JP Morgan Chase reported something unusual today: a loss. The bank has been forced to set aside a huge cash reserve to cover expected fines and related legal costs. In the most recent quarter, the set-aside was so large — $9.1 billion — that it produced a net loss for the bank.
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Today, a rare quarterly loss for the nation's biggest bank, JP Morgan Chase. As NPR's Dan Bobkoff reports, the bank is spending billions of dollars on litigation.
DAN BOBKOFF, BYLINE: It's not in JP Morgan Chase's nature to lose money. They made profits all through the financial crisis, bolstering both the reputations of the bank and its CEO Jamie Dimon. So a $380 million loss last quarter is noteworthy.
JAMES DIMON: It's very painful, OK, for me personally.
BOBKOFF: That's Dimon talking to industry analysts this morning. But this loss comes from something very specific: litigation. JP Morgan Chase expects so many lawsuits and regulatory actions in the coming months and so many fines and penalties that it is building up of a fortress of a fund to pay for it all, setting aside more than $9 billion last quarter alone, to create a settlement war chest of $23 billion.
JP Morgan has already agreed to pay nearly a billion dollars in fines following last year's London whale trading loss. The bank is facing a laundry list of other legal problems stemming from everything from Chinese bribery allegations to whether it knew about Bernie Madoff's Ponzi scheme to Libor manipulation. And it's working out a potential $11 billion settlement with the government over mortgage-backed securities. The majority of those losses stem from Washington Mutual and Bear Stearns, two banks the government pressured JP Morgan to buy during the crisis.
On today's call, CEO's Dimon said the Securities and Exchange Commission told him it would consider not holding JP Morgan responsible for Bear Stearns' losses, and he still believes his company is not responsible by contract for WaMu's problems.
DIMON: But that does not mean that people can't come after you.
BOBKOFF: But his first quarterly loss in years did not rattle investors. JP Morgan's stock barely budged today. Dan Bobkoff, NPR News, New York. Transcript provided by NPR, Copyright NPR.