JPMorgan in talks to settle government probes for $11 billion - sources

By David Henry and Karen Freifeld

NEW YORK (Reuters) – JPMorgan Chase & Co is in talks with government officials to settle federal and state mortgage probes for $11 billion (6.84 billion pounds), two people familiar with the matter said on Wednesday.

The sum could include $7 billion in cash and $4 billion for consumers, said the sources, who asked not to be identified because the negotiations are private.

The talks are fluid and the $11 billion amount could change, the people familiar with the matter said. They said the discussions include the U.S. Department of Justice, the Securities and Exchange Commission, the U.S. Department of Housing and Urban Development and the New York State Attorney General.

The New York prosecutor’s office is participating in the talks because it is part of a working group formed by President Obama in January 2012 to investigate misconduct in mortgage securities that contributed to the financial crisis.

JPMorgan disclosed in August that lawyers from the U.S. Department of Justice in the Eastern District of California had preliminarily concluded that the company violated securities laws in the sale or securities backed by subprime and other risky mortgage loans.

U.S. Department of Justice lawyers from other areas of the country and state authorities have been investigating JPMorgan’s liability for mortgage securities sold by two other companies it acquired during the financial crisis, Bear Stearns and Washington Mutual.

The discussion of an $11 billion sum to settle multiple probes was reported earlier by The Associated Press.

The talks to reach a global settlement on the mortgage issues heated up this week after the Department of Justice told the bank that it was preparing to file a lawsuit on Tuesday.

JPMorgan is pressing to resolve its legal and regulatory issues after coming under intense scrutiny since disclosing in May 2012 that it was losing billions of dollars on derivatives trades from its London offices.

JPMorgan shares were up 2.7 percent for the day at the close of New York Stock Exchange trading on Wednesday.

(Editing by Andrew Hay and Grant McCool)

JPMorgan in talks to settle government probes for $11 billion - sources