JPMorgan's $13 billion deal hits a snag

JPMorgan Chase & Co.'s preliminary $13-billion deal to resolve federal and state investigations into its mortgage bond business has hit some stumbling blocks, two people familiar with the talks said Tuesday.

In a draft settlement circulated late Sunday, JPMorgan sought a provision that effectively shut down any criminal inquiries into the bank's packaging and sale of mortgage securities, apart from an investigation by California prosecutors that the bank has already disclosed, one of the people said. The bank had previously agreed to keep all criminal probes out of the settlement, the person added.

A second person familiar with the talks said there appeared to be a misunderstanding over the issue.

Also at issue is a long-running disagreement between the bank and the Federal Deposit Insurance Corp. over legal liabilities from JPMorgan's takeover of Washington Mutual assets and obligations during the financial crisis.

JPMorgan, which acquired Washington Mutual from the FDIC for $1.9 billion at the height of the financial crisis, has disputed its responsibility to cover losses incurred by investors in the failed thrift's mortgage securities. -- Reuters