A federal regulator that helped forge a tentative $13 billion settlement with JPMorgan Chase split off with its own deal on Friday, extracting a $4 billion payout from the nation’s biggest bank.
The regulator, the Federal Housing Finance Agency, ran ahead of its fellow regulators as the broader deal was slow to materialize.
That $4 billion was initially seen as a crucial element of the preliminary $13 billion settlement that JPMorgan reached last week. The deal, which the Justice Department has taken the lead in negotiating, would resolve an array of investigations from state and federal authorities that suspect the bank misled investors about the risks of mortgage securities it sold in the lead up to the financial crisis.
The settlement with the housing regulator would help JPMorgan put one of its costliest cases behind it.
In a 2011 lawsuit, the regulator accused JPMorgan, Bear Stearns and Washington Mutual of selling mortgage securities to Fannie Mae and Freddie Mac, the government-controlled housing finance companies. The banks, the agency claimed, did not fully disclose the risks of the securities, which ultimately imploded.
“This is a significant step as the government and J. P. Morgan Chase move to address outstanding mortgage-related issues,†Edward J. DeMarco, the acting director of the housing agency, said in a statement.
In its own statement, JPMorgan called the deal “an important step towards a broader resolution†with the Justice Department and the other government authorities.
The $13 billion deal has implications beyond the housing agency. Under the current terms, the bank would also pay a roughly $2-3 billion fine to prosecutors in California, commit $4 billion to help struggling homeowners reduce their mortgage balances and dole out another roughly $6 billion to state attorneys general and other officials who will then funnel the money to investors who sustained losses on mortgage securities.
