Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a699562
US authorities demand $6bn damages from JP Morgan
by James Phillipps on Aug 28, 2013 at 07:29
JP Morgan is being pursued by the US authorities for $6 billion amid allegations it missold mortgage securities to government-backed agencies.
The Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, said the investment bank misstated the ability of borrowers to pay back their loans, according to the Financial Times.
The $33 billion book of loans was sold to the government-backed bodies ahead of the financial crisis and the value of the portfolio fell sharply as default rates started to rise.
It is understood that JP Morgan will fight the allegations, arguing that many of the bad debts were sold on by Bear Stearns and Washington Mutual, which it acquired with the government’s support at the height of the crunch.
The US regulator is also pressing for damages from Bank of America and RBS and in June announced it had reached a $885 million settlement with UBS as compensation for losses on mortgage-backed securities.
News sponsored by: