Will a Big Fine for Bank of America Hurt JPMorgan Chase?

It's a bit of a sleepy day for markets, with the Veteran's Day holiday keeping the bonds market closed, and no big economic announcements on tap. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) and the S&P 500 are both staying green so far this morning, as markets await the confirmation hearings for the next Federal Reserve Chair to begin on Thursday.

Bank of America woes not affecting big banks
In the banking world, both Goldman Sachs and JPMorgan Chase (NYSE: JPM  ) are in positive territory, still up following Friday's jobs report. Though rising interest rates certainly won't help the mortgage business, investors may be looking at the big banks' investments -- returns on which should get a boost from higher rates.

Even former Dow member Bank of America (NYSE: BAC  ) is on a roll, despite another piece of lousy news in its never-ending legal saga. Prosecutors in the recent "Hustle" lawsuit -- in which Bank of America was found liable for creating and selling toxic loans to Fannie Mae and Freddie Mac back in the day -- have asked a federal court to impose the maximum penalty in that case.

The $863 million requested in a filing over the weekend exceeds the losses presented by the government during the trial, according to Bloomberg. The penalty amount will be decided when the court begins hearing arguments on this issue on Dec. 5.

Doubtless, big banks like JPMorgan Chase will be keeping an eye on these developments. The biggest U.S. bank has been embroiled in its own legal drama with federal regulators lately, as it puts paid to charges of its own involvement in the pre-financial-crisis sale of toxic mortgage bonds. A legal weapon used by the government to help secure the Bank of America verdict, the Financial Institutions Reform, Recovery, and Enforcement Act, has also cropped up in JPMorgan's own recent legal negotiations with regulators. The movement toward higher success rates of government cases against big banks, coupled with escalating penalties and fines, will surely begin to rub bank investors raw as time goes on.

The toughest bank you'll ever love
Many investors are terrified about investing in big banking stocks after the crash, but the sector has one notable stand-out. In a sea of mismanaged and dangerous peers, it rises above as "The Only Big Bank Built to Last." You can uncover the top pick that Warren Buffett loves in The Motley Fool's new report. It's free, so click here to access it now.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2721453, ~/Articles/ArticleHandler.aspx, 9/30/2016 8:22:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
BAC $15.65 Up +0.49 +3.23%
Bank of America CAPS Rating: ****
JPM $66.59 Up +0.94 +1.43%
JPMorgan Chase CAPS Rating: ****