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What if JPMorgan Has to Pay More than $13 Billion to DOJ?

  +Follow February 11, 2014 1:41PM
Tickers Mentioned:

The myriad legal settlements paid out by investment banker JP Morgan Chase and Co. (JPM) have consistently filled financial news headlines for some time now. Not just for the scope of the company’s malfeasances, but for the sheer size of the payouts — a few hundred million here, a couple billion there, and $27 billion by the time the dust had settled.

What is often lost in all the talk of JP Morgan’s monstrous government settlements is how they didn’t really affect the bank’s profits. JP Morgan factored in the expected losses and set aside a giant wear chest for settlements prior to their maturation. The market in turn looked past the payouts to JPMorgan’s bottom line, and liked what it saw.

Indeed, despite the size of the payouts JP Morgan remained solidly in the black three out of four quarters of 2013. The banking giant outpaced the S&P 500’s already robust return, notching a 30.94 percent gain in stock price over the year versus a 29.6 percent uptick for the famous index.

The company’s investors breathed a sigh of relief after the largest of the payouts closed late last year: the one due to the Department of Justice over knowingly selling toxic mortgage securities during the Great Recession. After initially throwing out $3 billion, JP Morgan finally settled to the tune of $13 billion. While sizable, it still fit within JPMorgan’s settlement budget, and business resumed as normal.

However, the size, scope, and lack of oversight concerning what became the largest government settlement in history are all facing closer scrutiny in light of a lawsuit filed by a government watchdog group. And if the lawsuit were to prove fruitful, JP Morgan could be on the hook for a settlement they might not so easily absorb.

The watchdog group in question, Better Markets, asserts that the DOJ violated the separation clause of the Constitution when they approved the $13 billion settlement unilaterally. In the lawsuit, Better Markets states that “This (settlement agreement) was the product of negotiations conducted entirely in secret behind closed doors… No one other than those involved in those secret negotiations has any idea what JP Morgan Chase really did or got for its $13 billion because there was no judicial review or proceeding at all regarding this historic and unprecedented settlement.”

If the lawsuit is found to have merit, it could not only ratchet up JPMorgan’s government tab considerably, but change to precedent for other major banks still due to shell out their own settlements, notably Bank of America (BAC) , who are still on hold for their own rumored $8.5 billion payout.

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Results for jpm
Stock Wire
18 Apr 15 00:41:18
JPMorgan Chase & Co. Increases SABMiller plc Price Target to GBX 4000 (SAB) $JPM http://t.co/Ba8hI62d9c
17 Apr 15 23:09:03
Weird Items For Sale By The Government $HIG $LNC $COF $JPM $PNC $WFC $CMA $BAC $DJCO $BRK-A $BRK-B $BCOIN http://t.co/ZPT8H2wIMc
Open Outcrier
17 Apr 15 21:24:40
$LUV May Replace $JPM for C redit Card Program http://t.co/20wA9tUJp6 $V $AXP $MA $C
Emotional StressTest
17 Apr 15 21:00:06
What do 'investigations,' 'laundering,' and 'declined' have to do with $JPM? Read about it here: http://t.co/mnEvbiw4Yq
RMB Investor
17 Apr 15 19:40:35
RT @Stock_Battle: Be with us on http://t.co/PLrw2hWPso when the market opens! $aapl $xom $msft $googl $goog $wfc $jnj $ge $wmt $jpm $pg $pf…
Clayton R.
17 Apr 15 19:08:17
Wondering where to learn stock options? Here's the place http://t.co/gV3ZaHH3uy $F $GE $T $BAC $VZ $C $AA $JPM $KO $PFE #investing
17 Apr 15 17:57:06
$RTN $WBSN $JPM: Raytheon Said to Agree to Buy Vista's Websense for $1.9 Billion: http://t.co/MnvZ6eBXf4
Chuck Jones
17 Apr 15 17:46:39
RT @jpmorgan: Seen in #Canada: A $JPM employee captured this image of a calm evening by the water in #Vancouver. http://t.co/ncCQLDAhpZ
Stock Wire
17 Apr 15 17:37:15
JPMorgan Chase & Co. Lowers Rio Tinto plc Price Target to GBX 3300 (RIO) $JPM http://t.co/rFUade8CxV
Ninji Starburst
17 Apr 15 17:32:16
God Y r u planning for the future? R u 15? $JPM
TalkMarkets Recap
17 Apr 15 17:09:03
Weird Items For Sale By The Government $HIG $LNC $COF $JPM $PNC $WFC $CMA $BAC $DJCO $BRK-A $BRK-B $BCOIN http://t.co/EhoyeboNhH
Capital Market Labs
17 Apr 15 16:45:06
Largest Banks Debt Level 1: $FNMA 2: $FMCC 3: $JPM Chart: http://t.co/yaCg3gvT0F http://t.co/UwOBcQQORH
Capital Market Labs
17 Apr 15 16:45:02
Largest Banks Debt Level 1: $FNMA 2: $FMCC 3: $JPM Chart: http://t.co/yaCg3gvT0F http://t.co/ahH4Ir3oRd
Capital Market Labs
17 Apr 15 16:43:14
Largest Banks Largest Banks Assets 1: $FNMA 2: $JPM 3: $BAC Chart: 1. $12689207 2. $FNMA 3. $JPM Full Chart: http://t.co/UHYxhNcUNQ
Usman zahid
17 Apr 15 16:39:19
RT @Bidnessetc: Former JPMorgan Chase & Co Advisor Charged With $20 Million Fraud http://t.co/5HjUz9JUx5 $JPM http://t.co/G5sWCO2Ez8
Dr. Goose
17 Apr 15 16:34:12
Bank earnings are blossoming all over. $JPM https://t.co/5fkk7V7g7z
Financial Buzz
17 Apr 15 16:20:40
Watch Our Weekly Wrapup LIVE from the Floor of the NYSE! Are you a shareholder? https://t.co/UtLMUy4sbx $MYL $JPM $NOK $ALU $C $NFLX
Stock Wire
17 Apr 15 16:14:17
Earnings News: JPMorgan Chase & Co (JPM) Q1 Profit Jumps 12%, Wells Fargo ... $JPM http://t.co/aqVnCgNqa8
17 Apr 15 16:01:36
Dow #Stocks Trend $CVX $CAT $GS $JPM $GE $PFE $MSFT $DIS $CSCO $XOM $VZ $IBM $AAPL $INTC $UNH $BA $DD $JNJ $MCD @ http://t.co/TvzJfd0RGT
Stock Wire
17 Apr 15 15:58:17
JPMorgan Chase & Co. Cuts Teck Resources Price Target to $17.00 (TCK) $JPM http://t.co/hgbNiRKlkA
Breaking News Now
17 Apr 15 15:45:19
$JPM $GS: Banks Earn On Trading, Cutting: http://t.co/8wiDbiBykT
17 Apr 15 15:21:32
RT dan_freed: . TheStreet Exclusive: SouthwestAir may replace Chase as credit card issuer http://t.co/YOsPzGEgQA $JPM $LUV $V
Marko Hristov
17 Apr 15 15:10:27
Barracuda Eyes Bigger Bite Of Cybersecurity Market http://t.co/RLhPKITu00 via @IBDinvestors $CUDA $EMC $IBM $SYMC $CHKP $SNE $TGT $JPM $HD
Joe Woelfel
17 Apr 15 14:27:10
Southwest Airlines May Replace Chase for Credit Cards Program -- Exclusive $JPM http://t.co/zk9yWZBrsi
Dan Freed
17 Apr 15 14:26:34
. @TheStreet Exclusive: @SouthwestAir may replace @Chase as credit card issuer http://t.co/SCDgp5CT05 $JPM $LUV $V
17 Apr 15 14:09:03
Hunting For #Yield Among Bank Stocks $JPM $WFC $CIZN $FNLC $NWBI $NYCB http://t.co/KEHNXZ5gmT
Jeff Sandene, CFP®
17 Apr 15 13:51:28
4/17/15 S&P 500: -1.13% GREEN: $BMY $MAT RED: $SPY $XOM $CVX $T $VZ $JPM $WFC $DD $BAC $V $MA $PEP $IBM $MMM $PFE $JNJ $PG $MCD $GE $DIS $KO
My Financial Wisdom
17 Apr 15 13:41:15
Picking a new bank http://t.co/BVQ7cUORjf $BAC $USB $WFC $KEY $JPM $V $MA $DFS $AXP #Banking #BankingServices
LeBron James
17 Apr 15 13:40:21
RT USATODAYmoney Banks warned U.S. will strike hard at second offenders http://t.co/EHUY7zV0EO $JPM $BCS $C $BAC
it assessors
17 Apr 15 13:39:24
Banks warned U.S. will strike hard at second offenders http://t.co/4qxWDSjg7N $JPM $BCS $C $BAC
The Fly
17 Apr 15 13:31:58
Stocks end week lower amid earnings reports, fear about Greece, China $GOOG $NOK $ALU $AVP $PNRA $NFLX $JPM $G... http://t.co/BMNucUvy1i
Stock Trade Alerts
17 Apr 15 13:29:08
Banks warned U.S. will strike hard at second offenders $JPM $BCS $C $BAC http://t.co/xseTxrn3o4
17 Apr 15 13:27:06
Banks warned U.S. will strike hard at second offenders http://t.co/gTRkxillJ3 $JPM $BCS $C $BAC
Jacob Austin
17 Apr 15 13:21:40
Finance and housing markets ease out lower at the end of this week for $JPM and #BerkshireHathaway. http://t.co/e3LTjtt0Rj
Kevin Ogden
17 Apr 15 13:18:51
shawn_leamon: Ex-J.P. Morgan Chase investment adviser charged with embezzlement $JPM http://t.co/mZ2JN3WDxI via WSJ
Shawn Leamon
17 Apr 15 13:16:11
Ex-J.P. Morgan Chase investment adviser charged with embezzlement $JPM http://t.co/jYJt6ePr47 via @WSJ
Stock Wire
17 Apr 15 13:02:23
Balfour Beatty plc Receives Neutral Rating from JPMorgan Chase & Co. (BBY) $JPM http://t.co/sWN8VB7AaQ
17 Apr 15 12:59:14
Dow #Stocks Trend $CVX $CAT $JPM $GS $GE $CSCO $PFE $VZ $DIS $XOM $BA $MSFT $IBM $UNH $AAPL $INTC $DD $NKE $V @ http://t.co/TvzJfd0RGT
17 Apr 15 12:52:17
RT @CML_VisualFeed: Largest Banks Cash from Operations 1. $C 2. $JPM 3. $BAC Full Chart: http://t.co/icGQzRvhKx #CML
Capital Market Labs
17 Apr 15 12:51:13
Largest Banks Cash from Operations 1. $C 2. $JPM 3. $BAC Full Chart: http://t.co/icGQzRvhKx #CML
Jacob Austin
17 Apr 15 12:51:04
See how rate increases affect investments and financials, from J.P. Morgan. $JPM http://t.co/Dt7VU5b8XZ
17 Apr 15 12:47:19
$YHOO -3% to $44.40 .@barronstechblog #Yahoo!: #Cantor, $JPM See Upside in New #Microsoft Terms #search $MSFT $BABA http://t.co/RmkDVfVclt
17 Apr 15 12:45:26
Former JPMorgan Adviser Accused Of $20 Million Fraud - http://t.co/vYkHVAYNxz $JPM http://t.co/uyHEKBXOxp
Forex News & Tips
17 Apr 15 12:40:42
RT @equitiescom: Stocks Fall as Earnings Season Picks Up Steam $aapl $jpm $NFLX $lnkd $c $wuba $AVP $PRTY $VIRT $ETSY http://t.co/JTh0egaxi7
17 Apr 15 12:39:15
RT: http://t.co/P7sx30nNd5 #webinar The smart approach to weekly options http://t.co/HjAiMmm9CV $JPM $BA $BAC
Carolyn B Miciano
17 Apr 15 12:37:50
The smart approach to weekly options http://t.co/QQ4hBXlqBf $JPM $BA $BAC
James P Worthy
17 Apr 15 12:35:39
$JPM JPMorgan Chase: A Buy After Q1 2015 Results? http://t.co/3eR6YVmfQ5
17 Apr 15 12:34:31
Stocks Fall as Earnings Season Picks Up Steam $aapl $jpm $NFLX $lnkd $c $wuba $AVP $PRTY $VIRT $ETSY http://t.co/JTh0egaxi7
17 Apr 15 12:31:21
$JPM New SEC Document(s) for JPMorgan Chase & Co. From our Stock News Alerts App
17 Apr 15 12:28:06
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/1IgKT2jamM
  +Follow February 11, 2014 1:41PM



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