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
TheStreet Open House

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) 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.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs