The New York Times early Wednesday reported JPMorgan was being investigated by federal prosecutors over whether or not the company took the proper steps required by law to alert regulators over concerns about Bernard Madoff before Madoff's Ponzi scheme was discovered. The report cited unnamed sources.
Madoff in June 2009 was sentenced to 150 years in prison, after pleading guilty for orchestrating the largest Ponzi scheme in U.S. history.
The report came less than two weeks after current and former officers involved with JPMorgan's now-infamous " London Whale" hedge trading losses of at least $6.2 billion were grilled by the Senate Permanent Subcommittee on Investigations.In its report about the London Whale matter, the Senate Permanent Subcommittee on investigations, chaired by Senator Carl Levin (D., Mich.), made several recommendations, including the immediate implementation of the Volcker Rule, "to stop high risk proprietary trading activities and the build-up of high risk assets at federally insured banks and their affiliates." According to the Times, "at least eight federal agencies are investigating the bank." JPMorgan Chase previously reported in its annual 10-K filing that its expenses for litigation reserves during 2012 totaled $3.7 billion, increasing from $3.2 billion in 2011.
Bank Stocks Pull Back
The broad indices ended mixed, after the National Association of Realtors reported its pending home sales index declined by 0.4% to 104.8% in February, although the index was still 8.4% higher than a year earlier. Economists on average expected pending home sales for February to increase by 1% from January, according to Zacks. While it may seem strange after so many years of pressure on home prices from a glut of houses for sale, an inventory shortage has developed in many U.S. regions and is limiting sales, according to NAR chief economist Lawrence Yun. The NAR report followed a report from CoreLogic on Tuesday, saying, shadow inventory -- distressed properties not yet listed for sale -- was declining sharply. "Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50 percent from current levels," in order to bring inventories to normal levels, Yun said. "Most local home builders are small businesses and simply don't have access to capital on Wall Street," he said, adding that "clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."
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