"The banking industry could be on the hook for tens of billions of dollars in legal costs if government officials apply the same regulatory standards to other banks that they have in their sweeping mortgage-fraud investigation of JPMorgan (JPM), securities analysts tell the Fox Business Network.
JPMorgan Chase & Co, the nation’s largest bank by assets, is in talks with the Justice Department to settle charges related to mortgage backed securities for $13 billion. A final deal, expected to be announced Thursday or Friday of this week, could then open up other large banks to similar litigations, analysts say.
The reason: Many of the regulatory issues government officials are pressing against JPMorgan involve its financial-crisis purchases of Bear Stearns and the bank Washington Mutual, both at the behest of the federal government.
Several other large banks also completed similar purchases at the time including Bank of America’s (BAC) acquisition of Merrill Lynch, Wells Fargo’s (WFC) purchase of Wachovia, PNC Financial’s (PNC) purchase of National City Bank, according to bank analyst #$%$ Bove of Rafferty Capital Markets."
“All of these banks are guilty of the same things as JPMorgan,” Bove said in an interview. “Forget JPMorgan, the government is going to go after every major bank with the potential civil lawsuits for tens of billions of dollars.” FWIW
Sorry for the financial post on this USB harassment forum.
I think this turn of events was quite predictable. If you look back at the last major banking/financial crisis (S&L debacle) the governement pushed many healthy banks to absorb the failing S&Ls, then when those purchase went south, the Gov. then sued the formerly healthy banks - essentially for making those purchases.
I think it is interesting how these investigations and negotiations drag on and on until finally a seemingly massive settlement is leaked...then confirmed. Most people will see this 13B fine as a serious punishment to JPM....but ost likely the entire amount has been reserved and is just sitting on the balance sheet waiting to be paid.
I remember the S&L debacle very well. I see the problem being a lack management and employee ability on the part of regulators and examiners. The regulators and examiners were on the payroll and supposedly performing their audits when the loans were made. The problem should have been corrected when the loans were made and not 8 or 10 years later when the institution does not exist.
The real question of the S&L debacle is what were the two major causes of the S&L's to fail?? Look up the lifting of Reg Q by the Fed and then RAP (not GAAP) accounting procedures allowed by the OTS before you respond and perhaps you will have two very good responses for that question.