JPMorgan’s Talks on Mortgage Bond Settlement Focus on $11B

JPMorgan Chase & Co.’s negotiations with federal and state authorities to resolve a series of investigations tied to mortgage bonds are focusing on a potential $11 billion figure, including $4 billion for consumer relief, a person familiar with the talks said.

The amount isn’t final, said the person, who asked not to be identified because the negotiations aren’t public. Those involved in the talks include the U.S. Justice Department, the Department of Housing and Urban Development and New York Attorney General Eric Schneiderman, who is co-chairman of a federal and state working group on residential mortgage-backed securities.

JPMorgan CEO Jamie Dimon arrived at the Justice Department in Washington yesterday to personally discuss the settlement with Attorney General Eric Holder, according to a person familiar with the meeting. Federal officials rejected a proposal from the bank earlier this week to pay between $3 billion and $4 billion to settle the probes, a separate person with knowledge of the negotiations said.

The talks are still fluid and the size of the settlement keeps changing, according to another person familiar with the matter. The people said they weren’t sure which claims may be resolved. The bank is trying to resolve as many probes as possible before the end of the third quarter on Sept. 30, according to people familiar with the bank’s thinking.

JPMorgan is seeking to negotiate a resolution to mortgage-bond investigations being conducted by federal and state authorities, including probes by U.S. attorneys in Philadelphia, Washington and Sacramento, Calif., according to another person briefed on the effort.

The bank has also tried to settle a $6 billion claim by the Federal Housing Finance Agency, according to the person, who also asked not to be identified because the talks are private.

Joe Evangelisti, a spokesman for the New York-based bank, declined to comment on the negotiations.

“Talks are ongoing,” Lauren Horwood, a spokeswoman for Sacramento U.S. attorney Ben Wagner, one of the federal officials involved in the talks, said Sept. 25.

Last week, JPMorgan agreed to pay $920 million in penalties over $6.2 billion in losses stemming from derivatives trading by the bank’s chief investment office in London.