Yesterday, Bond insurer Ambac Financial Group, Inc. stated JP Morgan Chase & Co. agreed to pay $995 million to settle all claims against the lender over toxic residential mortgage-backed securities (RMBS). In a statement, Ambac President and CEO Nader Tavakoli said the deal would have a positive impact on Ambac’s fourth quarter 2015 operating results, along with its claims paying resources.
Representatives for JPMorgan did not immediately respond to a request for comment. However, in a regulatory filing with the Securities & Exchange Commission (SEC), JPMorgan said the new deal resolves actions brought by Ambac seeking recovery of principal and interest payments on roughly $3.3 billion of insured classes of 11 RMBS trusts sponsored by JPMorgan unit EMC Mortgage LLC. The bank said the settlement will not have a material effect on its earnings for the first quarter of 2016.
This most recent settlement comes after Goldman Sachs, on Jan. 14, agreed to pay $5.06 billion to end federal and state investigations in connection with the investment banking giant’s underwriting and sale of RMBS from 2005 to 2007.
As part of the Goldman Sachs deal, the bank will pay a $2.385 billion civil monetary penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief to resolve all claims made by the US Department of Justice, two state (Illinois and New York) regulators. , the National Credit Union Administration and Federal Home Loan Banks in Chicago and Seattle.
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