Updated from 9:09 a.m. ET with early market action and additional comments from Rafferty Capital Markets analyst Richard Bove. NEW YORK ( TheStreet) -- The JPMorgan Chase ( JPM) daily leak-fest continues, and it would appear that no dollar figure is too high. The Department of Justice has rejected a $3 billion settlement offer from JPMorgan, according to a Wall Street Journal report filed Tuesday night, citing an unnamed source. The bank was seeking to resolve multiple investigations by federal and state authorities into its sales of mortgage-backed securities. The Justice Department rejected the offer as "too low for the number of cases involved," according to the report, however, "the discussions have widened to include other investigations of J.P. Morgan, and the final tally could be larger," according to the Journal's source. Considering the continuing flow of investigations and leaks, it seems clear that JPMorgan Chase needs to bite the bullet and enter into a global settlement to clean the slate with regulators, the Justice Department and state attorneys general looking to get in on the action. The highest proposed settlement figure that has been thrown out there so far is $20 billion, which, according to a New York Times DealBook report on Monday was "discussed at the bank," according to unnamed sources, although "it is not clear who proposed that number." According to DealBook, "the Justice Department and the Department of Housing and Urban Development have discussed the possibility of striking a wide-ranging settlement to conclude many of the looming mortgage investigations from federal authorities and state attorneys general." Investors' reaction last Thursday was muted, after JPMorgan entered into a $920 million settlement with four regulators over the "London Whale" hedge trading debacle. Later on Thursday, the Consumer Financial Protection Bureau said JPMorgan had already refunded $309 million to 2.1 customers, with the Office of the Comptroller of the Currency also assessing a $60 million fine, spring from the two regulators' combined investigation of its " illegal credit card practices." JPMorgan's shares only pulled back 1% last Thursday, despite the day's $1.289 billion regulatory tab, possibly because that figure paled in comparison to the estimated $6.2 billion in losses from the hedge-trading problems during 2012. The $1.289 figure was also lower than the third-quarter litigation expenses CFO Marianne Lake hinted at when speaking at a conference on Sept. 9.
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 for settlements does not belong to either management or the Board of Directors." "To this observer it appears that the government has made the decision to extort from shareholders as much money as it arbitrarily deems to be appropriate," Bove wrote. "This is not the American way and this Board of Directors has no right to hand over shareholder funds without proof that a wrong has been committed." Bove added that "shareholders need an advocate" to fight against the government's "extortion," and that "this does not appear to be the Board of JPMorgan Chase." Despite his "neutral" rating on JPMorgan's shares and his view that the regulatory actions will have a material effect on earnings, Bove estimates JPMorgan will earn $5.95 a share for all of 2013, which would be another record. He estimates the company's earnings will rise to $6.19 a share in 2014. JPMorgan Chase's shares closed at $50.32 Tuesday. Despite all the bad news, the shares were up 17% year-to-date. The shares were also cheaply valued compared to other large-cap banks, trading for 8.3 times the consensus 2014 earnings estimate of $6.08 a share, among analysts polled by Thomson Reuters. Even with the hedge-trading losses, the company earned $21.3 billion, or $5.20 a share during 2012, for its third-straight annual earnings record. But this year could be different, JPMorgan decides to make a big push to "clean the slate" by year-end, with what could be a record-setting global settlement. JPM data by YCharts