[Photo: BreakingEnergy.com]

JPMorgan has settled a $2 billion lawsuit by agreeing to pay $400 million to the U.K. subsidiaries of Ambac Assurance and Assured Guaranty. The insurers were suing over toxic mortgage-backed securities that the investment bank sold to the insurers and their clients just prior to the 2008 credit crisis. Thus ends, yet, another credit crisis lawsuit.

JPMorgan had invested ScottishRe funds in non-agency mortgage-backed securities and, according to the plaintiffs, ignored its investment mandate by continuing to buy mortgage bonds even as warning signs of a market deterioration began to multiply. Scottish Re and its associated securitization vehicles subsequently were hit by multiple downgrades from ratings agencies, which left them with heavy losses.