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Big Bank Settlement
Wed November 20, 2013
JPMorgan Chase To Pay Illinois Pension Funds $100 Million
The bank JPMorgan Chase will pay Illinois' pension funds $100 million under a national settlement announced Tuesday. The payment is a result of the bank's misconduct leading up to the Great Recession.
Like a lot of investors in the last decade, Illinois' pension funds had a good chunk of change in mortgage-backed securities. Once the housing market collapsed and homeowners began defaulting, the value of those securities collapsed, too.
The resulting worldwide recession was a significant factor in leaving Illinois with the worst-funded pension system in the country.
Illinois Attorney General Lisa Madigan says JPMorgan Chase knew the mortgages were lousy, "nonetheless, they still put those mortgages into investment vehicles that then pensions systems and others invested in."
Illinois is sharing in a $13 billion nationwide settlement with the federal Justice Department and four other states.
JPMorgan Chase's money will go to the retirement funds for public school teachers, university workers, and state employees.
Nevertheless, the settlement represents just one-tenth of one percent of the state's massive pension liability.