JPMorgan

Wall Street banks are being investigated by federal authorities on whether they "deliberately mispricing a type of mortgage bond that was central to the economic turmoil," The Wall Street Journal reports. Its the first "known wide-ranging examination of mortgage-bond sales by banks in the years that followed," The Journal reports. The investigation could upset the financial recovery those institutions have made, but it also could bring some accountability regarding the mortgage-sparked 2008 financial crisis.

In another financial development, JPMorgan has agreed to settle for $2 billion criminal charges that it failed to alert the government about Bernie Madoff's Ponzi scheme, The Washington Post reports.
 

JPMorgan Chase and federal govermental officials have finalized a $13 billion settlement, which is the largest settlement with the goverment on record, The Wall Street Journal reports. The settlement resolves much of the legal liability JPMorgan faces for its role, or the role played by companies it bought up, in the economic crisis after mortgage-backed securities went south despite promises of their strength as an investment vehicle. Part of the settlement includes $4 billion in aid for distressed homeowners, the WSJ also reports.

We all like tax deductions (mortgage interest deduction, anyone?). Even though JPMorgan Chase has agreed to pay $13 billion to the Justice Department, corporate leaders also probably like the fact that they can claim a tax deduction on part of that settlement as an ordinary business expense. The Washington Post reports on the introduction of a Senate bill and a House of Representatives bill that would change "part of the law that lets companies receive tax deductions on payments made to resolve allegations of illegal conduct." Currently, companies cannot deduct portions of accords that are penalties or fines for violating the law, but  governmental "agencies, however, rarely spell out whether the entire monetary figure should be regarded as punitive."

The New York Times reported that the U.S. Department of Justice is contemplating entering a deferred-prosecution agreement with JPMorgan for the Wall Street bank allegedly turning a blind eye to Bernie Madoff's Ponzi scheme. There is no record of any other investment bank entering such an agreement to resolve criminal charges, The Times also reported.

The consequences of bringing criminal charges against JPMorgan is potential harm to the financial markets. Is JPMorgan not just too big to fail but too big to indict? But U.S. Attorney Preet Bharara argues '"I don’t think anyone is too big to indict — no one is too big to jail,”' The Times also reported.

JPMorgan was Madoff's primary bank.

JPMorgan has struck a tentative $13 billion deal to resolve civil claims related to various alleged financial wrongdoings, including paying for homeowner mortgage relief, Bloomberg reports. U.S. Attorney General Eric Holder refuses to release the investment bank for any criminal liability. "The settlement would amount to more than half of JPMorgan’s record $21.3 billion profit last year, or 1.5 times what the firm’s corporate and investment bank set aside to pay employees during this year’s first nine months," Bloomberg also reports.

Bloomberg's data shows America's six largest banks have spent $100 billion in legal costs since the 2008 financial crisis.

As JPMorgan's legal costs mount from several governmental investigations, the investment firm has set aside a $23 billion reserve fund for litigation costs, The New York Times reports. But all the bank's legal woes will be good for law firms: "Even as defense lawyers publicly complain that government regulators are being too aggressive, they privately celebrate the windfall. Law firms in New York and Washington are collectively earning many hundreds of millions of dollars representing JPMorgan in cases ranging from weak controls against money laundering to commodities trading, according to interviews with senior partners at several of top firms," The Times also reports.