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JP Morgan agrees record $13bn settlement

JP Morgan has agreed to pay a $13bn (£8bn) settlement with US regulators for the misselling of mortgage-backed securities in the run-up to the 2008 financial crisis.

The settlement, the largest ever agreed upon between the US government and a corpor-ation, will be paid to the US Department of Justice and
state authorities.

US attorney general Eric Holder says: “Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown.

“JP Morgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behaviour.”

Once the settlement is paid, all civil government investi-gations into JP Morgan and lawsuits relating to the mortgage security misselling will
be concluded.

Around $4bn of the settlement will comprise consumer relief payments. The rest will be divided between the Department of Justice, attorneys-general from states including New York and California, the National Credit Union Administration and the Federal Housing Finance Authority.

Hargreaves Lansdown senior investment director Adrian Lowcock says: “The financial services sector, JP Morgan and the investors who have been affected by the misselling all want a line to be drawn under this whole period so we can move forward and start to regain trust for the industry.

“This is still a big chunk of money, even for a bank of JP Morgan’s size. They do plan for these sorts of things but I do not think any chief executive would want to pay out this amount of money.”

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