JPMorgan: Why a $13B Settlement May Not Be Enough

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Nov. 19 (Bloomberg) -- Bloomberg’s Dawn Kopecki examines JPMorgan’s record $13 billion settlement with the U.S. government over the sale of mortgage bonds and the cases still pending against the bank. She speaks on Bloomberg Television’s “Market Makers.”

Reasons to hate this agreement.

But at this point, you would have to say he is at the very least -- i don't know if i want to say excited -- perhaps relieved to get this behind him.

This settles a very large chunk of the ongoing mortgage bonds litigation that the company has right now.

A lot of it it did itself.

A lot of it is also inherited from the acquisitions of bear stearns and washington mutual.

This sets a big chunk of it back.

By all means, it is not all of it.

Is there anything still lingering?

Any overhang to be concerned about?

There is still this litigation that is going on with the fdic over the washington mutual assets or liabilities.

This will resolve some of that.

The company is agreeing to absorb the losses for that.

It has been in courts for four years now.

Who is responsible for the bad mortgage bonds and loans that washington mutual sold.

The company also still sold -- has other mortgage bond cases that it has not settled it.

As you know, they have this asia possible bribery investigation going on.

They have other investigations into criminal activity in manipulating energy markets.

There are other probes.

There was a probe into other -- all sorts of other investigations that the company itself is the only target of in addition to other banks and the industry.

The $13 billion settlement with expected to be announced as soon as today is being called an agreement.

We will see the words agree, agreement and the legal documentation.

It is knowledge jpmorgan having a lot of leverage our room to maneuver here, did it?

They didn't. and they wanted to get this off their plate.

They have set aside something like $28 billion in legal reserves since 2010. they have used up about 8 billion of it -- a billion dollars of it.

They set aside another $9 billion in pretax money in the third quarter.

They want to set aside -- settle as much as they can before the end of the year.

They will not have record earnings in 2013. they are on track to earn somewhere may be around $15 billion.

That is a guesstimate.

Maybe less than that compared to over $20 billion last year.

They are chucking up 2013 is a bad year already.

It behooves them to get as much of this settled and under their belt before the end of the year.

What about the fdic?

Jpmorgan bought a good chunk of washington mutual from the fdic and so far as i understand it expected that there was some indemnification there -- that the fdic would cover some of jpmorgan's liabilities.

We have been reporting some time that that does not look likely.

Do we know for certain what is going to happen later today?

Whatever happens today, there is still going to be a large chunk of this that is not resolved.

There is a deutsche bank case where they are doing about $6 billion to $10 billion about mortgage bonds that were purchased by clients from washington mutual.

That is not going to be resolved today.

What will be resolved and this will bear out in the documents -- cases where the fdic was asking as -- acting as a trustee on behalf of other banks that went into receivership.

We are expecting those cases.

We are waiting to get a dollar amount on that amount.

There are going to be billions more, in addition to settling these cases, there will be billions more the jpmorgan is going to be on the hook for because it is absorbing or agreeing to absorb the losses from washington mutual.

Whether or not jpmorgan should be responsible for those losses is in dispute.

That is a case for the courts to decide.

It has been ongoing for four years.

The fdic says jpmorgan bought these assets, and p liabilities as well, and they are the ones that are responsible.

Good to have you this morning.

On the west coast,

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


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