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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.


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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