WASHINGTON (AP) — JPMorgan Chase & Co. hastentatively agreed to pay $13 billion to
settle allegations surroundingthe quality of mortgage-backed securities it sold in the run-up to the2008
financial crisis, a person familiar with the negotiations betweenthe bank and the federal government
said Saturday.If theagreement is finalized it would be the government’s highest-profileenforcement
action related to the financial meltdown that plunged theeconomy into the deepest recession since the
Great Depression of the1930s.The person, who spoke on condition of anonymity because thedeal has not
been finalized, said Attorney General Eric Holder,Associate Attorney General Tony West, J.P. Morgan CEO
Jamie Dimon andthe bank’s general counsel, Stephen Cutler, negotiated the tentativesettlement in a
Friday night phone call.The person said thetentative agreement does not resolve a criminal investigation
of thebank’s conduct. It is being handled by federal prosecutors inSacramento, Calif.On Friday night,
Holder told the bank that anon-prosecution agreement was a non-starter — meaning that the
JusticeDepartment will continue to conduct the criminal investigation of thefinancial institution, said
the person. As part of the deal, the JusticeDepartment expects JPMorgan to cooperate with the continuing
criminalprobe of the bank’s issuance of mortgage-backed securities between 2005and 2007, the person
said.JPMorgan spokesman Brian Marchiony and Justice Department spokesman Brian Fallon declined to
comment.Ofthe $13 billion, $9 billion is fines or penalties and $4 billion willgo to consumer relief for
struggling homeowners, the person said.Whenthe housing bubble burst in 2007, bundles of mortgages sold
assecurities soured and the investors who bought them lost billions. Inthe aftermath, public outrage
boiled over that no high-level Wall Streetexecutives had been sent to jail. Some lawmakers and other
criticsdemanded that the big bailed-out banks and senior executives be heldaccountable.In response, the
government in January 2012 set up atask force of federal and state law enforcement officials to
pursuewrongdoing with regard to mortgage securities.In September,JPMorgan agreed to pay $920 million and
admit that it failed to overseetrading that led to a $6 billion loss last year in its London
operation.That combined amount, in settlements with three U.S. and one Britishregulator, is one of the
largest fines ever levied against a financialinstitution. In another case, the company agreed to pay a
$100 millionpenalty and admitted that its traders acted "recklessly" with the Londontrades.In
August, the Justice Department accused Bank of AmericaCorp., the second-largest U.S. bank, of civil
fraud in failing todisclose risks and misleading investors in its sale of $850 million inmortgage bonds
in 2008. The Securities and Exchange Commission filed arelated lawsuit. The government estimates that
investors lost more than$100 million on the deal. Bank of America disputes the allegations.Thelatest
action against the beleaguered JPMorgan brought the weight ofthe Obama administration against the bank,
which has enjoyed areputation for managing risk better than its Wall Street competitors.JPMorgan came
through the financial crisis in better shape than most ofits rivals and Dimon, its CEO, charmed
lawmakers and commanded theattention of regulators in Washington.A number of big banks,including
JPMorgan, Goldman Sachs and Citigroup, previously have beenaccused of abuses in sales of securities
linked to mortgages in theyears leading up to the crisis. Together they have paid hundreds ofmillions in
penalties to settle civil charges brought by the SEC, whichaccused them of deceiving investors about the
quality of the bonds theysold.JPMorgan settled SEC charges in June 2011 by agreeing to pay$153.6 million
and reached another such agreement for $296.9 millionlast November.The banks in all the SEC cases were
allowed toneither admit nor deny wrongdoing — a practice that brought criticism ofthe agency from judges
and investor advocates.But in a first fora major company, JPMorgan admitted in the agreement with the
SEC overthe $6 billion trading loss in its London operation that it failed inits oversight. The
admission could leave the bank vulnerable to millionsof dollars in lawsuits. JPMorgan also reached
settlements over thetrading loss with the Federal Reserve, the U.S. Office of theComptroller of the
Currency and Britain’s Financial Conduct Authority.TheJustice Department is still pursuing a criminal
investigation of thetrading loss and a possible cover-up at the bank. Two of the bank’sformer traders in
London are facing criminal charges. The SEC also isinvestigating individuals involved in the trading
loss.Mountinglegal costs from government proceedings pushed JPMorgan to a rare lossin the third quarter,
the first under Dimon’s leadership. The bankreported Oct. 11 that it set aside $9.2 billion in the
July-Septemberquarter to cover a string of litigation stemming from the financialcrisis and its
"London Whale" trading debacle. JPMorgan said it hasplaced a total of $23 billion in reserve
to cover potential legal costs.___Associated Press writer Marcy Gordon in Washington contributed to this
report.Copyright 2013 The Associated Press. All rightsreserved. This material may not be published,
broadcast, rewritten orredistributed.