JPMorgan paying $5.1B settlement
JPMorgan paying $5.1B settlement
WASHINGTON (AP) — JPMorgan Chase has agreed to pay $5.1 billion to resolve claims that it misled Fannie Mae and Freddie Mac about risky home loans and mortgage securities that it sold them before the housing market collapsed.
The Federal Housing Finance Agency, which oversees Fannie and Freddie, announced the settlement Friday with JPMorgan, the largest U.S. bank. A broader deal with the Justice Department is still being negotiated.
JPMorgan sold $33 billion in mortgage securities to Fannie and Freddie between 2005 and 2007, according to the agency. That was the second most sold to Fannie and Freddie ahead of the crisis, behind only Bank of America. The securities soured after the housing bubble burst in 2007, losing billions in value. The government rescued Fannie and Freddie during the financial crisis when both were on the verge of collapse. The companies received taxpayer aid totaling $187 billion. They have since become profitable and repaid $146 billion.
New York-based JPMorgan will pay about $2.74 billion to Freddie and $1.26 billion to Fannie for the securities that it sold. JPMorgan is also paying $1.1 million for home loans the bank sold to Fannie and Freddie ahead of the crisis.
JPMorgan reached a tentative agreement with the Justice Department last weekend to pay $13 billion over bad loans and mortgage securities the bank sold ahead of the crisis.
Students back in class after killing
DANVERS, Mass. (AP) — Students at the Massachusetts school where a classmate allegedly killed a teacher returned Friday, surrounded by extra safety measures as well as tributes to the victim, including trees adorned with pink ribbons, her favorite color.
Classes resumed at Danvers High School two days after student Philip Chism, 14, was charged with murder in the death of Colleen Ritzer, a 24-year-old math teacher. School had been canceled the previous two days.
On Friday, the U.S. flag outside the school flew at half-staff, and the pink ribbons hung from a row of six trees in front of the building.
The day was stressful and difficult, said freshman Cambria Cloutier, 14.
“Everyone was just kind of crying, crying together. Everyone,” she said.
Cloutier had class with Ritzer and Chism, and she returned to the classroom to find it stripped of pictures and handwriting. “There was basically no life in it,” she said.
She said she could only tolerate being back in the room for about five minutes because she was thinking about seeing Ritzer and Chism together in the room after school Tuesday, shortly before the teacher was killed.
“Just remembering that … was overpowering,” she said.
Sergeant charged in Tenn. shooting
MEMPHIS, Tenn. (AP) — A Tennessee National Guard recruiter was charged in federal court on Friday, accused of shooting three of his superiors at an armory after he was told he would be relieved of duty and dismissed from active service.
U.S. District Magistrate Judge Diane Vescovo told Amos Patton he is charged with committing assaults within the maritime and territorial jurisdiction of the United States and carrying a weapon during a federal crime of violence.
The 42-year-old sergeant first class was ordered to the armory north of Memphis Thursday, where he was told that he was being relieved of duty, reduced in rank and recommended for removal from active reserve, U.S. Attorney Edward Stanton III said at a Friday news conference.
Following the meeting, Patton was ordered to return government equipment that was in his vehicle outside the building, located in Millington, the complaint said. Patton had a “fanny pack” with him when he returned. When Patton tried to access the pack, one Guardsman yelled “gun,” the complaint says. Patton then opened fire, hitting three Guardsmen, wrote FBI Special Agent Matthew Ross.
$3M settlement in Toyota lawsuit
OKLAHOMA CITY (AP) — Toyota Motor Corp. on Friday reached a settlement with the victims of a deadly 2007 car crash, a day after an Oklahoma Country jury became the first in the country to find the company liable in a case of sudden unintended acceleration.
On Thursday, the jury awarded a total of $3 million in monetary damages to the injured driver of the 2005 Camry involved in the crash, and to the family of the passenger, who was killed.
The ruling was significant because it was the first case where plaintiffs argued that a car’s electronics — in this case the software connected to the Camry’s electronic throttle-control system — caused the unintended acceleration. The Japanese automaker recalled millions of cars, starting in 2009, following claims of sudden acceleration in Toyota vehicles.
It has denied that electronics played any role in the problem.
The Japanese automaker had won all previous unintended acceleration cases that went to trial. Legal experts said the Oklahoma verdict might cause Toyota to consider a broad settlement of the remaining cases, but that the company is likely to fight a few more cases before making that decision.
On Friday, Judge Patricia Parrish announced the parties had reached a deal that eliminated the need for the second stage of the trial over punitive damages. The terms of the settlement were not disclosed, but Toyota agreed not to appeal the jury’s decision, said Jere Beasley, an attorney for the plaintiffs.
“You can rest assured they did not want to go to the punitive phase,” Beasley said.
Toyota has blamed drivers, stuck accelerators or floor mats that trapped the gas pedal for the sudden unintended acceleration claims that led to the big recalls of Camrys and other vehicles. No recalls have been issued related to problems with the vehicle’s onboard electronics. In the Oklahoma case, Toyota attorneys theorized that the driver, Jean Bookout, mistakenly pumped the gas pedal instead of the brake when her Camry ran through an intersection near Eufaula and slammed into an embankment.
Toyota said in a statement Friday that it disagreed with the verdict, and vowed to “defend our products vigorously at trial in other legal venues.”
But Sean Kane, who heads a safety research company in Massachusetts, said the ruling in the Oklahoma case could influence how Toyota proceeds with the dozens of pending lawsuits that target the vehicle’s electronics.
“It’s important that this case is only one of many we’ve examined in which you can point to nothing other than the electronics system in the car,” Kane said. “The problem for Toyota in this case was there was a preponderance of evidence to show this wasn’t a driver error issue, and it clearly wasn’t a floor mat.”
On Thursday, the jury awarded $1.5 million in monetary damages to Bookout, 82, and $1.5 million to the family of Barbara Schwarz, who died. Their attorneys maintained Toyota knew about the problems, but concealed that information from the public.
Toyota previously agreed to pay more than $1 billion to resolve hundreds of lawsuits claiming that Toyota owners suffered economic losses because of the recalls. But that settlement did not include those suing over wrongful death and injury. Hundreds more of those lawsuits remain.
While the jury verdict was bad enough, the venue makes the setback even more dangerous for Toyota, said Pete Marketos, a Dallas lawyer who won a $136 million verdict against Mercedes-Benz and other defendants in a fraud case in Texas this year.
“The fact that it was a jury in Oklahoma — which is generally considered a very conservative, not plaintiff-friendly state — that doesn’t bode very well for Toyota,” Marketos said.
Marketos said that because of the large number of lawsuits over the acceleration issue, it would usually take more than one loss to force a manufacturer into a broad settlement, “but it certainly pushes the pile in that direction.”
The verdict came just weeks after Toyota won a case in California where plaintiffs argued that Toyota was liable for the death of a woman whose 2006 Camry crashed because the company hadn’t installed a system that could override the accelerator. The woman’s family was seeking $20 million in damages.
A federal judge in Orange County, California, is dealing with wrongful death and economic loss lawsuits that have been consolidated.
Similar to the Oklahoma County case, federal lawsuits contend that Toyota’s electronic throttle-control system was defective and caused vehicles to surge suddenly. Toyota has denied the allegation, and neither the National Highway Traffic Safety Administration nor NASA found evidence of electronic problems.
Wylie Aitken, an Orange County plaintiff’s attorney who is a liaison with the cases filed in state court against Toyota, said he thinks the Oklahoma case “could be a game-changer to get the compensation the plaintiffs are entitled to.”