Lake said the bank was expecting net losses in its mortgage origination business during the second half of 2013, and that a "crescendo" of regulatory activity would lead to additions to third-quarter additions to litigation reserves "which will more than offset the $1.5 billion or so of consumer reserve releases."
Other recent settlements by JPMorgan include $410 million in fines and "disgorgement to ratepayers," after a subsidiary of the bank was charged by the Federal Energy Regulatory Commission with manipulating energy prices in California and the Midwest from September 2010 through November 2012.
But Rafferty Capital Markets analyst Richard Bove on Monday in a note to clients wrote that if investors were "shrugging off the recent actions by the United States government against JPMorgan Chase under the theory that the fines were expected and operating earnings will not be impacted," the investors were making "a big mistake."
"The cost could be $5.8 billion in after tax earnings or 25% of projected 2013 results," Bove wrote.Continuing his theme of a witch hunt by the government, Bove wrote that the "only victim" from the "London Whale" hedge trading losses and efforts by some JPMorgan employees initially to cover up the losses "was the shareholders of JPMorgan Chase." "Other players in the markets clearly benefitted by earning the $6 billion that JPMorgan lost. Moreover, the government, itself, suffered no loss nor did any client or counterparty in the financial markets." But in the current political and regulatory environment, regulators, Justice Department attorneys and state attorneys general have nothing to lose by making JPMorgan Chase a poster child for every bad thing any bank has ever done. The bank's "punishment" this year by regulators and the Justice Department for losses borne by shareholders during 2012 only adds to investors' losses. Bove in another note on Wednesday expanded upon this theme, writing that "the money being discussed
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