A settlement of $11 billion or more would mark the highest such deal ever struck by the Justice Department with a single company. The public is eyeing whether J.P. Morgan will admit wrongdoing as part of a settlement. Government negotiators have been pushing for such an admission from the company.
Mr. Dimon, whose bank weathered that crisis better than many other large financial institutions, now faces the prospect of watching government investigators try to rewrite that recent history by making J.P. Morgan offer the most-damaging admission of wrongdoing of all the major financial firms.
One scenario under discussion between Justice and J.P. Morgan would include a $7 billion cash penalty plus $4 billion to consumers. The penalty may escalate beyond $11 billion because of other outstanding cases, including one with the Federal Housing Finance Agency and another with New York Attorney General Eric Schneiderman, which could increase the ultimate settlement cost.
The U.S. government and SEC is going after people more critically. This marks an important time in history because they have never taken as serious action like this before. They’re defining their reach as regulators. Even though the act was taken overseas, something that affects the U.S. market will still be prosecuted by the SEC.
If the Justice Department extracts an admission of wrongdoing, J.P. Morgan could face private lawsuits for years to come—which would serve as costly for the bank. Even if Mr. Dimon manages to spare J.P. Morgan an admission of wrongdoing, his legacy will come under threat. His hold on the main job seems secure for now. But J.P. Morgan-watchers already are betting that Mr. Dimon will have to relinquish his chairman role.
http://online.wsj.com/article/SB10001424052702303796404579099041935922038.html?KEYWORDS=jp+morgan
-Rachel Ryu
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