JPMorgan Chase’s record $13 billion settlement over civil claims that it misleadingly sold mortgage-backed securities won’t deter most big-ticket investors, even though the settlement, reached Friday, doesn’t absolve the bank from potential criminal liability.
Ken Langone, the billionaire founder of Home Depot, told Bloomberg News that the settlement marks a good opportunity to invest in the bank, led by CEO Jamie Dimon. The claims stem from JPMorgan’s acquisition of Bear Stearns and Washington Mutual, but the “brunt of the misbehavior occurred before Jamie or JPMorgan had anything to do with these two companies,” Langone said.
The $13 billion settlement includes $4 billion in relief for consumers hit hardest by the housing collapse in regions where the bank has branches, and $9 billion in fines and other payments, a source familiar with the deal told Bloomberg News. The settlement also includes a $4 billion payment to the Federal Housing Finance Agency over the bank’s sale of mortgage-backed securities for Fannie Mae and Freddie Mac.
Though Dimon and JPMorgan unquestionably “messed up” with the acquisition of Bear Stearns, analyst Mike Mayo told Bloomberg News, JPMorgan has done a stellar job of making it through the financial crisis and has seen a 72 percent jump in share price since the end of 2008.
“Jamie Dimon will remain Iron Man on Wall Street,” Mayo said. “He’s still seen as very strong, with investors’ interests at heart.”
Last week, the bank reached an agreement to sell 1 Chase Manhattan Plaza, a 2.2 million-square-foot Lower Manhattan office tower, to Chinese conglomerate Fosun International for $725 million. [Bloomberg News] – Hiten Samtani