JP Morgan is currently in talks with the department of justice regarding a settlement payout of about $11 b in fine on its mortgage backed securities transactions in the past.
It is also in the news regarding its London Whale fiasco. The losses due to aggressive bets on credit default swaps trades were estimated at $5.4 b, which later were reported to be much higher; in addition, now fines have been levied to the tune of $920 m for violating securities laws as key information regarding the trades were withheld from the board.
Too much of losses and too much of payouts; it is troubling times for JPM for sure.
Many of the investment banks have been under the radar, but not punished adequately, for their reckless behavior: aggressive (proprietary) trading, rogue trading, insider trading, speculative trading. Top executives who are the real culprits keep doing the stuff they are used to. The documentary film, inside job, shows how the financial system collapsed and how top managers got away.
Back to JPM which earned about $23 b during the last four quarters. If that $11 b materializes, about 50% of its earnings will be dusted. But then it had some $593 b of cash as of 30 June 2013, which will be of some use now, albeit at the cost of its shareholders.
It would surely like to pay up and forget. What we can say, grow up?
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