The US Government Is About To Put JP Morgan Through The Ringer Like You've Never Seen Before

Around May, reports surfaced that Washington was growing tired of JP Morgan.

The House of Dimon had grown unruly, said the New York Times, and regulators had warned the bank that it was in their sights.

Recently, those reports have started playing out in real time, and now that the onslaught is here, it is clear that no one thought it would be this bad.

In the last week, the regulatory siege on JPMorgan has been unlike anything the bank has experienced in recent memory. The Securities and Exchange Commission, the Department of Justice, several state Attorneys General, and the Federal Energy Regulatory Commission (FERC) all want a piece of the JP Morgan for various transgressions that it has allegedly committed in the years leading up to, and since the financial crisis.

And there could be more.

Let’s start with the most recent. Last month, JP Morgan agreed to pay a $US410 million FERC fine to settle allegations that its traders manipulated energy markets in California and the Midwest from 2010 to 2012. This has a direct connection to the New York Times’ May report, as it mentioned that one of the divisions of JPM under fire was JP Morgan Ventures Energy Corporation (JPMVEC), its commodities arm.

Back in May, the NYT reported that government documents alleged that JPMVEC’s head, Blythe Masters, had “‘knowledge and approval of schemes’ carried out by a group of energy traders in Houston” and that she had “‘falsely’ denied under oath her awareness of the problems” — so perhaps we can expect more on that front.

Masters’ division is under pressure for other parts of its business as well. According to Bloomberg, JPM was added to a lawsuit against Goldman Sachs and Glencore alleging that it purposely delayed deliveries of aluminium from its Henry Bath warehouses to suck more money out of customers. The suit was filed by filed by a Jacksonville, Florida, direct purchaser, Master Screens Inc., and a private individual.

If that’s not enough, this week reports detailed two more aggressive moves on the bank.

The SEC said that it would push JPM to not only pay a fine, but also admit wrongdoing for the 2012 $US6 billion trading loss in its Chief Investment Office. Banks don’t usually admit wrongdoing… for anything — they pay fines and they walk away. This is newly minted SEC Chief Mary Jo White’s way of saying, ‘I’m not playing ball.’

For what it’s worth, trader Bruno Iksil, the so-called ‘London Whale,’ will not be prosecuted for the loss.

The second move comes from the Justice Department. It’s reaching back even further into JP Morgan’s past for its probe, ramping up an investigation into now defunct Bear Stearns’ dealings in mortgage backed securities in the lead-up to the market’s collapse. Since JPM bought Bear at the financial crisis fire sale, it is liable for any alleged wrongdoing.

According to Reuters, U.S. prosecutors in California are looking into this matter as well. That means they’re joining the ranks of Attorneys General all over the country, like Eric Schneiderman in New York, who are still digging into the mortgage mess the financial crisis left behind. Expect more drama here as well.

This doesn’t have to be the end. In the fall Jon Corzine and another MF Global executive will go to Court to answer for the over $US1 billion of customer funds lost when the commodities brokerage went down in flames back in 2011.

MF Global banked with JP Morgan, and in its final days, there was allegedly communication between Corzine and the bank. JP Morgan wanted Corzine to ensure the money he was moving around was not untouchable customer money. It’s murky whether or not those assurances ever came.

That doesn’t even touch on all the issues regulators warned JP Morgan about in May. There are still questions about how the bank handled former client and convicted Ponzi schemer Bernie Madoff’s money, and there are questions surrounding its collection of credit card debt as well, according to the New York Times.

So hold on to your hats.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.