This morning, the NY Times had an article titled: JPMorgan Reveals It Faces Criminal and Civil Inquiries. The timing was funny, because we had been discussing this up in Maine over the weekend.

The dollar figures for the fines just since 2011 are pretty astounding:

$56 million (April 2011)
$153.6 million (June 2011)
$229 Million (July 2011)
$88.3 Million (August 2011)
$5.29 Billion (February 2012)
$110 million (February 2012)
$150 million (March 2012)
$296.9 million (November 2012)
X% of $8.5 billion (January 2013)
$100 million (March 2013)
$410 million FERC settlement (August 2013)

Source: Daily Beast

Assuming that the unknown amount is modest, the total fines over the past 2 years are still over $7 billion dollars in fines, just over the past two years. (And that’s before we add in the $8 billion in London Whale losses).

That’s just what was settled.

Joshua Rosner, who published a long missive here on JPM (March 2013), estimated that JPM’s legal & litigation expenses since 2009 have totaled $16 billion.

According to this March 2013 NYT article, there are “at least eight federal agencies are investigating the bank, including the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the Securities and Exchange Commission. Federal prosecutors and the F.B.I. in New York are also examining potential wrongdoing at JPMorgan.

Fortress JP Morgan? Dimon the greatest banker of his generation?

Hardly.

The data says otherwise . . .

Category: Corporate Management, Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

25 Responses to “JP Morgan: $7 Billion in Fines, $16 Billion in Legal Costs”

  1. Al_Czervik says:

    Fines paid by stockholders. Was there any cost to the people responsible?
    How is it that Jamie Dimon is still running a company that paid $6 billion in fines over a two-year period?

    • Al_Czervik says:

      Doh…$6.9 billion!

    • Hallsto says:

      Probably has to do with the profitability of taking those illegal actions. Some would call generating $14B and only repaying half a success.

    • ByteMe says:

      Because he threatened to leave if anyone dared question his pay. And the wimpy institutional investors who own JPM stock caved instead of voting him off the island.

  2. GeorgeBurnsWasRight says:

    Maybe that’s why he wasn’t a BFF with Obama in 2012.

    Question for me is: Is JPM worse than most of the other large banks, or are they all going to finally be called into account for ignoring the foreclosure laws?

  3. wally says:

    So can we now say that J P Morgan is a criminal organization and that it is engaged in racketeering?

  4. DeDude says:

    This data does not fit so well with the narrative of Obama being in the pocket of Wall Street and letting them go unpunished. It sort of fit better with the narrative of most of the criminal activity on Wall Street having been legalized or burdens of proof having been raised so high by the supreme court that it is better to cut a deal than to take them to court.

    • Lugnut says:

      It does from the stand point that the fines are merely viewed as the cost of doing business. They obviously aren’t a deterrent in and of themselves. Uncle Sam gets his vig, takes the ill gotten gains and stuffs it in his own operating accounts (heaven forbid they repatriate any monies back to wronged parties) and the game goes on. Fabulous Fab is conspicous as being the only real person from the Wall St banks seeing any sort of criminal charges since 2008. Otherwise the same thugs are still doing business the same way in the same positions at the same companies.

  5. shf6662005 says:

    This piece on JP Morgan should be read by anyone who believes that privatizing the role of Fannie Mae and Freddie Mac will somehow produce a cleaner, lower risk home mortgage industry. The top banks JPM, Citi, Wells Fargo and Bank of America originate and service a very large percentage of home mortgages in the US. They all have the same legal profile of giant fines and no acknowledgement of wrongdoing despite a significant amount of fraud. The downfall of Fannie and Freddie was to privatize them and give their executives the same incentives as the banks mentioned above leading to the same dismal result.
    Fannie and Freddie should be a utility run by the government with strict guidelines on ltv, income, and down payments carried out by an army of bean counters that receive no bonuses and are motivated by job security. All profits should go into a long-term reserve for bad mortgages not budget deficit reduction. Private mortgages can be made by anyone as long as the taxpayer is not on the hook and there is no TBTF. Otherwise, at the end of the “reform” of Fannie and Freddie we will be transformed by a complete privatization of the mortgage industry, more expensive mortgages, and eventually the same secenario of bailouts all over again and a new round of litigation with no criminal prosecution.

    • Angryman1 says:

      Obama is in 2014 cycle already
      1.Republicans alienation of hispanics hasn’t faded
      2.A number of Republican voters from 2010 are dead
      3.commented on the Martin/Zimmerman stuff when he should have had nothing to say ie getting blacks to vote in 2014
      4.going after bankers important to his white middle class flank so they will vote in 2014

      The last 2 are critical though, they didn’t vote in 2010 and Obama lost the house. That is why he is turning up the “heat”.

    • DeDude says:

      I completely agree, they need to be run as a public utility company. The only reason they ever got into problems was that they had CEO’s who cared about market share (for the sake of their own personal bonuses) and tried to regain it after the private sector became “innovative” and lured loans away from them. The current reform efforts are a twisted way of trying to get the same benefits that could be obtained by simply turning Fannie and Freddie into what they used to be. They realize that the housing sector is so critical to the economy that they cannot allow greed and free market forces to sink it – but seem oblivious to the conclusions of that insight.

  6. Tarkus says:

    Again, the often overlooked issue in TBTF is that besides causing systemic “fragility” (Taleb), the sheer SIZE raises the question – can ANY of them LEGALLY continue to grow profits?
    What would be the TRUE profitability of these entities if all legally dubious (illegal?) activity was removed from their operations?

  7. Frilton Miedman says:

    As astounding as those fines are, put them side by side with the profits made from each offense, then factor the number of times they aren’t caught.

    As someone points out above, this comes from shareholders, meanwhile their salaries continue to climb despite the majority of the country still suffering the consequences of these banks’ actions from 2008.

  8. Sovavia says:

    There is probably a positive relationship between bank size and bank shenanigans: harder to manage, easier to embezzle. Same thing for leverage: the higher the leverage, the greater the temptation to double down.

    There are definitely diseconomies of scale in banking right now, for shareholders and society at large.

    The Obama administration is a poodle. If they were tough on Wall Street, they would begin the process of breaking up the TBTF banks.

    Depending upon your perspective, bank concentration and corruption are inevitable or quite sickening, especially for the body politic.

  9. Petey Wheatstraw says:

    One really stiff jail penalty for one CEO would bring this entire industry to heel.

    Nothing will change until we use SarBox and RICO to open up a can of whup-ass on those at the top.

  10. Moss says:

    Banks are compensation scheme rackets. How much has Dimon and the rest of the ‘C’ suite been paid for their management acumen? What are their lobbying costs, keep in mind this just what they got caught doing.

  11. Willy2 says:

    Rogue bank, anyone ?

  12. stonedwino says:

    Nailed it again dude…

    wally
    August 8, 2013 at 12:53 pm

    So can we now say that J P Morgan is a criminal organization and that it is engaged in racketeering?

  13. WFTA says:

    Wake me up when we get to the part of the story where Big Leroy looks at his cellmate Jamie and asks, “Do you want to be the husband, or do you want to be the wife.”

  14. scottinnj says:

    Per Yahoo Finance NPBT for JPM for the last three years cumulatively is $78 Bn, so lets add back these $16bn to get $94bn. So these fines are about 17% of NPBT +Fines.

    Just a cost of doing business. Not that much different than the skim you pay the house at the track or what you need to pay to the cop on the beat to look the other way.

  15. [...] JP Morgan: $7 billion in fines, $16 billion in legal costs (The Big Picture) [...]

  16. U.S. steps up probe of JPMorgan over Bear mortgage bonds

    The U.S. Department of Justice has stepped up a probe in recent weeks into Bear Stearns & Co’s mortgage dealings in the run-up to the financial crisis, according to two sources familiar with the situation, raising the possibility that JPMorgan Chase & Co may face yet another case over mortgage bonds.

    Justice Department lawyers in Washington have been interviewing people linked to Bear Stearns’ mortgage securitization business, EMC Mortgage Corp, over sales of mortgage bonds going into the housing crisis, the sources said.

    JPMorgan bought Bear Stearns during the financial crisis in 2008.

    The probe, which Reuters first reported in February, has picked up steam in recent weeks and comes in addition to civil and criminal investigations of the bank by U.S. prosecutors in California over its offerings of mortgage bonds.

  17. James Shannon says:

    ….. That’s like a $50 parking ticket for not plugging the meter!
    These guys knew these costs upfront before they ever started stealing from everyone! These costs mean absolutely nothing to those who rule the roost or their stockholders!
    … and the consumers continue to bank with them!
    …. how dumb can one nation get!

  18. [...] to update the tally: Since 2011, JPM has been fined [...]