J.P. Morgan could be hit with a fine of more than $6bn from US authorities as they pursue the bank over sales of securities to government-backed mortgage companies.
According to a report in the Financial Times, US legislators are demanding J.P. Morgan Chase pay more than $6bn to settle allegations it mis-sold the securities to government-backed mortgage companies in the run-up to the financial crisis.
The report says the bank is refusing to make such a payment at present. A fine on that scale would be its single biggest penalty and one of the largest post-crisis settlements by any bank.
It is the latest crisis to hit the group, following the "London whale" trading scandal, and it also exceeds the penalties for its alleged manipulation of commodities markets.
The case comes after the Federal Housing Finance Agency, a government regulator, sued J.P. Morgan and 17 other banks in 2011. It said the bank falsely claimed that loans backing $33bn of mortgage-backed securities complied with underwriting guidelines and that it "significantly overstated the ability of the borrowers to repay their mortgage loans".
The securities were sold to Fannie Mae and Freddie Mac, which guarantee US home loans and also buy securities for their own investment portfolios.
J.P. Morgan is refusing to pay the amount requested by the government, but the report - citing people familiar with the situation - claims the bank expects to settle for billions of dollars.
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