Last year, Jamie Dimon, chief executive of JPMorgan Chase & Co., was adamant that he would fight mortgage put-back claims being pursued by big investors like BlackRock. On the surface, Dimon appeared to be indicating that he was no Brian Moynihan, the chief executive of Bank of America who cut the biggest private legal settlement in the history of Wall Street, an $8.5 billion mortgage put-back settlement with a similar BlackRock-led group.
“We are going to fight repurchase claims that pretend the steep decline in home prices and unprecedented market conditions had no impact on loan performance or that seek to impose liabilities on us that we believe reside with third-party originators (or, in the case of WaMu securitizations, with the FDIC),” Dimon wrote in his letter to shareholders in April 2012. “These plaintiffs face a long and difficult road, and, as a result, litigation over these issues could take many years.”
But Dimon’s defiance came before the London Whale debacle that saw the nation’s biggest bank suffer more than $6 billion in trading losses. It was before Dimon was dragged before Congress and grilled by lawmakers. Now, a weakened Dimon has clearly made the decision to pay up to try to get JPMorgan Chase beyond the slew of legal claims and regulatory actions that have been launched against it. He is no longer talking tough.
Dimon is now reportedly negotiating with the BlackRock-led group that is seeking $5.75 billion. The two sides met last week and have been negotiating on-and-off for a year, according to The Wall Street Journal. The potential settlement comes as Dimon moves closer to inking a $13 billion settlement with the Department of Justice over JPMorgan Chase’s mortgage lending practices.
It is the tough talk of Kathy Patrick that is being listened to on Wall Street. The Houston lawyer who teaches Bible study on Sundays and sings in her church band told Forbes in 2011 that BlackRock and the other group of bondholders she represents “did not come together just to deal with Bank of America. They came together because they wanted a comprehensive industrywide strategy and an industrywide solution.” Patrick added that the group had started with Bank of America “because they thought they could achieve a template that they could extend to other institutions.” Forbes Magazine called Patrick, a partner at law firm Gibbs & Dunn, Wall Street’s new nightmare.
Bank of America’s $8.5 billion deal is still awaiting approval from a New York State judge after the likes of AIG objected to the deal, but Dimon appears to be headed toward signing onto the same template.
