Saturday, March 18, 2023

JPMorgan Chase is facing criminal and civil investigations

JPMorgan Chase is facing criminal and civil investigations by the Justice Department involving its sales of mortgage-backed securities in 2005 to 2007, the bank said in a regulatory filing Wednesday.

Investigators from Justice’s civil division have “preliminarily concluded” the nation’s largest bank broke the law, JPMorgan said in the filing.

The disclosure is tucked into a single paragraph on page 204 of the bank’s second-quarter financial report with the Securities and Exchange Commission. The investigation is being run by the U.S. Attorney’s Office for the Eastern District of California and covers sales of securities backed by subprime mortgages and limited-disclosure loans made near the peak of the housing bubble, the filing said.

The disclosure follows the filing of a civil suit by the Justice Department Tuesday against Bank of America over $850 million of mortgage-backed securities. Bank of America denied any wrongdoing.

JPMorgan spokesman Joe Evangelisti couldn’t immediately be reached for comment. The U.S. Attorney’s Office for the Eastern District of California declined to comment.

“No one should be surprised that JPMorgan Chase may be charged with wrongful or criminal conduct. They’ve got a record that would make Al Capone look like a neighborhood criminal,” said Dennis Kelleher, president of financial watchdog group Better Markets, referring to millions the banking giant has paid in recent fines and penalties.

“The only real question is why it’s taken the feds so long” to pursue a mortgage case against the bank, said Kelleher.

But Raymond James bank analyst Anthony Polini said it’s not a big deal for the bank. “Small potatoes,” he said. “The government is trying to eke every last dollar out if this debacle. It’s no material threat.”

Separately, Bloomberg News reported Wednesday that MetLife disclosed it may face fines as a result of a government review of foreclosure cases at its bank unit. The Justice Department has requested information about payments made to law firms tied to foreclosures, Bloomberg reported, citing a MetLife regulatory filing.

 

USA Today

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