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October 22, 2013

J.P. Morgan Aimed to Limit Damage

J.P. Morgan Chase & Co. is willing to pay a steep price to settle with the Justice Department over soured mortgage securities, but it is getting one thing it wanted: It won’t have to pay heavy penalties for the sins of two companies it bought during the financial crisis.

“Under the terms of a tentative $13 billion deal that could be finalized in a matter of days, J.P. Morgan will pay roughly $2 billion in penalties that apply to its own conduct during the years before the financial crisis, and not any for problems it inherited from Bear Stearns Cos. or Washington Mutual Inc., according to people close to the talks.

J.P. Morgan purchased the firms for a discount in 2008 at the urging of U.S. regulators. It has argued to government officials that it shouldn’t be punished for the rescue, according to the people close to the talks. The Justice Department chose to dial back its assessment of punitive penalties tied to the two firms because the government helped arrange J.P. Morgan’s acquisitions of the companies to help stabilize the financial system, said the people close to the settlement talks.”

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Read full Wall Street Journal article here

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