The settlement should clear away nearly all of JPMorgan’s legacy legal troubles that the bank inherited when it purchased Washington Mutual and Bear Stearns, said Erik Oja, an equity analyst with Standard & Poor’s who covers the banking industry.
“These things are never ‘one and done’ and there’ll be more civil charges, but as we have seen in the past, these sort of settlements really do help clear away most of the issues a bank might have had in the past,” said Oja, who has a “strong buy” on JPMorgan’s shares.
Mounting legal costs from government proceedings pushed JPMorgan to a rare loss in this year’s third quarter, the first under Dimon’s leadership.
On Friday last week, the company announced it had reached a US$4.5 billion settlement with 21 major institutional investors over mortgage-backed securities issued by JPMorgan and Bear Stearns between 2005 and 2008.
The investors, which include Goldman Sachs, said the bank deceived them about the quality of high-risk mortgage securities.