This is a bloomberg.com article.
JPMorgan Chase & Co. agreed to pay almost $1 billion to resolve claims by Ambac Financial Group Inc. that it was duped into insuring mortgage bonds backed by shoddy loans, clearing the way for approval of a larger settlement over similar allegations.
Ambac said Tuesday in a statement that the bank will pay $995 million to end two lawsuits the New York-based insurer filed in New York state court in 2012 over the quality of loans underlying mortgage bonds sold by Bear Stearns & Co., which was bought by JPMorgan in 2008.
As part of the deal, Ambac agreed to drop its objections to a $4.5 billion settlement between JPMorgan and institutional investors including BlackRock Inc. and Pacific Investment Management Co. over claims of faulty home loans, leaving only one objector to the pact. Ambac’s settlement clears the way for a judge to approve the larger deal, Bloomberg Intelligence analyst Elliot Stein said.
The settlement with JPMorgan was a “bit of a surprise” as many investors had been focused on whether Ambac would be able to resolve similar claims against Bank of America Corp., Mark Palmer, an analyst with BTIG in LLC in New York, said in a note to investors.
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