Investor’s Showing Confidence In JPMorgan Chase & Co. (NYSE:JPM)
After feeling the heat of $13 billion mortgage settlement announced on Tuesday, finally the stock of JPMorgan Chase & Co. (NYSE:JPM) soared 2% during the Thursday’s trading. The rally could be considered as an outcome of confidence, the investors opinioned in a survey conducted by Selzer & Co. on November 19th among 750 Bloomberg subscribers. Selzer is a lowa based public opinion research firm with a margin of error of +/- 3.6% points. Even investors, MoneyBeat spoke with, were also confident about JPMorgan Chase & Co. (NYSE:JPM)’s stock performance.
The Larger Picture
The six biggest U.S. banks have so far reached settlements costing more than $100 billion in aggregate, since the credit crisis. Bank of America Corp (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) are just couple of names among these banking giants. If we translate the hefty legal costs borne by banking giants, it exceeds all dividends paid to investors in past five years. The scenario remains same even in Europe where the biggest banks have spent over $77 billion in legal expenses since the financial crunch, suggest Bloomberg’s data compilation.
The Opinion Poll
JPMorgan Chase & Co. (NYSE:JPM) has set apart $28 billion in reserves since 2010 to cover such settlements, which approximately half of respondents expressed to remain at same level or may even rise. About 37% expressed that legal expenses could possibly fall from this level.
Regarding U.S. Justice Department and regulators’ settlements with banks and fines against banks were echoed as excessive and politically motivated by 38% respondents while 31% expressed them not to be sufficient to change behavior. Only 20% respondents said that to be justified by the case of wrongdoing.
Regarding the amount of penalties charged for wrongdoing, about 28% respondents said them to be too high whereas the same percentage of respondents expressed them to be rightly charged. 26% believed it to be too low in consideration to wrongdoing.