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 Chart JPM data by YCharts


-- 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 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.

If you liked this article you might like

These Powerful Corporate Executives Could Make a Run at the Presidency in 2020

PayPal CEO Reveals How Silicon Valley Could Repair Its Broken Culture

How JPMorgan Is Helping Businesses Escape the Prison of Paper Checks

JPMorgan CEO Jamie Dimon Attacks Bitcoin Again

SEC's Cyber-Gaffe Highlights Risk of Trump Budget Cuts at Agency