More than half of the JPMorgan settlement amount will be tax-deductible

http://www.npr.org/blogs/thetwo-way/2013/11/19/246143595/j-p-morgan-chase-will-pay-13-billion-in-record-settlement

by Bill Chappell
November 19, 2013

In an agreement settling many U.S. claims over its sale of troubled mortgages, JPMorgan Chase will pay a record $13 billion, in a deal announced by the Tuesday. The plan includes a $4 billion payment for consumer relief, along with a payment to investors of more than $6 billion and a large fine.

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"The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges," the Justice Department says.

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More than half of the record settlement amount will be tax-deductible, the banking giant said in a conference call Tuesday.

"It's our understanding that the $2 billion penalty will not be tax-deductible," JPMorgan Chief Financial Officer Marianne Lake said, "but that the remaining $7 billion of compensatory payments will be deductible for tax purposes."

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"JPMorgan and the banks it bought securitized billions of dollars of defective mortgages. Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing [residential mortgage-backed securities] from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects.

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"Also, U.S. officials can pursue charges against some of the individuals who were involved in mortgage fraud, and they've said they might do that," NPR's Jim Zarroli told Renee Montagne on Tuesday's .

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