JPMorgan $13B Accord: Biggest U.S. Settlement Ever

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Oct. 21 (Bloomberg) -- Credit Suisse's Moshe Orenbuch, FBR Capital's Paul Miller and Bloomberg's Dawn Kopecki discuss JPMorgan facing the biggest U.S. settlement in history. They speak on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Jamie bought the shares under a lot of pressure from washington.

Is it coming back to haunt him?

That is a big part of what is happening.

We do not know how much the mortgage bonds at issue were legacy jpmorgan, bear stearns and washington mutual.

We know a of it was while mu -- was wamu.

The company was pressured heavily to buy it.

The criminal investigation in california is 100% jpmorgan legacy.

That i cannot blame on others.

Investors need to keep that in perspective.

Not the jpmorgan is being criminalized here.

They have their own problems they did have their own problems.

Trying to clear that up.

A lot of this covers the time from 2005-2 thousand seven.

We do not have specific details.

Cleans up some of the mess from the fdic.

They purchased washington mutual out of receivership on the fdic, but we do not know if this covers the bonds at issue with the receivership.

This could be an entirely different fdic altogether.

$13 billion, a staggering amount of money.

Do you think the worst is effectively over?

Investors seem to be taking it in stride today.

The $13 billion number is a good headline.

The $4 billion consumer relief is already factored into reserves at jpmorgan.

That is been writing down mortgages.

The $9 billion is a big number but does not clean the plate.

It gets them through big hurdles, yes.

California, stuff going on out there.

The fdic.

I think there will be more of the litigation stuff out there as the government used the banks as a personal piggy bank.

What is the future for a ceo like jamie dimon if in fact the government will continue to knock on its door?

It does not matter if it is jamie dimon or someone else.

I think it is just that these big banks made it through the crisis ended bad things.

We all know that.

They have been fined in suit all over again for the same stuff.

When will it end?

I wish we could say tomorrow.

This is not closer in my book.

As you try to model embers in the future, part of the problem is there was an admission of wrongdoing.

How do you try to do that as you model the numbers in your own work?

In addition to the 9 billion they set out, 15 billion in the legal reserve as -- prior to this.

Another 15 billion available for various things.

Some of the things to which you are probably referring they are ready be encompassed in the 15 million dollars.

It is a bigger number than 9 billion.

Perhaps this helps to explain why investors are shaking this off today.

Jpmorgan disclosed last quarter that they had $23 billion of legal reserve.

When you factor in the 13 billion, it will not translate because 13 billion will be tax- deductible, some not.

This might amount to a $9 billion hit to earnings or reserves after all is said and done.

At the end of the day, they still have at least another 10 million or more left in the legal reserves to cover other matters they expect over the next wealth months.

As we understand it, that would cover former employees, possibly not current ones.

Still tracking that's on the criminal investigation.

They took a big hit.

They reported their first loss under jamie dimon on october 11. what is the difference between what bob diamond went through at barclays and what jamie dimon is going through now?

On time and was forced to resort -- reside -- resigned.

Might he face a similar fate?

As far as i understand it, the libor scandal has more serious charges of executive of barclays but the number was large but not nearly as big as what jpmorgan has artie paid.

Nowhere near where it the mortgage bonds mess is.

Still being investigated for possible bribery charges for hiring practices and asia.

Criminal investigation for manipulating energy markets.

Another criminal investigation out there.

This is jpmorgan.

So there are a number of investigations this does not cover.

By the way, we're not even talking about the other banks.

As we look at bank of america, there is some other pending settlements.

Can you tell us your view on what is happening at bank of america.

The same fha suing is bank of america through countrywide sold a lot more securities.

Some people throwing out a $5 billion number there.

What the final number will be, we do not know.

You also have the bank of new york settlement, which i guess the settlement hearings will start up in november.

You will probably see headlines there.

If that gets ok, that goes a long way to the debt for bank of america.

That is a big number.

If the judge rejects the settlement, that opens up a can of worms for new negotiations.

There is still stuff out there we are very concerned about.

Wells fargo?

Wells fargo has paid probably the least amount.

They did not do a lot of subprime and securities.

They have paid some fines, but we think they are probably relatively safe on the issues.

F are these stocks buys now that we are getting all of this out or do you step aside?

We have a buy on jpmorgan.

Earnings power consistently surprises to the upside.

Both when the industry is been strong and weak.

These things are extremely distracting to management and investors but do not change the capital or long-term earnings picture.

It is like the guy who sees his friends beating his head against the wall.

It is like why are you doing that?

Because it feels so good when i stop.

We will leave it there.

This text has been automatically generated. It may not be 100% accurate.


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