US investment banking giant J.P. Morgan Chase has agreed a mammoth $13bn (£8bn) settlement in relation to sales of residential mortgage-backed securities which contributed to the financial crisis.
The authorities accused J.P. Morgan and firms it later purchased, Bear Stearns and Washington Mutual, of selling high risk mortgage securities during the housing bubble while misrepresenting their quality. These securities later failed in huge numbers, playing a key role in the 2008 crisis.
J.P. Morgan Chase acknowledged it made "serious misrepresentations" to the public about numerous RMBS transactions.
Under the terms of the agreement, the firm will pay a total of $9bn in cash and provide $4bn in borrower relief.
The US Justice Department said the settlement is the "largest ever reached with a single entity in American history".
J.P. Morgan Chase said it has committed to complete delivery of the promised relief to borrowers before the end of 2017.
The firm added it continues to co-operate with the ongoing criminal investigation by the Department of Justice.
Chairman and CEO Jamie Dimon (pictured) said: “We are pleased to have concluded this extensive agreement with the President’s RMBS Working Group and to have resolved the civil claims of the Department of Justice and others.
"Today’s settlement covers a very significant portion of legacy mortgage-backed securities-related issues for J.P. Morgan Chase, as well as Bear Stearns and Washington Mutual.”
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