Reuters: Regulatory News: UPDATE 1-JPMorgan faces criminal and civil probes over mortgages

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UPDATE 1-JPMorgan faces criminal and civil probes over mortgages Aug 7th 2013, 21:54 Wed Aug 7, 2013 5:54pm EDT Aug 7 (Reuters) - JPMorgan Chase & Co, the biggest U.S. bank by assets, said on Wednesday it is being investigated by criminal and civil divisions of the U.S. Department of Justice over offerings of mortgage-backed securities. The civil division gave the company a notice in May that it had preliminarily concluded that the firm violated federal securities laws in offerings of subprime and Alt-A residential mortgage securities during 2005 to 2007, JPMorgan said. JPMorgan said in the filing that it is responding to parallel investigations being conducted by the civil and criminal divisions of the United States Attorney's Office for the Eastern District of California relating to mortgage-backed securities. The company made the disclosures in a quarterly filing with the Securities and Exchange Commission. On Tuesday, federal prosecutors filed a $850 million civil lawsuit against Bank of America Corp over the sale of bonds backed by jumbo mortgages. [ID: nL1N0G71LM] The lawsuit followed a disclosure by Bank of America on Aug. 1 that it expected to be sued by the Department of Justice and SEC over mortgage bonds. News of the investigations comes after President Barack Obama vowed to hold companies responsible for breaking the law in financing the housing bubble that caused the 2007-2008 financial crisis and the Great Recession. U.S. Attorney General Eric Holder said in a statement on Tuesday that Obama's Financial Fraud Enforcement Task Force, which brought the latest lawsuit against Bank of America, "will continue to take an aggressive approach to combating financial fraud and uncovering abuses in the residential mortgage-backed securities market," and is pursuing "a range of additional investigations." The parallel civil and criminal investigations that JPMorgan disclosed are being conducted from the U.S. Attorney's Office for the Eastern District of California, according to the company's filing. JPMorgan also raised its estimate of possible legal losses in excess of reserves to $6.8 billion at the end of June from $6 billion three months earlier. Link this Share this Digg this Email Reprints

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