Over the weekend banking giant JPMorgan Chase & Co. came to a tentative agreement with the United States Justice Department that might see an end to investigations into the company’s purportedly sordid dealings leading up to the financial crisis of the past half-decade. Principally at issue is whether or not JPMorgan employees intentionally sold mortgage-backed securities—meaning financial instruments with home and business mortgage payments as their collateral—they knew to be inherently faulty based on poorly constructed and unsoundly issued loans. While the bank’s settlement is likely to be one for the record books, it is unlikely to be the only such payment forthcoming: several other giant banks, including Bank of America, may soon face similar payments.
5 There Are at Least 8 Separate Probes Aimed at JPMorgan
The huge settlement payout likely to be completed in the coming weeks would resolve multiple different investigations into the bank’s presumed malfeasance. Three United States attorneys, two state-level attorneys general and at least three federal regulatory officials have open probes aimed at the bank. Portions of this one payment could potentially end them all, likely preventing plural future fines from adding up to more even than the sum of this one settlement.
4 This Payment Will Cause the First Quarterly Losses Under CEO Dimon
Sometimes known as Iron Man on Wall Street, JPMorgan Chase CEO Jamie Dimon has been the steady hand on the banking giant’s tiller for almost a decade now, taking over the coveted “corner office” in late 2005. Since then, the bank has seen profits in every single quarter, even during the depths of the financial crisis and recession, until the third quarter of this year, where it stands to lose several hundred million dollars. Amazingly, that will be just a bump in the road as investors still seem supremely confident in the bank.
3 JPMorgan Shares Have Outpaced Other Lenders by Almost 25%
Between the darkest depths of the national financial collapse and the end of 2012, most major lenders had seen an averaged share price increase of just under 50% (meaning a share worth one dollar in 2008 was worth $1.50 in 2012, for the record). JPMorgan shares surged an untouchable 72% during this same period, outpacing the competition by a full 24 percentage points!
2 The JPMorgan CEO and Attorney General Directly Negotiated the Settlement
In a rare example of direct and transparent negotiations between a major corporation and the United States government, Jamie Dimon and Eric Holder reportedly hashed out the details of the bank’s settlement payout during a weekend phone call. The two men reached the agreement during the last of a series of direct talks—the government chose the numbers and agreed to certain terms, namely ending the civil probes. The bank still faces several criminal investigations, though, that are not necessarily resolved.
1 The Record Settlement Payment Is Set at $13 Billion
JPMorgan Chase Company stands to pay out a figure that tops the annual gross domestic product of more than 60 nations, according to the International Monetary Fund. Four billion dollars of the massive $13 billion payout will go to consumers affected by the housing market collapse in markets where JPMorgan did business. The rest of the settlement, some nine billion dollars, will be used to settle fines and fees leveled against the bank.