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JPMorgan faces new lawsuit over subprime mortgages

AFP  Washington, September 24, 2013
First Published: 11:35 IST(24/9/2013) | Last Updated: 11:58 IST(24/9/2013)

The US justice department is preparing to file a civil lawsuit against banking giant JPMorgan Chase over its handling of "subprime" mortgages after settlement talks broke off, the Wall Street Journal said late Monday.

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The bank and the justice department broke off attempts to reach a settlement because they failed to agree on the size of a potential fine, the US newspaper reported, citing a person familiar with the matter.

A spokesman for the bank declined to comment on the report to AFP.

The investigation focuses on the sale of mortgage-backed securities between 2005 and 2007, ahead of the 2008 housing bust.

Risky "subprime" mortgages are blamed for the collapse of the housing market, which sparked a financial crisis and plunged the US into a deep recession in 2008.

This new lawsuit, which could be filed as soon as Tuesday according to the US newspaper, is the latest in a string of legal woes for JPMorgan -- the largest US bank by assets.

Last week, the bank agreed to pay a combined $920 million to three US regulators and one British agency in the so-called "London Whale" trading debacle.

That figure includes $200 million to the SEC, $200 million to the Federal Reserve, $300 million to the Office of the Comptroller of the Currency, and $220 million to Britain's Financial Conduct Authority, (FCA).

The trading fiasco, dubbed the "London whale" because of the location and size of bets that went sour, has cost the bank $6 billion in losses.

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