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JP Morgan Chase has agreed to pay almost $2.5B in separate settlements to Lehman Brothers ($1.42B) and bond insurer Ambac ($995M).
Lehman Brothers (pictured) sued JP Morgan in May 2010, alleging JP Morgan abused its leverage as Lehman's primary lender to create an $8.6B “slush fund” and position itself ahead of other creditors in Lehman's bankruptcy.
The demise of Lehman Brothers—once the nation's fourth-largest investment bank—caused the US economy and housing market to tank, catapulting the entire world into a global financial crisis.
In a separate lawsuit settlement, JP Morgan will pay bond insurer Ambac $995M. Ambac had sued JP Morgan for allegedly misrepresenting the quality of mortgages backing hundreds of securities Ambac insured. [WSJ]
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