$16 billion.
That's how much JPMorgan Chase has paid in fines, settlements and other litigation expenses in the last four years alone.
More than half of that amount, $8.5 billion, was paid out in fines and settlements as the result of illegal actions taken by bank executives.
$8.5 billion is almost 12 percent of the net income the mega-bank brought in during the same period.
High Overhead
These figures comes from "JPMorgan Chase: Out of Control," an impressive analysis of the bank's performance by Joshua Rosner, an investment analyst at GrahamFisher. And there's more. Since Rosner published his report only last week, JPMorgan Chase has settled another dispute.
This latest agreement is with the trustee for customers of fraudulent investment firm MF Global.
The MF Global deal included a $100 million cash payout from Chase, and an agreement to waive the $417 million in claims it had made against MF Global's clients. If you add in the full amount of this agreement, the bank has given up more than $9 billion in settlements since 2009.
Now we're over 12 percent just in payouts. Throw in all the other litigation costs and the total comes to well over 20 percent of the bank's net income in a four-year period.
And illegalities aren't the only thing that's costing JPMorgan Chase's shareholders a lot of money. There's also the London Whale foul-up, an apparently illegal series of trades that's already lost the bank $6.2 billion.
Add it all up. Then throw in the massive fines JPMorgan Chase paid before 2009, but after Dimon took the helm. Then add in the likely cost of the cases which loom before the bank today. You'll find that the Price of Evil for Dimon & Co. is very high -- at least by normal standards.
Bad Company
Is "evil" too harsh a word? Merriam-Webster defines evil as "morally reprehensible," "arising from actual or imputed bad character or conduct," "causing discomfort or repulsion," or "causing harm." Which of those descriptions is not true for the leaders of an institutions that's paid billions for misdeeds such as:
- Reportedly taking MF Global's customers' money as that firm was collapsing under the weight of its own fraud;
- Closing the bank account and freezing the credit card of a hedge fund manager because he criticized its handling of MF Global on television;
- Bribing officials in Jefferson County, Alabama, which subsequently went bankrupt;
- Fraudulently submitting court documents in support of its foreclosures, using a group of untrained college students and other young people (known in the firm as "Burger King Kids") to prepare and submit the papers.
Follow the links at the bottom of the page if you want more information, but here's a sneak preview: Angels, they ain't.
The Gang That Couldn't Cheat Straight
If "evil" strikes you as too harsh you may not like the word "incompetent" either. But the Office of the Controller of the Currency, which is not known for being overly aggressive with bankers, secretly downgraded its internal assessment of the bank's management and ruled that its internal oversight "needs improvement."
The OCC found that the "Matters Requiring Attention" within the bank include its much bragged-about risk management, its money-laundering controls, audit oversight, and its valuation of its trading positions."
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