JPMorgan shares flat as investors shrug at record settlement
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Investors shrugged at news of JPMorgan Chase’s historic settlement with the federal and state agencies. Shares of the nation’s largest bank were flat in mid-day trading Wednesday.
JPMorgan announced Tuesday that it had agreed to pay $13 billion in cash and mortgage assistance to resolve allegations that it knowingly sold faulty mortgage-backed securities.
Details of the settlement had been reported for weeks ahead of time and investors Wednesday seemed to take it in stride. Shares of the company’s stock were trading dead-even at $56.15 at 9:23 a.m. Pacific Standard Time.
The bank said it was “fully reserved” for the $13-million settlement, factoring in its ability to write off a portion of the settlement from its tax liability.
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Erik Oja, an analyst with S&P Capital, said in a research note that the settlement was “a further positive step toward eventual resolution of all JPM’s mortgage-related claims.” He maintains a “strong buy” rating on the company’s stock.
JPMorgan admitted to knowingly peddling the toxic securities that helped lead to the housing bubble and the worst financial meltdown since the Great Depression. The settlement is the largest made by any single American company in history.
California, slammed by 1 million foreclosures during the mortgage meltdown, will be a major beneficiary of the deal.
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The agreement includes $4 billion to help homeowners in the Golden State and across the nation who were foreclosed on or who are struggling with their loans. California pension funds, which were big investors in mortgage securities, will receive nearly $300 million in damages to cover losses to the retirement accounts of state employees and teachers.
For the Justice Department, it was a much-needed win. Critics have lambasted the government for not doing enough to hold banks accountable for financial chicanery that helped trigger a global recession.
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