| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 Asia Economy


How to use our RSS feed

Follow Finfacts on Twitter

Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.


Finfacts is Ireland's leading business information site and you are in its business news section.


Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News


Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News




Content Management by interactivetools.com.

News : US Economy Last Updated: Oct 21, 2013 - 10:49 AM

JP Morgan Chase agrees $13bn settlement with US Department of Justice
By Finfacts Team
Oct 21, 2013 - 3:23 AM

Email this article
 Printer friendly page
James Dimon, chairman and CEO, JP Morgan Chase & Co., speaks during the session 'The Next Shock: Are We Better Prepared?' at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 27, 2011. © World Economic Forum swiss-image.ch/Photo by Sebastian Derungs

JP Morgan Chase & Co, America's biggest bank, reached a tentative deal this weekend to pay $13bn to end a number of civil investigations into its sale of mortgage securities before the 2008 financial crisis. However, a separate and potentially more serious criminal probe into the bank and its executives will continue.

The New York Times reports that  "on September 24, four hours before the Justice Department was planning to hold a news conference to announce civil charges against the bank over its sale of troubled mortgage investments, Mr. Dimon (Jamie Dimon, chairman and CEO) personally called one of Attorney General Eric H. Holder Jr.’s top lieutenants to reopen settlement talks, people briefed on the talks said. The rare outreach from a Wall Street CEO scuttled the news conference and set in motion weeks of negotiations that have culminated in a tentative $13bn deal, according to the people briefed on the talks."

The Wall Street Journal says the proposed pact includes $4bn to settle claims by the Federal Housing Finance Agency that JP Morgan misled federal mortgage guarantors, Fannie Mae and Freddie Mac about the quality of the mortgage securities it sold them, another $4bn in consumer relief, and $5bn in penalties paid by the bank, according to people familiar with the deal. But the Journal says the two sides remain apart on several issues related to the civil settlement, including whether the bank should have to admit that it didn't follow its own due-diligence standards in packaging the mortgages into securities it could sell, according to people familiar with the discussions.

In 2008, the bank had acquired Bear Stearns, a failing investment bank, and Seattle based Washington Mutual, a home loans operation, with the cooperation of US regulators.

The NYT says the share price rose recently on news that JPMorgan would set aside $23bn for its legal headaches. It also said the deal might also embolden the Justice Department and set a precedent for the agency’s investigations of Wall Street. Using the JPMorgan case as a template, and relying on a law that extends the legal deadline for filing certain financial fraud cases to 10 years from five, the Justice Department is planning to take action against other big banks suspected of selling troubled mortgage securities.

Last week, the Commodity Futures Trading Commission announced that JPMorgan Chase had agreed to pay $100m and admit wrongdoing to settle an investigation into market manipulation involving the bank’s multibillion-dollar trading loss in London. Last month other regulators fined teh bank $920m.

Prof Peter Morici of the University of Maryland, comments - -"JP Morgan's record $13bn tentative settlement with the Justice Department concerning misrepresented residential mortgage-backed securities does not absolve from criminal charges senior bank officials or the bank as an institution.

JP Morgan could be dismembered if several senior officers are found guilty of criminal charges or the bank as an institution engaged in fraud or other criminal activities. The resulting crippling or breakup of JP Morgan would have grave consequences for major corporations and the broader economy that rely on the institution as their primary banker, and those firms' CFOs would do well to start shopping their business elsewhere.

Also, other Wall Street institutions, such as Goldman Sachs, marketed similarly shaky securities. It must be asked: Why has all this taken five years? Why was JP Morgan singled out for such harsh treatment? Does this episode have parallels to the federal suit against Standard and Poor's, which downgraded US debt in 2011 and then was singled out among bond rating agencies by the Administration?

Much of JP Morgan's legal problems stem from its acquisitions of Bear Stearns and Washington Mutual, whereas Goldman Sachs' mortgage securities problems were manufactured within its own confines. Again why is JP Morgan treated so much more harshly, and without regard for the broader macroeconomic effects?

Much of Wall Street backed Barack Obama's bid for the presidency in 2008, and subsequently maintained distance for the 2012 campaign. Goldman Sachs has continued close ties to the Administration and the Federal Reserve.

All this raises serious questions about the exercise of prosecutorial discretion by Eric Holder's Justice Department."

Check out our subscription service, Finfacts Premium , at a low annual charge of €25

Related Articles
Related Articles

© Copyright 2011 by Finfacts.com

Top of Page

US Economy
Latest Headlines
US jobs rose by 215,000 in July; Unemployment rate stable at 5.3%
US economy grew at weak pace in Q2 2015 - Worst expansion since 1945
Decoupling of per capita GDP, productivity, private employment, and median family income in America
US economy stumbles again in 2015
Income gap highest in 30 years; No inequality rise in best-paying US firms
Fed minutes raise doubts about fragility of US recovery
Senate Democrats block trade deal authority for Obama
Five firms held 25% of top US non-financial companies cash pile in 2014
US added 223,000 jobs in April; Broad jobless rate at 10.8%
Investment struggles as dividends/ share buybacks at top US firms to exceed $1tn in 2015
US economic growth plunged in Q1 2015
Why the Fed may (almost) never raise interest rates
US jobless rate falls to 5.5%; Broad rate at 11%; Participation rate at 1978 level
US added 257,000 jobs in January; Broad jobless rate at 11.3%
US economy will soon see best years in a decade
US annualised GDP slowed sharply in final quarter 2014
US budget deficit to fall to 2.6% of GDP in 2015
US added 252,000 jobs in December; Jobless rate falls to 5.6%
US adds 321,000 jobs in November; Private sector adds 10.9m jobs in 57 months of growth
US manufacturing slowed in November
US retail spending over Thanksgiving weekend fell 11%
US consumer spending weak in October; Business investment fell again
US third-quarter GDP revised up to 3.9% annualised rate
After destroying banking secrecy US helps Swiss exporters
US oil imports from OPEC cartel at 30-year low
Tax-inverted "Irish" firm Actavis agrees to buy US Botox maker Allergan
US nonfarm payroll employment rose 214,000 in October' Jobless @ 6-year low
Swiss bankers await fallout of US tax evasion acquittal
Two PMI reports give contrasting trends on US manufacturing
US GDP increased at annualised 3.5% in third quarter of 2014
US city home price growth slowed again in August; Consumer confidence rebounded in September
US new orders for manufactured durable goods fell again in September
Loans to buy US shares at record highs
Global markets slide; US industrial production best in 3 years & jobless claims in 14-year low
US federal budget deficit dips to 2.9% of GDP in fiscal year 2014
US added 248,000 jobs in September; Jobless rate falls to 5.9%
US set to become world’s leading liquid petroleum producer again
Obama issues new rules to combat tax inversions
US Securities and Exchange Commission to pay $30m award to foreign whistleblower
Typical American household income in 2013 was below the 1989 level