This Day On The Street
Continue to site
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

JPM Sees Light at End of Tunnel: KBW

NEW YORK ( TheStreet) -- KBW's global research team estimates big banks' legal tab from civil lawsuits by the Federal Housing Finance Agency, as well as lawsuits tied to manipulation of LIBOR and foreign exchange markets, could hit $100 billion.

After spewing your coffee, please take comfort, as this is an estimate for "the next decade."

According to a KBW research report published Wednesday, global investment banks have set aside $44 billion for legal expenses since the first quarter of 2012. "The banks have provisioned for more cases than they have settled for, something we feel the banks are often not given credit for," the analysts, led by Andrew Stimson, wrote.

A slew of global investment banks disclosed their cooperation with European and U.S. regulators' massive probe of possible manipulation of foreign exchange markets. Meanwhile, the LIBOR manipulation scandal continued to unfold with the privately held Rabobank of Utrecht, the Netherlands, settling for over $1 billion and its CEO resigning. The first of a slew of banks settling with regulators while admitting it had manipulated rates submissions for the compiling or the London Interbank Offered Rate was Barclays (BCS), which coughed up $454 million in June 2012, soon followed by the resignation of its CEO and Chairman

The Federal Housing Finance Agency (FHFA) which regulates Fannie Mae (FNMA) and Freddie Mac (FMCC) in September 2011 sued 17 global banks at home and abroad over the sale of $196.2 billion in private label mortgage-backed securities to the government sponsored mortgage giants.

Most of those lawsuits are still unfolding, but JPMorgan Chase (JPM - Get Report) last month settled with the FHFA, agreeing to pay $5.1 billion to Fannie and Freddie, while not admitting any wrongdoing.

The FHFA just wanted the money for the GSEs, which were taken under government conservatorship in September 2008. But JPMorgan is continuing to negotiate with the Department of Justice to settle other criminal and civil investigations of the company's mortgage lending and sales activities and will probably have to admit to some wrongdoing, according to myriad leaks to the media, which also peg the overall settlement amount at $13 billion, including the money being forked over to the FHFA.
1 of 2

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
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SCGLY $7.61 -4.04%
JPM $62.56 -1.93%
AAPL $95.18 1.64%
FB $117.43 -0.96%
GOOG $692.36 -0.84%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs