JPMorgan Chase to pay $100M to Illinois' pension systems
Attorney
General Madigan recoups full losses to pension funds caused by bank
misconduct in run-up to financial crisis
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[November 23, 2013]
CHICAGO — This week Attorney
General Lisa Madigan announced a $100 million settlement with
JPMorgan Chase & Co. to recover losses incurred by Illinois' pension
systems as a result of the bank's misconduct in the lead-up to the
2008 economic collapse. The announcement is part of a national
settlement with the U.S. Department of Justice and attorneys general
from California, Delaware, Massachusetts and New York. The
settlement addresses the bank's violations of federal and state laws
in its marketing and sale of risky residential mortgage-backed
securities.
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In Illinois, the settlement will require JPMorgan Chase to pay $100
million to the state's pension systems for losses sustained as a
result of their investments in JPMorgan Chase, Bear Stearns and
Washington Mutual mortgage-backed securities prior to 2009.An
investigation by Madigan's office revealed that between 2005 and
2008, the bank failed to disclose the true risk of these investments
to Illinois' pension systems and therefore misled the systems when
they invested in the residential mortgage-backed securities market
"We are still cleaning up the mess that Wall Street made with its
reckless investment schemes and fraudulent conduct," Madigan said.
"(Tuesday's) settlement with Chase will assist Illinois to recover
its losses from the dangerous and deceptive securities that put our
economy on the path to destruction."
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JPMorgan Chase will pay $72.4 million to the Illinois Teachers'
Retirement System, $16.2 million to the State Universities
Retirement System and $11.4 million to the Illinois State Board of
Investment, which oversees the State Employees' Retirement System,
General Assembly Retirement System and Judges' Retirement System.
Also as part of the national settlement, JPMorgan Chase will
provide $4 billion in relief to aid homeowners harmed by the
unlawful conduct of JPMorgan Chase, Bear Stearns and Washington
Mutual. Similar to the direct relief provided to borrowers in the
$25 billion national mortgage settlement, the consumer aid will
include principal forgiveness and loan modifications. An independent
monitor will be appointed to oversee the relief distribution.
The settlement this week is part of Attorney General Madigan's
work on the Residential Mortgage-Backed Securities Working Group
under President Obama's Financial Fraud Enforcement Task Force.
Long before this settlement announcement, Madigan has led
nationally in taking legal action against banks, lenders and other
financial institutions for unlawful financial misconduct that
contributed to the country's economic collapse.
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Last year, Madigan was a lead negotiator in a $25 billion
national settlement with the country's largest mortgage servicers —
Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally
Bank, formerly GMAC — to address allegations of widespread "robo-signing"
of foreclosure documents and other fraudulent practices banks
employed while servicing mortgages of struggling homeowners. The
settlement has brought approximately $2 billion in relief for
Illinois homeowners.
Madigan became the first attorney general in the nation to sue a
national bank for fair lending violations. Madigan and the
Department of Justice secured a $175 million national settlement to
resolve allegations that Wells Fargo illegally targeted
African-American and Latino borrowers for sales of the lender's
poorest quality and most expensive mortgages during the height of
the subprime mortgage lending spree. Madigan and the DOJ also
reached a $335 million national settlement with Countrywide, once
the nation's largest mortgage lender, to resolve similar allegations
of fair lending violations. The settlement has provided restitution
to harmed Illinois borrowers and is the largest settlement of a fair
lending lawsuit ever obtained by a state attorney general.
Madigan also reached a landmark $8.7 billion national settlement
in 2008 against Countrywide for deceptively placing thousands of
Illinois homeowners into ultra-risky and unaffordable subprime
mortgages. The settlement with Countrywide's new owner, Bank of
America, established the nation's first mandatory loan modification
program.
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Currently, Madigan is litigating against the national credit
rating agency Standard & Poor's, alleging that the company
compromised its independence as a rating agency by doling out high
ratings to unworthy, risky investments as a corporate strategy to
increase its revenue and market share.
[Text from file received from the office
of
Illinois Attorney General Lisa
Madigan] |