JPMorgan Chase (NYSE:JPM) may be on the hook for as much as $6 billion, if a U.S regulator has its way.
Earlier this month, the U.S. Department of Justice launched an investigation over JPMorgan's sale of mortgage-backed securities to Fannie May and Freddie Mac ahead of the financial crisis, but the bank is balking at what would be the largest ever settlement by any bank.
The Federal Housing Finance Agency already sued JPMorgan and 17 other banks in 2011 over the quality of nearly $200 billion worth of instruments sold to Fannie and Freddie. Those securities soured so badly that the government stepped in to rescue the two agencies.
Separately, as part of a series of moves that hone in on the JPMorgan's dealings during the latter part of the last decade, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, according to a New York Times report, are also mobilizing to slap the lender with a series of penalties and fines.
The action could happen as early as next month, according to unidentified sources close to the issue, in response to how JPMorgan handled its customers during the recession.
Of those accusations, the most costly centres around JP Morgan's alleged practise of luring credit card customers into buying products to protect them from identity theft, but with false promises attached.
The two authorities would force the bank to acknowledge its mistakes, under the terms of the civil orders. The consumer bureau would levy a $20 million fine, while the comptroller’s office would ask for $60 million.
Adding to the list of post-crisis scrutiny and unabated punishment is a bribery investigation by the Securities and Exchange Commission into JPMorgan’s hiring practices in China. The agency is examining whether the bank hired the children of powerful Chinese officials so it could score lucrative business in the country.
The bank is also getting attention for a trading scandal in London, known as the London whale, that generated more than $6 billion in losses related to alleged manipulation of commodities markets. The penalties in that case could be in the $500 million to $600 million range. The Justice Department, Securities and Exchange Commission, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and the U.K's Financial Conduct Authority are all involved.
On Tuesday, a former JPMorgan trader was arrested in Spain, weeks after the United States government charged him and another former bank employee with falsifying bank records and inflating the value of derivative trades to hid losses.
JPMorgan is rising 0.4 percent to $50.77 in mid-morning trading.