How JPMorgan’s $13 billion fine breaks down


Allegations that JPMorgan Chase misled investors about just how risky those infamous mortgage securities they were selling between 2005 and 2008 were — which after the housing bubble burst helped the economy do a belly-flop down to levels not seens since the Great Depression — has resulted in a $13 billion settlement finalized between the bank and the Justice Deprtament Tuesday.

So where is all that money, the largest sum a single company will have paid to the government at this point, going to go?

In short, America’s biggest bank will pay more than $6 billion to compensate investors, $4 billion to help struggling homeowners and the remaining $3 billion as a fine.

How $13 billion breaks down for JPMorgan:

A more thorough breakdown, according to the DOJ’s release by the Dept. of Justice:

$4 billion — relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual.

$4 billion — to settle federal and state claims by the Federal Housing Finance Agency

$2 billion — civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act

$1.4 billion — to settle federal and state securities claims by the National Credit Union Administration

$613.8 million — to settle claims by the State of New York

$515.4 million — to settle federal and state securities claims by the Federal Deposit Insurance Corporation

$298.9 million — to settle claims by the State of California

$100 million — to settle claims by the State of Illinois

$34.4 million — to settle claims by the Commonwealth of Massachusetts

$19.7 million — to settle claims by the State of Delaware

Rather than a slap on the wrist, the New York Times contends this hefty sum is more like a punch in the gut and that “prosecutors have signaled to the nation’s biggest banks that the billion- dollar mark is a floor rather than a ceiling.”

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Attorney General Eric Holder said in the statement. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. … No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.”

James Dimon, JPMorgan’s chief executive, said in a statement that the bank is “pleased to have concluded this extensive agreement … and to have resolved the civil claims of the Department of Justice and others.”

The investment site Motley Fool surmises the $13 billion amount is enough to buy another Large Hadron Collider, with plenty left over to buy twenty thousand average American homes at $200,000 a piece.