JP Morgan Deal with DOJ May Be Collapsing

Econintersect:  Reuters is reporting Tuesday evening (29 October 2013) that the $13 billion settlement deal for JP Morgan (JPM:NYSE) mortgage fraud in large part inherited with its acquisitions of Bear Stearns and Washington Mutual during the Great Financial Crisis of 2008.  The sticking points appear to be centered on two factors:

• JPM is contesting liability for Washington Mutual activities prior to the take-over.
• JPM  is reported to be backing away from agreeing to criminal inquiries into the bank’s activities before the financial crisis.

Reuters is quoting anonymous sources who are “two people familiar with the talks“.

The fact that criminal exposures are a problem for JPM is no surprise.  In the GEI News report last week (20 Otober 2013) the following was stated:

It is reported that the criminal liablity had been a major sticking point in the negotiations.

Reuters mentioned some of the areas that might be pursued by the U.S. Department of Justice:

Even if the $13 billion deal is finalized, JPMorgan faces other government probes into everything from bad derivative bets to whether it gave jobs to the children of government-owned company officials in China to secure business there.

The largest U.S. bank said earlier this month it has set aside $23 billion over time to pay for legal issues.

John Lounsbury

Sources:

• JPMorgan’s $13 billion deal hits stumbling blocks: sources (Aruna Viswanatha and David Henry, Reuters, 29 October 2013)

• JP Morgan: 13 is an Unlucky Number (GEI News, 20 October 2013)