DOJ Is Exaggerating What It Won in JPMorgan Settlement

A blog about business and economics.
Nov. 20 2013 7:46 AM

Less Than Meets the Eye in JPMorgan Settlement

Partying partying yeah.

Photo by Jemal Countess/Getty Images for Time

The final $13 billion tally that JPMorgan will pay out in various ways to settle litigation launched by the federal government and various state attorneys general is eye-popping. But there's a little bit less here than meets the eye at first glance, and a good deal less than the lead prosecutors are making there out to be in their triumphant press releases.

For starters, the money. Getting to $13 billion involves adding $9 billion in new payments to a $4 billion settlement JPMorgan already reached with the Federal Housing Finance Agency. Of the remaining $9 billion, just $2 billion takes the form of an actual fine. The $7 billion in other compensatory payments Morgan will have to make is tax-deductible, which assuming the company has smart accountants and lawyers working for it, will reduce the real pain by somewhere in the $2 billion–$3 billion range. And then backing this back out, JPMorgan can count writedowns of loans that are owned by third-party investors as constituting $2 billion worth of consumer relief even though no consumers would be relieved, and though theese writedowns are genuinely painful, they'd likely happen anyway.

The most interesting part of the affair is that the government said it was going to hold out for an admission of wrongdoing. That would set an important precedent and leave JPMorgan exposed to other kinds of litigation. But instead, Morgan seems to have managed to settle private litigation first, then get the government to agree to a "statement of facts" that doesn't involve wrongdoing per se. Jonathan Weil summarizes: "There is nothing in JPMorgan's admissions that would be damaging to the company."


All in all, it looks like a case of a medium-sized settlement being puffed up to appear as massive as possible. But relative to the scale of the litigation, this is a win for the bank.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


The World

The Budget Disaster that Sabotaged the WHO’s Response to Ebola

How Movies Like Contagion and Outbreak Distort Our Response to Real Epidemics

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

Everything You Should Know About Today’s Eclipse

An Unscientific Ranking of Really, Really Old German Beers


Welcome to 13th Grade!

Some high schools are offering a fifth year. That’s a great idea.


The Actual World

“Mount Thoreau” and the naming of things in the wilderness.

Want Kids to Delay Sex? Let Planned Parenthood Teach Them Sex Ed.

Can Democratic Sen. Mary Landrieu Pull Off One More Louisiana Miracle?

  News & Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
Oct. 23 2014 11:51 AM It Seems No One Is Rich or Happy: I Looked
The Eye
Oct. 23 2014 12:48 PM Track Your Bag and Charge Your Phone With This Carry-On Smart Suitcase
  Double X
The XX Factor
Oct. 23 2014 11:33 AM Watch Little Princesses Curse for the Feminist Cause
  Slate Plus
Oct. 23 2014 11:28 AM Slate’s Working Podcast: Episode 2 Transcript Read what David Plotz asked Dr. Meri Kolbrener about her workday.
Brow Beat
Oct. 23 2014 12:01 PM Who Is Constantine, and Should You Watch His New Show?
Oct. 23 2014 11:45 AM The United States of Reddit  How social media is redrawing our borders. 
  Health & Science
Bad Astronomy
Oct. 23 2014 7:30 AM Our Solar System and Galaxy … Seen by an Astronaut
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.