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Big JPMorgan settlement sets 'dangerous precedent'

JPMorgan Chase won't likely face a criminal case following the expected $13 billion civil settlement with the government over financial crisis-era mortgages, said former federal and state prosecutor Jacob Frenkel.

"I don't think there's really a real credible criminal probe [here], because the civil cases would not have been settled," Frenkel said in a "Squawk Box" interview, ahead of the formal announcement Tuesday of the deal, which has been in the works for weeks. A tentative settlement was reached nearly a month ago, after JPMorgan CEO Jamie Dimon went to Washington to meet U.S. Attorney General Eric Holder.

(Read more: The prosecutors with SAC Capital in their crosshairs)

The breakdown of the settlement is expected to include $4 billion going to troubled homeowners in various forms—such as lower interest rates in some cases and lower payments in the others—and $2 billion in penalties paid to the Treasury.

The deal with federal and state prosecutors stems in large part from allegations of sales of shoddy mortgage securities by Bear Stearns and Washington Mutual, which JPMorgan purchased during the 2008 financial crisis at the behest of the government and the Federal Reserve.

"I think that creates a very dangerous precedent," said Frenkel, "not only in terms of the numbers but in the terms of how the government went about this case."

He said the takeaway for companies: "This government cannot be trusted when it asks an institution to come to the rescue."

"This is a toxic, toxic … regulatory environment that's been created by the powers that be in Washington," said Frenkel, also a former Securities and Exchange Commission lawyer who now heads corporate litigation as a partner at Shulman Rogers.

—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC. CNBC's Kate Kelly and Reuters contributed to this report.

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