A top federal official on Tuesday defended his decision not to prosecute JPMorgan Chase (JPM) for allegedly facilitating Bernie Madoff's Ponzi scheme, calling a deferred-prosecution agreement and monetary penalty an "appropriate" resolution of the bank's alleged failings.

The country's largest bank on Tuesday agreed to pay roughly $2.6 billion to settle criminal and civil allegations over its role in Madoff's $17 billion fraud. That amount includes $1.7 billion that JPMorgan will pay under a deal with the U.S. Attorney's Office for the Southern District of New York. Under the agreement, JPMorgan admitted the government's charges and accepted responsibility for the lapses; however, the settlement does not hold any individual JPMorgan employees responsible for the failures, and will allow the company to avoid prosecution if it complies with all of the terms of a two-year deferral period.

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