 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."
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.
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.
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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.
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]
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