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JPMorgan's $13 Billion Settlement: Jamie Dimon Is a Colossus No More

JPMorgan’s $13 billion settlement with the government was the best deal Jamie Dimon could get. It could still hurt him
Once the white knight of the financial crisis, he’s now stuck paying the bills for Wall Street’s misdeeds
Once the white knight of the financial crisis, he’s now stuck paying the bills for Wall Street’s misdeedsPhoto illustration by Braulio Amado; Photograph by J. Scott Applewhite/AP Photo

Thirteen billion dollars requires some perspective. The record amount that JPMorgan Chase has tentatively agreed to pay the U.S. Department of Justice, to settle civil investigations into mortgage-backed securities it sold in the runup to the 2008 financial crisis, is equal to the gross domestic product of Namibia. It’s more than the combined salaries of every athlete in every major U.S. professional sport, with enough left over to buy every American a stadium hotdog. More significantly to JPMorgan’s executives and shareholders, $13 billion is equivalent to 61 percent of the bank’s profits in all of 2012. Anticipating the settlement in early October, the bank recorded its first quarterly loss under the leadership of Chief Executive Officer Jamie Dimon.

That makes it real money, even for the country’s biggest bank by assets. Despite this walloping, there’s reason for the company to exhale. The most valuable thing Dimon, 57, gets out of the deal with U.S. Attorney General Eric Holder is clarity. The discussed agreement folds in settlements with a variety of federal and state regulators, including the Federal Deposit Insurance Corp. and the attorneys general of California and New York. JPMorgan negotiated a similar tack in September, trading the gut punch of a huge headline number—nearly $1 billion in penalties related to the 2012 London Whale trading fiasco—for the chance to resolve four investigations in two countries in one stroke. In both cases, the bank’s stock barely budged; its shares have returned 25 percent this year, exactly in line with the performance of Standard & Poor’s 500-stock index.