RENEE MONTAGNE, HOST:
Over the past few weeks, we've been looking back at the year through numbers and this morning's number is 15 billion. That's the approximate amount of dollars JP Morgan Chase paid in fines and settlements this past year. NPR's Jim Zarroli has more.
JIM ZARROLI, BYLINE: This year, bank analyst Josh Rosner of Graham Fisher set out to calculate how much money the biggest banks have paid in fines and settlements since the 2008 financial crisis.
JOSH ROSNER: What I quickly found as I start digging through all of the filings, all of the announcements, all of the settlements, was that JP Morgan was in a far worse condition than any of the others.
ZARROLI: Rosner says as of last March, JP Morgan Chase had paid far more than any other bank because of private lawsuits, regulatory fines and settlements with the government and the dollar amount has only soared since then. In November, the bank agreed to pay $13 billion to settle charges related to the marketing of mortgage assets. John Coffee is a professor at Columbia law school.
JOHN COFFEE: I think both their CEO and their board of directors made a decision that it was - made more sense to be a peacemaker and to accept the penalty than to go down into their bunker and fight the government for several years.
ZARROLI: The $13 billion settlement was the largest ever paid to the government by a single company and it wasn't the only one JP Morgan faced. The bank paid more than a billion dollars to British and U.S. regulators over the so-called London Whale trading losses. Over the summer, it paid $410 million to settle charges it attempted to manipulate the energy markets.
JP Morgan racked up so many legal expenses, it lost money in the third quarter for the first time ever. Here with CEO Jamie Dimon in a conference call:
JAMIE DIMON: It's very painful, OK, for me personally.
ZARROLI: And JP Morgan faces a raft of other investigations having to do with alleged bribery of Chinese officials, the Bernie Madoff ponzi scheme and the so-called LIBOR scandal, which involved the manipulation of interest rates. John Coffee says none of this detracts from the fact that JP Morgan is actually a really good bank.
COFFEE: There's an irony here because JP Morgan is probably both the best capitalized and the best run bank. They were the one bank that was not crippled by the 2008 financial contagion.
ZARROLI: Why, then, does JP Morgan face all of these legal problems? Warren Buffett suggested in an interview on CNBC in October that the bank's prominence makes it something of a target for regulators.
WARREN BUFFETT: If a cop follows you for 500 miles, you're going to get a ticket. And believe me, you had a lot of cops that have been following a long time and they're going to write some tickets.
ZARROLI: Buffett noted that a lot of the bank's mortgage troubles grew out of its acquisition of two failing institutions, Washington Mutual and Bear Stearns, deals that the government encouraged. But Josh Rosner of Graham Fisher says the bank's problems go beyond that. Rosner says the bank is far too big, with too many investments in too many different places, and even Jamie Dimon can't keep track of it all.
ROSNER: Obviously, he is one of the best managers in the banking industry. The problem is that you've got a company that is about one-seventh the size of U.S. GDP and I don't know how anyone can be expected to properly manage or oversee all of the implications of that.
ZARROLI: Rosner points to incidents like the London Whale fiasco when rogue traders hid billions of dollars in derivatives losses from management. He says such incidents are signs that the bank lacks the internal controls it needs to police all of the different parts of its operations. In that sense, he says, JP Morgan Chase faces deep underlying problems it hasn't really addressed, and the mounting fines and settlements are a symptom of that. Jim Zarroli, NPR News, New York.
(SOUNDBITE OF MUSIC)
MONTAGNE: You're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.