This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Feds Seek $6 Billion From J.P. Morgan: Financial Times

NEW YORK ( TheStreet) -- Federal regulators are seeking a $6 billion payment from J.P. Morgan Chase (JPM - Get Report) to settle allegations of falsely claiming loans sold to government-sponsored enterprises met required underwriting standards, according to the Financial Times.

The Federal Housing Finance Agency (FHFA) regulates Fannie Mae (FNMA) and Freddie Mac (FMCC), and in 2011 sued J.P. Morgan and 17 other banks over misrepresentations of the quality of mortgage loans sold to the two mortgage giants.

Fannie and Freddie were taken under government conservatorship at the height of the credit crisis in September 2008.

JPMorgan has refused the $6 billion settlement figure, but "expects to settle for billions of dollars," according to the unnamed sources cited in the report.

The Financial Times also said that a large percentage of the loans in question were sold by Washington Mutual and Bear Stearns, before those companies were acquired by JPMorgan. Washington Mutual was the largest U.S. bank every to fail, and was purchased from the Federal Deposit Insurance Corp. in September 2008.

The $6 billion figure from the Financial Times report is only the latest in series of negative headlines, which have kept JPMorgan Chase's stock trading at a significantly lower valuation than most other large-cap U.S. banks.

Rafferty Capital Markets analyst Richard Bove on Monday cut his rating on the bank to "hold" from "buy," while lowering his price target for the shares to $57 from $60.00. Bove cited "clear risks to company earnings as a consequence of the government vendetta" against the company.

According to JPMorgan's second-quarter 10-Q filing, there are six separate investigations by the Department of Justice against the company, along with four investigations by the Securities and Exchange Commission and three by the Commodities Futures Trading Commission.

Shares of JPMorgan Chase fell over 3% on Tuesday to close at $50.60, on a day of weakness for the overall market and especially the financial sector, as the United states geared up for a possible attack on Syria.

JPM Chart JPM data by YCharts

Interested in more on JPMorgan Chase? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
FNMA $2.36 0.42%
FMCC $2.26 0.44%
JPM $62.68 0.18%
AAPL $110.37 -1.75%
FB $88.15 -1.94%

Markets

Chart of I:DJI
DOW 16,374.76 +23.38 0.14%
S&P 500 1,951.13 +2.27 0.12%
NASDAQ 4,733.4970 -16.4820 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs