JP Morgan’s impending settlement with the U.S. government may result in the largest payout by a single bank ever. The payout, which is a consequence of JP Morgan’s role in the events that led to the 2008 housing and financial crisis, would surpass HSBC recent $1.92 billion money laundering penalty.
Financial publications such as Quartz and the Wall Street Journal have been reporting varying figures as to how much JP Morgan will owe the government in the settlement of cases that arose after the Department of Justice investigated its pre-2008 mortgage dealings. Initial news from the Wall Street Journal was that the company would owe $3 billion, but the figure has now reached reports of up to $11 billion.
Those figures would be paid in order to cover a wide variety of costs associated with the accusations against JP Morgan. Quartz reports that the main reason behind the lawsuits is that JP Morgan misrepresented the quality of home loans in mortgage bonds that it sold pre-2008 economic crisis, which led to the loss of $33 billion in taxpayer loan money after the government bailouts of 2008 (Fannie Mae and Freddie Mac).
The company has already paid $3.68 billion in settlements this year. $80 million was paid to regulators for credit card billing fraud. An additional $309 million in refunds was paid as a result of that case. JP Morgan also paid $1.96 billion for illegal foreclosure practices, $410 million to the Federal Energy Regulatory Committee for tinkering with the electricity market and $920 million after the London Whale fiasco.
The allegations against JP Morgan — both settled and pending — are difficult to keep track of and understand completely, so much so that Slate has published an article entitled “A Guide To Everyone Suing JP Morgan.” New investigations outside the allegedly imminent $11 billion payout to the Department of Justice include suits by the state of Massachusetts and the Securities and Exchange Commission.
JP Morgan continues to make annual profits nearly double the penalty they may owe the government, but the large settlement is a testament to the company’s role in the economic crisis that continues to linger. Whether it’s a deserved punishment or a solution to the problem remains up for debate.