JP Morgan faces $6bn US misselling penalty

Nicola-Mitchell-MM-grey-250x255.jpg

US authorities are demanding more than $6bn (£3.87bn) from JP Morgan Chase amid allegations of misselling securities to government-backed mortgage companies.

According to the Financial Times, JP Morgan is refusing to pay the amount which would be one of the largest single penalties paid by any bank since the crisis.

However, the bank is expected to settle for billions of dollars. Additionally, the bank warned earlier this month that its total legal bill could exceed the cash put aside for it by $6.8bn. 

In 2011, JP Morgan and 17 other banks were sued by the Federal Housing Finance Agency, a government regulator, for falsely claiming loans backing $33bn of mortgage-backed securities complied with underwriting guidelines.

At the time, the FHFA said the bank “significantly overstated the ability of the borrowers to repay their mortgage loans.”