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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.

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.

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Results for jpm
Dana Jose
30 Jan 15 07:25:17
RT @jpmorgan: #TBT: The original $JPM HQ, circa 1890, when it was Drexel, Morgan & Co. One of the 1st #NYC offices w/ an elevator http://t.…
30 Jan 15 07:22:37
lookn4wins: ZIP CASH TRAIN: $JPM 200 Simple Moving Average $JPM Most recent http://t.co/heKWijE1Ht
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$RAX Hitting Buzz $TSN $JPM $ERY $SYN $VTI http://t.co/5tKsi09MwM
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$JPM 200 Simple Moving Average $JPM Most recent stock chart and technical analysis. $ABBV $JNJ $CURE $PBR $ARI http://t.co/QHlH2uqoe9
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Bank Of America - I'm Pounding The Table After The Fed Catalyst http://t.co/zeoirNfn2K $C $JPM $MS $WFC $XLF $BAC
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$V says lower fuel created a 1% point headwind to US volume. According to $JPM, this could "lead to 2-3pt drag." Good quarter though!
30 Jan 15 06:53:57
RT @WallStJesus: $JPM Jan2017 $60 C buyer this morning
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US financial / CAD bank ratio up agaiiiin $xlf $jpm $bac $wfc $ry $td
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$JPM Jan2017 $60 C buyer this morning
John Quinlan
30 Jan 15 06:45:22
@petenajarian is the volume for the Jan 2017 $60 leaps in $JPM correct at 6,800? Huge calling buying if so.
P Tempany
30 Jan 15 06:43:58
RT @fhoro: From $JPM FX Strategist this morning "The market is pricing in a 50-60% chance of another BoC cut on March 4" - #cad
Peter Bardens
30 Jan 15 06:32:03
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30 Jan 15 06:32:01
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30 Jan 15 06:27:57
From $JPM FX Strategist this morning "The market is pricing in a 50-60% chance of another BoC cut on March 4" - #cad
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30 Jan 15 06:14:15
Turn $1000 Into Million Dollars In Less Than a Year! http://t.co/vezCDY95do .. $LVS $JPM $MHYS
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$JPM $1 - 10 day trial Jason Bond Chat - http://t.co/lvxkRO4259 check us out
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$BAC $C $JPM: Carney in Davos Said to Liken Benchmark-Rigging to Frontrunning: http://t.co/HZRSsPjm2m
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James Fahey
30 Jan 15 03:46:47
RT @gary_cdo2: US Judge allows #FX benchmark antitrust case to proceed against major banks; $JPM has agreed settlement in principle http://…
30 Jan 15 03:31:07
$JPM: First-Time Junk Borrowers Returning to Europe on Slumping Costs: http://t.co/vJ2kZ0HzAC
Gary Kendall
30 Jan 15 03:24:32
US Judge allows #FX benchmark antitrust case to proceed against major banks; $JPM has agreed settlement in principle http://t.co/MPSDiHWmlz
30 Jan 15 03:16:11
$JPM New SEC Document(s) for JPMorgan Chase & Co. From our Stock News Alerts App
30 Jan 15 03:08:01
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/U1SXxFjS8u
30 Jan 15 03:08:00
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/cRfRbkmk3n
30 Jan 15 03:05:46
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/8Tky7RdE90
30 Jan 15 03:05:45
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/u3x2RVe1kW
30 Jan 15 03:05:43
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/tuiJ2ilDms
30 Jan 15 03:05:42
$JPM - Free Writing Prospectus - Filing Under Securities Act Rules 163/433 (fwp) http://t.co/JY6QJF8CjH
30 Jan 15 02:57:01
$JPM : $SHAK is 50x times covered , expects the stock up $20 on the first tick, no stock to retail
30 Jan 15 02:31:35
Yesterday's's Mid-Day Penny Stock Pick On $ETBI gained 23.27% for us! Big News: http://t.co/HIV8wkY6AM $LVS $JPM $MHYS
30 Jan 15 02:16:04
$JPM $BAC $BX $MS: Draghi's Asset-Backed Debt Revival Nowhere to Be Seen in January: http://t.co/Oy3uOf1L7K
CFA Institute Events
30 Jan 15 02:05:13
In #NOLA this March: An economic & markets outlook from @aamoros1 of $JPM - Is #SecularStagnation here to stay? http://t.co/VoaKoVZVK1
Beacon Awards
30 Jan 15 01:54:20
RT @jpmorgan: This week's $JPM reception for the 2015 @BeaconAwards was truly memorable. Good luck to all nominees. http://t.co/g98wgcOYkr
Sherilyn Balazs
30 Jan 15 01:20:10
TRADE WELL http://t.co/o6PqlxZaOF $F $GE $T $BAC $VZ $C $AA $JPM $KO $PFE $GOOG $EBAY $FB $TWTR http://t.co/4kFiDIgIeL
30 Jan 15 01:07:11
Slowly but surely some folks are nibbling into bank options especially $JPM and some $C...that's interesting..need to look into it
Stock Rocket
30 Jan 15 00:33:31
Today's Mid-Day Penny Stock Pick On $ETBI gained 23.27% for us! Big News: http://t.co/HCG2IUhNyd $LVS $JPM $MHYS
Dow Stocks
30 Jan 15 00:16:54
#Dow #stocks $JPM JPMorgan Chase Daily:1.68% Weekly:-3.33% YTD:-11.04% Trend:10 / 100 http://t.co/EovIb7gkAD
Stock Wire
29 Jan 15 23:55:29
Jefferies Rating Disclosure on JPMorgan Chase & Co. $JPM http://t.co/W8Qhp6viMg
29 Jan 15 23:41:52
How to make 120,000 chase miles in 6 months. http://t.co/eFR4CTFO75 $jpm #frequentflyer #mileageplus #creditcards
FinSentS SP500
29 Jan 15 23:11:29
$JPM:US Two rate cuts by June: JP Morgan #JPMORGAN CHASE & CO http://t.co/0NnpR8NtmN #SP500
29 Jan 15 21:21:02
$C $JPM $BAC $GS: Capitol Hill Dodd-Frank Letter, Nordic Banks: Compliance: http://t.co/q1KcBOlpiA
29 Jan 15 21:21:02
$JPM: In-House Legal Department Budgets Not Growing: Business of Law: http://t.co/xO8307cIr7
29 Jan 15 21:16:02
$JPM: Singapore Charges Forex Traders for Cheating HSBC, Deutsche Bank: http://t.co/dLW9b84VKW
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#JPM $JPM Possible Short setup #WharmonicS #Trading #Stocks http://t.co/ZBtOhiBZox
Stock Wire
29 Jan 15 20:30:53
JP Morgan Chase to eliminate 350 jobs $JPM http://t.co/DDS4NT7252
29 Jan 15 20:26:02
$JPM: Asian Currencies Fall a Fifth Month in Longest Streak Since 1998: http://t.co/CQpckTQcrF
  +Follow February 11, 2014 1:41PM



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