Of course, the $6 billion figure for the FHFA lawsuit may be far higher than the ultimate settlement amount, but when factoring in the possible fines for a "London Whale" settlement, the CFPB settlement and the $410 million in penalties and "disgorgement to ratepayers" the bank agreed to pay in its July to settle the Federal Energy Regulatory Commission's charges of energy market manipulation, JPMorgan is facing a major hit to earnings this year.
And there could be plenty of additional pain, since the bank in its second-quarter 10-Q filing said it was facing six separate DoJ investigations, along with four investigations by the SEC and three by the Commodity Futures Trading Commission.
The bank last week decided to temporarily stop adding new foreign correspondent banking relationships, in order to ease its compliance burden, according to an internal memo cited by the Wall Street Journal.
It would appear that even JPMorgan's own employees are getting in on the leak game.As part of extracting their pound of flesh from JPMorgan, the federal agencies can be expected to continue leaking like a sieve. The idea is to get the maximum number of headlines for every single event. This can mean leaking an investigation, leaking an investigation's conclusion, leaking a lawsuit or regulatory action before taking the action and announcing it publicly, leaking information about settlement negotiations and of course, leaking the settlement before it's publicly announced. This example, with seven separate steps all leading to headlines, can include a high-profile press conference for the action and another for the settlement, which for lead attorneys for the Justice Department can serve to increase face time and name recognition. Those can be very useful when furthering political careers. So what does this mean for JPMorgan Chase, which performed so well in the aftermath of the credit crisis? It could mean plenty of additional pressure for the stock over the next year. 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. Bove cited "clear risks to company earnings as a consequence of the government vendetta" against the company.
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