$1.3 billion in 2012. jpmorgan stock up 20%. it sounds really good, but it appears it will have to pay a price for all of that, and a record one.
13 billion dollars to settle with the u.s. government and criminal cross -- prostitution remaining on the table.
It happened after one phone call.
Jamie dimon and attorney general eric holder hashing out this agreement.
It is not yet final, we should be clear, but the deal on the civil side is done.
There are still criminal investigations, however.
Jpmorgan bought bear stearns, washington mutual, one of the largest originators of mortgaged securities.
They bought the stock of both of those companies.
Which means that not only did they get their assets, but their liabilities as well.
And remember with bear stearns, the negotiated a smart deal.
They got 30 billion of assets they did not want taken away by the fed.
But they do have those liabilities and they had to know that on some level this is going to come back to them and they were going to have to pay the piper.
If jpmorgan knew what was coming down the pike, what happened?
He and his executive group did not get the correct protections when they bought washington mutual and bear stearns.
What does that mean for the stock?
Core businesses are struggling right now.
I know they would like to believe they are in growth mode, but three of the four businesses saw sequential declines in earnings in the fourth quarter.
And consumer bank, which is where washington mutual is a contributor, their earnings were down in the third quarter.
You know, sequentially.
And you have the credit card business struggling, the branch bank business troubling, and the mortgage business struggling.
And the corporate banking, where bear stearns concluded, there numbers were down in double digits sequentially.
He has been right on the money with jpmorgan, and by the way, he's not the only one with a negative view.
Earnings this past quarter were pretty decent, but the big issue would be the legal and regulatory risk.
I think this can help with the worst behind jpmorgan when it comes to the legal risk, but not all of it.
There are still some regulatory legal and political issues, i would say.
And repercussions from other banks in the industry as well.
Bank of america is dealing with allegations as well for up to $6 billion.
Big brother banking, that is where we are right now.
Regulatory risk comes in many forms.
And regulators were absent from the scene leading up to the financial crisis.
Is that adequately priced into the shares right now?
My view of jpmorgan is that it is dead money.
I have talked about other names like morgan stanley and citigroup that have more momentum.
At is the word on jpmorgan, the company.
But what about ceo jamie dimon?
He has been taking a lot of heat.
This is him speaking at a financial conference last weekend in washington.
We have a series of problems, some self-inflicted, which we have completely confessed to the whole world.
Some are industrywide.
We will get through that.
I'm very proud of what jpmorgan does and what our people do.
I think it has integrity down to its toes.
And we have some mistakes, and honestly, you cannot expect no mistakes.
Here is a widely followed banking analyst on jamie dimon himself.
Jamie dimon won the war, and he has lost the peace.
He did great during the crisis and lost a of years.
What should he do now?
Is he being treated fairly, to the fitter -- the twitter question of the day?
Is he being treated fairly?
Jamie dimon made a mistake and he might be singled out.
His mistake was when he bought bear stearns.
He said he did not think he would have to cover the mortgage legal issues for bear.
He might have gotten some assurances from the government.
Go back to animal house.
Her member animal house?
Come on, you cannot spend your whole life worrying about your mistakes.
Make the best of it.
His advice to flanders, you trusted us, you messed up.
He should have gotten it in writing.
The legendary mike mayo, going back to the source of all security.
Quoting "animal house." [laughter] 13 billion dollars in reported settlement, is it fair yeah, why should the banks be given free lunch and a takeover?
That is certainly one take.
How about, no, the punishment does not fit the crime.
How about others?
And it goes to the potential $6 billion settlement for bank of america.
And if there is crisis, how will it convince the government if there is a bailout -- to bail -- convince a company to bail out its peers and?
That begs the question, if there needs to be a future banking bailout, will the bankers be able to trust the government?
Get it in writing.
Jamie dimon should have gotten it in writing.
He had a "comfort" letter.
What about the lawyer representing him?
The bottom line is, get it in writing.
I do fault the legal staff are not getting them adequate protection.
Where do we go from here?
The fact of the matter is, what we don't know, what is still yet to come out, or to be leaked out, frankly, is what percentage of this piper they are paying comes from jpmorgan's business it self, as opposed to from bear stearns or washington mutual.
You are saying the wrongdoing?
The message that jamie dimon shared with me what last week when we were talking about the consent decree about the london whale was basically, the government was being a little unfair to them and he was looking for a fair settlement.
They are implying at jpmorgan that the problems were at bear stearns and washington mutual, but only very little was with the legacy of jpmorgan.
I think we will have to wait and see.
I am hearing there were many eager problems at jpmorgan than they are letting on at the moment.
And the reason why that is important is?
Because he is saying, we did everyone a favor, we did what the government told us to do.
And now you are giving us this huge bill?
We will have to see when they release these documents related to this, if it is even in there, how much of the trouble was at jpmorgan itself.
I think it will surprise people more than they are letting on at the moment.
Former aol chief steve case
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