Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?


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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

Signup for our daily newsletter and get our best articles emailed right to you!

Results for jpm
Capital Market Labs
3 Mar 15 08:30:54
$JPM Debt Level Trend #CML http://t.co/jnT283Aifc
Poncho C. Villanueva
3 Mar 15 08:30:24
RT @ForTraders: #J.P. Morgan, Justice Department Reach $50 Million 'Robosigning' Settlement http://t.co/1FhuwIGm32 $JPM
Wall Street.
3 Mar 15 08:29:00
RT @ForTraders: #J.P. Morgan, Justice Department Reach $50 Million 'Robosigning' Settlement http://t.co/1FhuwIGm32 $JPM
3 Mar 15 08:28:26
Francis Chou: Q4 Letter To Shareholders - Long Sears http://t.co/RJkWwyC6nI $WFC $JPM $MBI $SHLD $GM http://t.co/8pEj1Nlizs
3 Mar 15 08:28:04
#J.P. Morgan, Justice Department Reach $50 Million 'Robosigning' Settlement http://t.co/1FhuwIGm32 $JPM
3 Mar 15 08:22:06
$JPM - Prospectus Filed Pursuant to Rule 424(b)(2) (424b2) http://t.co/U56k2C4g0g
things for free
3 Mar 15 08:21:49
RT ☐ Free guide to backtesting http://t.co/9KstwNqS9W $JPM $BA $BAC http://t.co/9KstwNqS9W
Carolyn B Miciano
3 Mar 15 08:17:10
Example of conditional orders on #google http://t.co/l5BOj6kZvC $JPM $BA $BAC
Breaking News Now
3 Mar 15 08:12:02
$JPM: JPM to Pay $50M for Improper Mortgage Practices: http://t.co/hBHkYGGSBh
3 Mar 15 08:03:26
$XLB $GM $DUST $BABA Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/N1e9rAesNv
OM Daily Wisdom
3 Mar 15 08:03:13
$YHOO $AMZN $FB $V Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/q8CRNPcQv4
3 Mar 15 08:02:34
$RSX $XOM $X $T $F Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/GLdXJj5PqI
Carolyn B Miciano
3 Mar 15 08:01:09
Free guide to backtesting http://t.co/ttmGhHF7L4 $JPM $BA $BAC
3 Mar 15 07:57:02
$JPM: Great-West Adds $1.3 Billion of Assets in Equitable Risk Deal: http://t.co/JSOG7pW6f6
3 Mar 15 07:52:03
$JBLU $JPM: JetBlue Sees LaGuardia Expansion as End to Airport Limits Mulled: http://t.co/FCFsriIGi6
Lauren Holmes
3 Mar 15 07:51:29
Is $C or $JPM the best bank to buy right now? Read our thoughts here http://t.co/huaLsH8iDZ
Mortgage Direct US
3 Mar 15 07:47:58
JPMorgan Chase will pay $50M to compensate #homeowners in #bankruptcy over improper practices http://t.co/71HfW6sAk3 #Housing $JPM
Perfor Mance
3 Mar 15 07:38:52
Option Millionaires: uranium-pinto-beans: $JPM he Department of Justice's U.S. Trustee Program has http://t.co/LivogQQOjY
3 Mar 15 07:31:15
there needs to be a second wave of selling in the banks. $JPM, $C and $BAC are all green.
3 Mar 15 07:28:14
$JPM - Prospectus Filed Pursuant to Rule 424(b)(2) (424b2) http://t.co/1LQ9ioD41k
3 Mar 15 07:22:02
$ACT $AGN $JPM $WFC: Activis bond books heard topping US$65bn: source: http://t.co/tInnHRCDqE
Lauren Holmes
3 Mar 15 07:10:48
Which is the best bank, $MS $C $JPM or $WFC? Check what we think here http://t.co/huaLsH8iDZ
3 Mar 15 07:07:44
$TWTR $FB $LNKD $MA Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/Lbu6Pz8Ig3
OM Daily Wisdom
3 Mar 15 07:07:39
$AAPL $NFLX $TSLA Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/ntul1gvFBg
C. Allen
3 Mar 15 07:07:10
$GOOG $AAPL $TWTR Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/VeaRgNJ0Hr
3 Mar 15 07:05:55
$TSLA $GOOGL $USO $C Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/b6ON6VqgDt
Stock Hobbit
3 Mar 15 07:05:48
$TLT $IBB $GPRO $MA Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/WKj4myno6B
3 Mar 15 07:04:49
$CSL $SNE $MRK $ORI Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/IHSQyuXZXv
Duncan R. Thomas
3 Mar 15 07:03:40
$SPY $QQQ $BABA $FB Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/TfTk1tFM0O
3 Mar 15 07:03:37
$NFLX $PCLN $GPRO Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/L6K19bvpnl
Jared Brightman
3 Mar 15 07:02:40
$AAPL $QQQ $SPY $IBM Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/igN7Ev0arR
LJ Keane
3 Mar 15 07:02:10
$DUST $GLD $SPY $QQQ Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/lJhk1Xg9YE
3 Mar 15 07:01:52
$TNA $TZA $UGAZ $Z Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/CDJD8GBtK0
3 Mar 15 07:01:39
$GOOG $SPY $QQQ $MA Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/c2lupYTVqF
3 Mar 15 07:01:37
$QQQ $SPY $XBI $SSO Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/98AhfJjQMa
J. Martin
3 Mar 15 07:01:07
$AMZN $BAC $BIDU $UA Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/Kb9WGJ3eaK
Ralph J. Roberts
3 Mar 15 07:01:05
Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/rFB2HerxRn
Wall Street
3 Mar 15 07:01:05
http://t.co/iQWRYpOCQJ....Top penny stocks, NYSE, and NASDAQ trades from the stock market today. +296% last week. $JPM $AEGR $AMAT $BSX
Danny Habbyshaw
3 Mar 15 07:01:01
$JNUG $DUST $GM $F Tuesday Morning Market Video – $JPM $AAPL $GOOGL $GDX $FCX $GLD $BIDU http://t.co/Xw09nHG9IK
Andy Heppelle
3 Mar 15 06:59:34
RT @Chase: $JPM’s Thasunda Duckett named one of @BlackEnterprise’s most powerful women: http://t.co/qLmaiaDRS3 #wobiz http://t.co/SJEZ2ZHMsH
Octaviano  Tatau
3 Mar 15 06:58:43
RT @Chase: $JPM’s Thasunda Duckett named one of @BlackEnterprise’s most powerful women: http://t.co/qLmaiaDRS3 #wobiz http://t.co/SJEZ2ZHMsH
Carolyn B Miciano
3 Mar 15 06:54:18
20% to 50% in a week or two - powerful swing trades http://t.co/AlNie2v0ci $JPM $BA $BAC
Hotpage News
3 Mar 15 06:48:56
At #JPMorgan Chase, Business Tilts Toward the Consumer Side and Away From Wall St. - $JPM - NYT - http://t.co/uhWEEGAd3B
3 Mar 15 06:48:56
At #JPMorgan Chase, Business Tilts Toward the Consumer Side and Away From Wall St. - $JPM - NYT - http://t.co/wguvQDnPyg
3 Mar 15 06:47:38
"@BeckyHiu: Bright spot today is: big banks. $JPM $GS $BAC $C all green"
Becky Hiu
3 Mar 15 06:45:55
Bright spot today is: big banks. $JPM $GS $BAC $C all green
Quantpost Financial
3 Mar 15 06:33:06
$C $JPM $WFC $BAC News: "Our Bank Of America: Ripe For A Short Sale $C $JPM …" http://t.co/0dKvQd7qoI Board view: https://t.co/w8PMO8lRHe
Financial Stocks
3 Mar 15 06:33:04
Our Bank Of America: Ripe For A Short Sale http://t.co/H9jltlCvYG $C $JPM $WFC $BAC
Long & Short Ideas
3 Mar 15 06:33:03
Our Bank Of America: Ripe For A Short Sale http://t.co/4hQoNqNQzm $C $JPM $WFC $BAC
Seeking Alpha
3 Mar 15 06:33:03
Our Bank Of America: Ripe For A Short Sale http://t.co/CDZo02OfvV $C $JPM $WFC $BAC
  +Follow February 11, 2014 1:41PM



blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.