JPMorgan Chase’s Crazy Fine Tally
JPMorgan Chase is one of America’s largest and most highly regarded banks. But in the past few years, it has paid out several billion dollars to settle lawsuits from consumers and regulators.
The
nice thing about being in the financial services world is that you
never really have to say you’re sorry. Screw over customers, botch
foreclosures, run afoul of important regulations, and violate some
important rules—and the worst you’ll have to do is pay some fines or
settlements. It’s a cost of doing business, even for America’s most
highly regarded banks.
Take
JPMorgan Chase. The New York–based firm, under the leadership of
hard-charging CEO Jamie Dimon, emerged from the financial crisis in much
better shape than many of its rivals. But that doesn’t mean the bank
wasn’t involved in many of the shenanigans that helped cause the
financial crisis and have contributed to a slow recovery. In fact, in
the past few years, JPMorgan Chase has been party to a series of very
expensive legal settlements. In many recent quarters, as it rang up big
profits, the bank was forced to set aside hundreds of millions of
dollars to deal with litigation. Joshua Rosner, a financial analyst and
co-author of Reckless Endangerment, in March estimated that the company’s litigation expenses since 2009 have totaled $16 billion.
And it’s not over yet. Along with a current investigation as to whether it failed to alert authorities to suspicions about Ponzi schemer Bernie Madoff, The New York Times reported that at least eight federal agencies are currently investigating the bank.
Here are some of the highlights—or lowlights—of the bank’s settlements over the past couple of years.
Date: April 2011
Amount: $56 million
Behavior: JPMorgan was one of several banks called out in a class-action lawsuit for overcharging or wrongfully foreclosing on
active-duty military personnel. The company apologized, paid out $27
million in cash, cut interest rates on home loans and returned houses
that were wrongfully foreclosed upon.
In many recent quarters, as it rang up big profits, the bank was forced to set aside hundreds of millions of dollars to deal with litigation.
Date: June 2011
Amount: $153.6 million
Behavior: The Securities and Exchange Commission sued JPMorgan
for misleading buyers by allegedly failing to inform investors that a
hedge fund assisted in picking and betting against securities in a
collateralized debt obligation JPMorgan had sold in 2007. JPMorgan paid
$153.6 million to settle the charges without admitting or denying the
allegations.
Date: July 2011
Amount: $229 Million
Behavior: In response to a suit by federal and state authorities, JPMorgan settled allegations
that it rigged the bidding process for reinvesting bond transactions
that affected 31 state governments. The bank paid $229 million to settle
the charges without admitting or denying the allegations.
Date: August 2011
Amount: $88.3 Million
Behavior: Talk about shady dealings. The Treasury Department alleged
the banking giant violated sanction orders by conducting transactions
with people or entities tied to Iran, Sudan, Cuba, and Liberia. JPMorgan
Chase settled the charges and violations by paying $88.3 million civil
penalty.
Date: February 2012
Amount: $5.29 Billion
Behavior: JPMorgan and four other major mortgage servicers agreed to pay a combined $25 billion
to settle charges with state attorneys general, the Justice Department,
and the Department of Housing and Urban Development relating to what
Washington Attorney General Rob McKenna called years of “shoddy loan
servicing, illegal robo-signing, and faulty foreclosure processing.”
JPMorgan Chase’s share of the settlement came to $5.29 billion.
Date: February 2012
Amount: $110 million
Behavior: Along with Bank of America and a few smaller lenders, JPMorgan settled
consumer litigation that claimed the banks processed checks by
size—rather than by chronological order—so they could charge unwarranted
overdraft fees.
Date: March 2012
Amount: $150 million
Behavior: After being sued by pension funds and investors for investing
their funds in a risky structured investment vehicle that failed at the
height of the global financial crisis in 2008, JPMorgan settled the
suit without admitting wrongdoing.
Date: November 2012
Amount: $296.9 million
Behavior: The Securities and Exchange Commission charged
JPMorgan with misleading investors about the quality of mortgages that
underlay mortgage-backed securities it sold. The bank settled the
charges without admitting or denying guilt.
Date: January 2013
Amount: Unclear
Behavior: Ten banks, including JPMorgan Chase, agreed to an $8.5 billion
settlement with the Office of the Comptroller of the Currency and the
Federal Reserve over “robo-signing” and other alleged abuses of the
foreclosure process. The banks were to pay $3.3 billion to harmed
borrowers and provide a combined of $5.2 billion in assistance in the
form of principal reductions or mortgage modifications. JPMorgan Chase
didn’t disclose its share of the settlement.
Date: March 2013
Amount: $100 million
Behavior: JPMorgan Chase agreed to return
$546 million to former customers of MF Global Holdings, the investment
firm run by former New Jersey governor Jon Corzine that collapsed in
2011. While it did not admit wrongdoing, JPMorgan had been threatened
with a lawsuit if it didn’t return the cash that had been transferred
from MF Global during the firm’s chaotic final days.
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