NEW YORK (
CEO Jamie Dimon said President Obama's plan to set up a new financial crimes unit that will widen the investigation into banks' fraudulent mortgage practices has a "pretty good chance" of derailing the foreclosure settlement talks.
Bank of America
, JPMorgan Chase,
, Ally Financial and
have been in year-long settlement talks with the 50 state attorneys general over deceptive foreclosure practices including robo-signing.
The banks have been seeking a broad release from future claims from the states in exchange for reducing the principal on mortgages.
Recent reports have suggested that the banks and states are close to reaching a $25 billion settlement that will help over 1 million borrowers benefit from a reduction in the principal owed on their mortgages. Principal reduction not only reduces the monthly payments but also wipes out negative home equity, making it easier for homeonwers to sell their homes or refinance further.
But the settlement talks seem far from over, with California Attorney General Kamala Harris refusing to sign on to the deal on the grounds that the settlement is inadequate.
Now, the new investigative task force threatens to throw another monkey wrench in the works.
In an interview with CNBC from Davos, Dimon said he was all for going after the bad actors in the mortgage business, but he was looking forward to getting the legacy mortgage problems behind them and help the nation move on.
"I think it will be better for America if the settlement took place," Dimon told CNBC. "If this derails that, so be it."
On the refinancing program, Dimon said it will likely help some homeowners but not the entire system. "Very often the government makes these programs so complex that no one can get the money," he said, referring to earlier refinancing programs.
Written by Shanthi Bharatwaj in New York
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