(Reuters) - Bond insurer Ambac Financial Group Inc said JPMorgan Chase & Co (N:JPM) will pay $995 million to settle disputes related to residential mortgage-backed securities.
The
settlement will have a positive impact on Ambac's fourth-quarter
operating results and its claims paying resources, Chief Executive Nader
Tavakoli said in a statement.
The settlement comes two weeks
after Reuters reported that three of Ambac's top 10 shareholders were
calling on Tavakoli to step down, claiming that he was slow to settle $4
billion in insurance claims and lawsuits against Countrywide Home Loans
Inc, Bank of America Corp (N:BAC) and JPMorgan.
Ambac
has publicly resisted calls to speed up its payment of insurance
claims, citing concerns that it wouldn't be able to meet its liabilities
that extend out to 2054.
The agreement will not have a material
effect on JPMorgan's first quarter earnings, the Wall Street bank said
in a regulatory filing. (http://1.usa.gov/20quSb8)
The settlement
also provides for the withdrawal of Ambac's objection to JPMorgan's
$4.5 billion settlement with trustees of trusts issued by JPMorgan,
Chase and Bear Stearns.
The resolution underscores how Wall
Street is yet to shake off the legacy of the U.S. subprime crisis, when
mortgages were sold to people who could not afford them and then
repackaged for investors without an adequate explanation of how risky
they were.
Ambac sued Bank of America Corp in 2014 to recoup
hundreds of millions of dollars of losses from insuring securities
backed at least in part by risky mortgages from the bank's Countrywide
Home Loans unit.
Goldman Sachs Group Inc (N:GS)
said earlier this month that it would pay regulators over $5 billion to
settle claims that it misled mortgage bond investors during the
financial crisis.
