Sat, Sep 28, 2013 - Page 15 News List

JPMorgan’s Dimon meets with US Attorney General

‘EMBARRASSING FOR BOARD’:JPMorgan said market fixing and the failure to supervise the London whale trades staff are things it is guilty of and must fix

Reuters

JPMorgan Chase & Co CEO Jamie Dimon met with US Attorney General Eric Holder on Thursday, seeking to make sure a possible US$11 billion settlement will end the bank’s pain from mortgage-securities probes, a source said.

The bank is close to settling many of the probes into how it sold mortgage bonds before the financial crisis, but Dimon fears that as soon as this deal is worked out other investigations will emerge, a familiar with the matter said.

It is unusual for a CEO of a company to meet with the head of the US Justice Department.

However, the bank is seeking to tamp down its legal problems as it fends off a spate of probes covering everything from possibly illegal nepotism in China to whether it hid losses from its disastrous “London whale” trades.

On the mortgage front, the Department of Justice in California, New Jersey and Philadelphia has been looking into mortgages that the bank packaged into bonds before the financial crisis.

Meanwhile, government-owned home finance giants Fannie Mae and Freddie Mac have been pressuring JPMorgan to buy back mortgage bonds that they said the bank should not have sold them.

Those claims and the investigation in California would be the two biggest pieces of any deal, another source said.

After the meeting at the US Justice Department, which lasted about an hour, Holder told reporters that he had met with representatives of JPMorgan, but did not mention Dimon by name. He declined to give details of the talks.

Speaking at a news conference on an unrelated topic, the attorney general also said that the Justice Department plans to make announcements about financial cases in the coming weeks and months.

A source familiar with the matter said a JPMorgan mortgage deal could come within days.

JPMorgan has already paid billions of dollars this year to resolve probes into areas including power market manipulation and failing to supervise employees that lost US$6 billion from the London whale trades.

Many investors see the heat on the bank as evidence of Dimon’s dysfunctional relationship with regulators.

A member of JPMorgan’s board of directors said on Thursday at a conference in Chicago that the company is determined to make amends and improve its reputation.

“We’ve got these things that we actually are guilty of and we’ve got to fix them,” said Labon Jackson, the head of the audit committee on JPMorgan’s board of directors.

“It’s embarrassing for the board,” he said.

The bank avoided the worst losses in the financial crisis, but has been under intense scrutiny since May last year, when it said it was losing money on derivatives bets that became known as the London whale trades.

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