JP Morgan agreed to pay a $13 billion settlement, and admitted to engaging in fraud and misrepresentation in its actions leading up to the financial collapse. Credit: Reuters
A satisfied Attorney General Eric Schneiderman announced today the long-awaited outcome of the suit he brought against JP Morgan a little over a year ago.
The financial giant will be paying out $13 billion to various injured parties — the largest settlement with a single entity in U.S. history, according to the A.G.'s office.
Schneiderman said more than $1 billion will go specifically to New York state.
"New Yorkers are getting good justice in this settlement," Schneiderman said.
$613 million of that $1 billion will be paid out in cash. An additional $400 million in "consumer relief" is expected though the exact figure is still being worked out, Schneiderman said.
The cash portion will be divvied up for several uses, Schneiderman said. One of those uses will be to fund legal services to those who are still suffering from the aftereffects of the fiscal crisis caused in large part by the fraud and misrepresentation perpetrated by JP Morgan, Bear Stearns, and others.
Jennifer Ching, the director of Queens Legal Services, said her office is still packed daily with New Yorkers who have been struggling for over four years at this point.
The money is also intended to help New Yorkers impacted by superstorm Sandy.
Schneiderman said that JP Morgan deserved credit for being the first of the banks and hedge funds involved in the financial crisis to admit wrongdoing and reach a settlement that offers some compensation to those they harmed. He and Michael Stephens, the acting Inspector General of the Federal Housing Finance Agency, promised they would continue to pursue restitution from the others involved.
But in answer to a claim that Bank of America reportedly said they anticipate being sued by Schneiderman, the A.G. hedged and said he "can't comment on when that action might be filed."
Some of the JP Morgan settlement will be tax deductible. Schneiderman promised at least $2 billion would not be, as it has been designated a penalty. Part of the settlement involved an agreement to not treat Bear Stearns and Washington Mutual's payout as a penalty. Schneiderman said whether the rest of the settlement is tax-deductible will be largely up to the Internal Revenue Service.