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Late yesterday, JPMorgan Chase offered to pay $7 billion to settle numerous federal and state investigations over its sale of mortgage-backed securities. Not good enough, says the Justice Department--it's pressing for a much bigger fine. And not even a meeting between Chase CEO Jamie Dimon and Attorney General Eric Holder could change that.
Mr. Holder’s nearly hourlong meeting on Thursday with the chief executive, Jamie Dimon, followed days of intense negotiations during which JPMorgan ultimately offered to pay a roughly $7 billion fine and provide $4 billion in relief for struggling homeowners, according to people briefed on the talks. While the Justice Department has largely agreed to the $4 billion in relief, which requires the bank to reduce the size of certain mortgages and refinance others, it seeks more than the proposed $7 billion in penalties and is now waiting for JPMorgan to prepare a new, larger settlement offer, the people said.
So far, this deal looks like a mixed bag. While the proposed settlement would cover all federal investigations into Chase's behavior from 2005 to 2007, it would allow the government to tee up the bank for any securities that originated in 2008 and beyond. But Chase also wants the government to end a two-pronged investigation by federal prosecutors in Sacramento. Apparently those prosecutors were ready to file a civil suit earlier this week before the talks ramped up, and a criminal probe is also well underway.
It's pretty encouraging that Holder is shaking Chase for more. But as I said a few days ago, any settlement will be meaningless unless Chase is actually required to admit wrongdoing.