JP Morgan, Nation's Biggest Bank, Paid More In Legal Costs Than Anything Else Last Quarter

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In business, you can tell what a company thinks is important by how its spends its money. The bigger the expense, the higher the priority. For example, last year, General Motors’ biggest expense was, wait for it — building cars.

On the other hand, Apple spent the biggest part of its budget not on developing new, “insanely great” devices and software, but on sales expenses. Those include building new branches of the ever-popular Apple Store and paying employees to work in them.

The financial firm Goldman Sachs’ biggest expenditure was on paying its employees, many of whom receive infamously sky-high salaries.

So what about the nation’s largest bank, JP Morgan Chase? What does this financial behemoth consider its top priority? Customer service? Employee benefits? Improving technology in its ATMs?

No, the biggest cost for the biggest bank is — legal expenses.

In the last quarter alone, JP Morgan shelled out a staggering $9.3 billion in legal fees and costs. The massive sum was the main reason why the bank showed a $380 million net loss in that time period.

Since 2012, the bank has written checks to cover its legal troubles totaling $31 billion. Of that $8 billion went to cover settlements of cases brought against the bank.

For last quarter, the bank’s legal costs consumed $39 out of ever $100 the bank took in.

Among the bank’s legal issues are its alleged misrepresentation of the home loans that backed the securities it sold in the last decade. When those loans went belly-up, the economy crashed in 2008. The bank is also suspected of manipulating bond indexes, hiring the children of prominent Chinese politicians as a way of currying favor, obstructing regulators and other similar violations.

Nonetheless, while the bank’s CEO Jamie Dimon (pictured) faces calls for his firing, he somehow retains the support of many in the financial industry.

"Jamie Dimon is one of the best C.E.O.s of any company in the world," investor Marvin C Schwartz told the CNBC financial news cable network. "It doesn't mean you can't have an accident.”

Another investor, Daniel Loeb, told CNBC that Dimon is "being used as a scapegoat and piñata to satisfy some kind of bloodlust."

SOURCES: CNBC, Quartz (2), ThinkProgress


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