Sunday 20 October 2013

JP Morgan to settle for RM 41 Billion?

"JP Morgan Chase & Co has reached a tentative $13 billion (8.03 billion pounds) deal with the U.S. Justice Department and other government agencies to settle investigations into bad mortgage loans the bank sold to investors before the financial crisis, a source familiar with the talks said on Saturday.

The tentative deal, the largest ever between the U.S. government and a single company, does not release the bank from criminal liability for some of the mortgages it packaged into bonds and sold to investors.

That had been a major sticking point in the discussions, but the government refused to budge on that issue and JPMorgan felt it had no choice but to give in, according to a second source. Until recently, the most that JPMorgan was willing to pay was closer to $11 billion.

The ongoing criminal investigation underscores how even if this settlement takes some heat off JPMorgan Chief Executive Jamie Dimon, he still has myriad regulatory issues to deal with.

The biggest U.S. bank sidestepped the worst of the financial crisis but now faces more than a dozen probes globally into everything from alleged bribery in China to a possible role in manipulating benchmark interest rates known as Libor."

The above according to a news report from Reuters. For those readers who think this might be tough to swallow for JP Morgan:

"...the bank can easily afford this deal. It said earlier this month that it has set aside a total of $23 billion to cover legal settlements. In a typical quarter, it earns about $5 billion to $6 billion, and it has some $30 billion of cash on its books."

Simply amazing the amounts of money involved. The whole concept of TBTF (To Big To Fail) seems to be wrong. Good that the regulators stick to not releasing the bank from criminal liability.

However, to put things into perspective, readers should also take note of a previous blog posting:

"Difference between Bankers and Pirates".

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