Seeking Alpha

FHFA wants $6B from JPMorgan to settle MBS claims

  • UBS last month agreed to a precedent-setting $885M settlement, or more than 90% of expected losses on MBS it packaged. The notional value of paper sold by JPMorgan (JPM) is 5x larger than that of UBS, leading to a figure close to the $6B range. JPMorgan - negotiating for a lower amount - says claims against other banks allege fraud, making their offenses more serious.
  • $6B would be the high-end of what JPMorgan last year figured was its liability in the case (the suit is over $33B in MBS). The House of Dimon could await its day in court, but nearly all initial rulings have gone against the banks thus far. A settlement before the summer 2014 trial date still looks probable.
  • Watching closely will be Bank of America (BAC) and RBS, both of which have heavy exposure to the FHFA suits and have yet to settle. Morgan Stanley estimates a worst-case scenario of $3.6B for BofA vs. a base case of $2B.
Comments (7)
  • lauraiskojacobs
    , contributor
    Comments (13) | Send Message
     
    if JPM gives money to the government, where does it go?
    27 Aug 2013, 03:51 PM Reply Like
  • philipmax
    , contributor
    Comments (250) | Send Message
     
    Good point! It should go to FnF the entities that were ultimately stuck with the crap!
    27 Aug 2013, 04:34 PM Reply Like
  • kata
    , contributor
    Comments (442) | Send Message
     
    Into politicians pockets? the US govt is fast becoming a criminal enterprise specializing in strong arm tactics and extortion. And 5xs the full value of the Mbs is closer to 4B not 6, but who's counting, lol.
    27 Aug 2013, 06:01 PM Reply Like
  • kata
    , contributor
    Comments (442) | Send Message
     
    Come to think of it, lets see where it Doesn't go. It doesn't go into new loans for new businesses or new construction. It doesn't go to grow the economy or pay part of your responsibility for taxes, it doesn't reduce the unemployment rate and it doesn't stop the US govt from finding another way to take what would eventually be your money if you were a JPM shareholder and received dividends that wont be growing.
    27 Aug 2013, 06:06 PM Reply Like
  • eml7
    , contributor
    Comments (2) | Send Message
     
    Treasury via FHFA. Some more loan sharking from the F&F cash cows by our wonderful government. Wait until the suits against them hit the news...ouch
    28 Aug 2013, 09:19 AM Reply Like
  • deercreekvols
    , contributor
    Comments (5142) | Send Message
     
    Money from one hand to another. Handshakes all around. Cocktails with Jamie Dimon for the elected officials.
    Just another day for JPM.
    Pay no attention to that man behind the curtain.
    27 Aug 2013, 07:48 PM Reply Like
  • heywally
    , contributor
    Comments (177) | Send Message
     
    JPM needs the money for HFT and controlling the commodities markets. Give them a break.
    27 Aug 2013, 11:01 PM Reply Like
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