Shareholders Buckle In as JPMorgan Faces Record Penalty
Shares of JPMorgan Chase & Co. (NYSE:JPM), America’s largest bank by assets, stood their ground on Monday morning after news broke that the firm faces a tentative $13 billion settlement with the Department of Justice. Sources told Bloomberg that Chairman and CEO Jamie Dimon negotiated the terms of the deal with U.S. Attorney General Eric Holder after markets closed on Friday evening.
The deal appears to resolve claims related the sale of faulty mortgage-backed securities by subsidiaries Bear Stearns and Washington Mutual, which JPMorgan acquired in the chaos of the financial crisis.
At a glance, the charge against JPMorgan has two major downsides shareholders could react negatively to: one, the $13 billion settlement is larger than the $11 billion figure originally estimated a few weeks ago; and two, the settlement does not absolve the firm of the possibility of criminal litigation. The first is a relatively minor blow to the bank’s bottom line, but the second leaves the door open for all sorts of unattractive uncertainty.
Sources familiar with the matter told Bloomberg that Holder insisted that the possibility of criminal charges remain on the table.