JPMorgan Chase & Co is in advanced discussions with the U.S. Securities and Exchange Commission to resolve a probe into its role in selling collateralized debt obligations, the bank said.
Friday's disclosure by the second-largest U.S. bank comes a day after court documents revealed that the SEC had subpoenaed Credit Suisse for documents related to home loan securitizations.
The SEC declined to comment.
JPMorgan previously said it had received a number of subpoenas and informal requests from federal and state authorities over CDOs and mortgage-backed securities.
The SEC also subpoenaed JPMorgan this week along with Credit Suisse for records related to mortgage securitizations, according to a report from Bloomberg News.
CDOs and mortgage-backed securities were at the heart of the 2008 financial crisis. Wall Street banks vacuumed up home loans, often subprime mortgages, and repackaged them into bonds and other securities that were sold with top-notch credit ratings.
When the U.S. housing market crashed, the securities plummeted in value, generating enormous losses for investors around the world.
Recent government reports and lawsuits have accused traders and bank executives of knowingly packaging dodgy loans into bonds and other securities, at times even betting the bonds would crater in value as they touted them to clients.
MBIA Inc and other bond insurers have been fighting back. They have sued the banks for billions of dollars and said they were fraudulently induced into insuring the mortgage bonds.
MBIA revealed that the SEC had subpoenaed Credit Suisse this week in a document filed in New York state court on Thursday. A spokesman for the bond insurer said the company's legal counsel also received a subpoena from the SEC.
MBIA's court filing accuses Credit Suisse of knowingly packaging bad loans into bonds. Rather than forcing the mortgage lender that originated the dud loans to repurchase them, Credit Suisse is accused of getting damage payments which it then kept and did not pass along to investors.
A spokesman for Credit Suisse did not comment directly on the subpoena, but said: MBIA is entitled to what its contract with Credit Suisse provides, and not more.
Similar accusations were made earlier this year against EMC, a mortgage business JPMorgan acquired along with its firesale buy of Bear Stearns, in a lawsuit brought by Ambac Assurance Corp, a bond insurer.
MBIA and Ambac are both represented by the Patterson Belknap Webb & Tyler law firm.
In its disclosure filing on Friday, JPMorgan estimated its maximum possible losses from legal proceedings, in excess of established reserves, at $4.5 billion as of March 31, unchanged from its estimate as of December 31.
(Writing by Tom Hals; Editing by Tim Dobbyn)