JPMorgan Chase JPMorgan Chaseis in the midst of an historic regulatory battle that could cost it $11 billion.  JPMorgan Chase CEO and Chairman, Jamie Dimon, at the Justice Department today.  The nation’s biggest bank is negotiating with the Justice Department over a series of onging investigations relating to mortgage bonds.  What makes these talks stand out more than others is the amount of money at stake: a reported $11 billion. It would be one of the biggest settlements in corporate history.  It comes just a a week after agreeing to pay $920 million over its London Whale trading disaster.  But are all these outsized settlement figures justified? Bank analyst Dick Bove doesn’t think so.  He says JPMorgan shareholders are being extorted. “You have to argue that the $920 million was a victimless crime because who other than the shareholders were hurt by it? The company still had record earnings yet the shareholders had to come up with $920 million and they did so without trial or explanation,” Bove says.  The $11 billion dollar figure in the latest talks is yet to be confirmed by the DoJ or JPMorgan Chase. The bank declined to comment.  Today CEO Jamie Dimon visited Washington DC to speak with US Attorney General Eric Holder over the matter. Earlier in the week, the bank made a settlement offer of $3 billion but the amount was rejected by Holder, according to the WSJ.  The bigger picture is that JPMorgan Chase, once the emblem of stability on Wall Street and and whose CEO was a confidant of top government officials including President Obama, is now subject to a never-ending reaming from regulators and prosecutors.  The turning point for the bank was of course its $6 billion London Whale mistake–a mistake that put the bank’s lax oversight and hubris in the spotlight. It’s a spotlight Dimon and the bank haven’t been able to shake off since as it’s been hit with a barrage of new investigations and law suits.  Think of JPMorgan Chase as the new Bank of America.  It’s not to say JPM is completely innocent in all it’s accused of but the most recent talks of an $11 billion settlement make you wonder why the matter isn’t being taken to court.  Historically, banks would much rather settle matters outside of the court system; it saves time, money and face. Plus, they don’t have to admit wrong doing.  “The bigger question is will JP admit fault as it just did in the London Whale case?,” says says Anthony Sabino a professor at St. John’s University‘s Peter J. Tobin College of Business. “Given the possible size of the settlement here, it might dig in and refuse to make any admission that would undoubtedly be used in subsequent litigation with aggrieved shareholders and others,” he adds.  But with a whopping $11 billion at stake, shouldn’t JPM be fighting this one in court? How much money and time is it actually saving here?
Is the potential $11 billion settlement on the horizon for JPMorgan justified? Dick Bove says no, and that the bank should take the case before a judge.