The JPMorgan deal isn't done yet. The bank and the Justice Department are still quibbling about where the $13 billion settlement should go. And JPMorgan wants to insulate itself from criminal probes, which doesn't please Attorney General Eric Holder.
The Wall Street Journal reports that according to those familiar with deal discussions, the $13 billion deal is at risk of collapsing "because of disagreements related to a criminal probe of the bank and its effort to get penalties reimbursed by a government-controlled fund." Basically, JPMorgan is trying to pull a fast one, and Attorney General Eric Holder isn't having it. The bank's lawyers submitted a new version of the deal on Tuesday, which significantly increased the bank's insulation from criminal probes. Holder won't accept this new version.
JPMorgan CEO Jamie Dimon is no longer asking Holder to stop the ongoing criminal investigation (though he begged him to before). The bank's lawyers are just trying to protect the bank from further legal action against it.
The DOJ also thinks JPMorgan is coming up short on the deal. The bank agreed to pay $5.1 billion to settle with the Federal Housing Finance Agency. $1.1 billion of that will go towards resolving issues with Fannie May and Freddie Mac, specifically. But the DOJ says that $1.1 billion doesn't count towards the full $13 billion settlement. JPMorgan only wants to pay $8 billion more, but according to the DOJ, the bank owes $9 billion.
Both sides should be motivated to make this deal work. If it falls apart, JPMorgans various legal settlements will be in flux. And the DOJ will no longer be able to take credit for this record-breaking settlement. In fact, the DOJ is using the JPMorgan deal as a model to investigate and reach settlements with other banks. The success of the DOJ's mortgage fraud task force is riding on this deal.
Neither the Justice Department nor JPMorgan have commented on the negotiations.