Delaware gets $20 million in JP Morgan settlement

Delaware will get a fraction of the largest settlement with a single entity in U.S. history as JPMorgan Chase agrees to pay $13 billion to settle toxic mortgage claims.

JPMorgan acknowledges it made “serious misrepresentations” to the public in the settlement reached between JPMorgan, the U.S. Justice Department and federal and state entities.  The DOJ and five states, including Delaware, alleged that JPMorgan bundled and sold mortgages to investors that were much riskier than advertised.  

The losses that resulted from those investments by pension funds, mutual funds, and others were catastrophic for the economy, says Delaware Attorney General Beau Biden.  “We are holding accountable one of the financial institutions that broke the rules and helped cause the economic crisis that brought our nation to its knees.”  

Delaware’s $19.7 million share of the settlement will compensate state entities for their investment losses and fund some of the state’s efforts to help Delaware residents emerge from the financial crisis.  “As a prosecutor and a consumer protector, I have an obligation to hold those responsible for causing the crisis accountable – and that work is not done,” Biden said.

In the settlement, JPMorgan admits that its employees claimed that the mortgage loans they sold to investors complied with underwriting guidelines when in fact the loans did not comply with guidelines and were not authorized to be bundled and sold as securities.

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said U.S. Attorney General Eric Holder in a statement.  “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.”

In addition to Delaware’s $20 million piece of the settlement, the company will pay $298 million to California, $100 million to Illinois, $34.4 million to Massachusetts, and $614 million to New York.

Despite the record settlement payment, JPMorgan and its employees are not absolved from facing possible criminal charges.