Op Ed : 13 Billion and It’s Still Better To Lie ?
JPMorgan Said to Reach $13 Billion U.S. Mortgage-Bond Settlement : Bloomberg
It does not matter. This is below the line i.e. Income Statement Profits Before Extraordinary Items. It does not affect the usual EPS which we typically use to base our stock valuation upon.
JPM US stock price is still close to historic highs which is a better deal for shareholders than if fraud had not been committed.
If fraud had not happened, the EPS over the years would have looked worse which would not have gotten its stock price to its current levels.
So we assume that after this they have bought the license to carry on and no further probes will occur except for the criminal one which would amount to little financial damage. Then we ask ourselves, can they continue to reap wondrous profits doing things the proper way ?
Think of QE and the amounts printed to salvage the economy. 13 billion is enough to pay for half a day’s of interest before a shutdown, granted that the 3 main beneficiaries will be the Fed, China and Japan ?
And we shall go on buying JPM shares because they are finally out of trouble, for the rest will be a pittance compared to this 13 billion. And yes, they can continue to make wondrous profits. Just shut down the mortgage business like Wells Fargo is doing (latest layoff number according to Mortgage Daily is 6,795 – hardly a dent in the unemployment because they can all go work for Burger King) and go on a hiring spree for the best accountants in the country who will help make the necessary entries to make the bottom line look good.