JPMorgan Chase & Co. (NYSE:JPM) Settlement To Cost $13 Billion?

Posted In Politics - By John Anderson On Monday, October 21st, 2013 With 0 Comments

JPMorgan Chase & Co. (NYSE:JPM), one the largest U.S. banks, has reached preliminary agreement with the U.S. Department of Justice to pay $13 billion, for alleged fraud.

The accusations – fraudulent sales of securities funded by mortgage and intentional misleading – were levelled against both JPM and a bank it acquired, Bear Stearns.

JPM vehement – point fingers at acquiring Bear Stearns and Washington Mutual

In what is being called as rancorous discussions, JPM executives have vehemently denied wrong doing and propose that financial management of resources within-the bank, in 2008, was aimed at acquiring the solvent companies, Bear Stearns and Washington Mutual and not for any other illegal purposes.

The settlement, pegged at $13 billion, is largely tentative in nature, and was announced on Saturday.  This settlement is only against ‘civil probes’ by the Attorney Generals of California and New York for the sale of JPM ‘s mortgage-backed securities, during the period 2005 and 2007 to Fannie Mae and Freddie Mac and Bear Stearns  mortgage-backed securities to the same firms, respectively.

Criminal probes are yet pending before Attorney General of California.

Settlement statistics

Trade analysts speculate that JPM’s honchos – Jamie Dimon, Chief Executive JPM, Steve Cutler, and Counsel of the bank – have made these expensive settlements, in an attempt to waive-off or minimize criminal proceedings. According to sources, the settlement was made with Eric Holder and Tony West, the U.S. Attorney General and his Deputy, respectively.

The $13billion settlement, though higher by $2billion over previous reports, is to compensate Federal Housing Finance Agency’s claim of $4billion, another $4 billion would be contributed towards mortgage relief and the remaining $5billion will be considered as fines.

JPM focused on Asia: hires new Electronic Trading 

Even as JPM struggled with legal hassles on US shores, its focus on Asian regional restructuring of the organization continued. The company has employed Shuya Kekke from Goldman Sachs Group Inc, and will be the head of its Asia-Pacific sales department for electronic trading.

About the Author

- John Anderson is a native of Florida and has received a masters in broadcast journalism from the Medill School of Journalism at Northwestern University.

Leave a comment

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>