JPMorgan Chase will pay almost $1 billion to insurer Ambac and another $1.42 billion to the estate of Lehman Brothers to settle its long-running lawsuits with these firms. This solves two of the biggest problems from the financial crisis that the US bank has been dealing with.
Housing Wire reported that JPMorgan will pay Ambac Financial Group $995 million to settle its disputes on the residential mortgage-backed securities. This will also lead to Ambac's withdrawal on its objection to JPMorgan's $4.5 billion settlement with trusts from JPMorgan, Bear Stearns, and Chase. Earlier in January, Goldman Sachs also paid $5 billion to settle its legal battles concerning toxic mortgage bonds sold to investors that lead to the financial crisis.
"Today's announcement validates our resolve and reinforces our confidence in our remaining RMBS-related cases," said Ambac president and chief executive Nader Tavakoli in a report by the Financial Times. "This settlement will have a positive impact on our fourth-quarter 2015 operating results, as well as our claims paying resources."
Meanwhile, the Wall Street Journal reported that JPMorgan agreed to pay $1.42 billion in cash to the remnants of Lehman Brothers Holdings Inc to settle its legal disputes. The lawsuit against JPMorgan claims that it siphoned billions of dollars from the international financial firm before it collapsed.
JPMorgan was the biggest creditor of the Lehman Brothers. It has been involved in the defunct bank's estate since it fell in 2008. Just this October, Lehman Brothers failed to secure its claims against JPMorgan after a judge ruled against them. The US District court said it has no obligation to save Lehman when it ruled in favour of JPMorgan last four months ago.
Lehman Brothers revealed $639 billion worth of assets when it filed for Chapter 11 protection. That figure is the highest value for bankruptcy report in the history of the US.
