JPMorgan’s Alabama Debacle Set to Cost Bank $1.5 Billion

(Bloomberg) JPMorgan Chase & Co. may see as much as $1.6 billion go down an Alabama sewer.

The biggest U.S. bank by assets agreed to forgive $842 million of debt owed to it by Jefferson County, Alabama, where it took the lead in arranging risky securities deals that pushed the county into the largest U.S. municipal bankruptcy, in November 2011.

That agreement follows a $722 million settlement in 2009 with the U.S. Securities and Exchange Commission related to the Jefferson County financing. JPMorgan’s total costs amount to a quarter of the $6.2 billion trading loss in 2012 from corporate-credit bets by a trader known as the London Whale.

Elizabeth C. Seymour, a bank spokeswoman, had no comment on the accord announced yesterday. If accepted by the court, it would cap almost a decade-long disaster in Alabama’s largest county, where JPMorgan initially reaped substantial fees arranging interest-rate swaps that subsequently proved tainted by municipal corruption and devastating to taxpayers during the 2008 credit crisis. ...................(more)

The complete piece is at: http://www.bloomberg.com/news/2013-06-05/jpmorgan-s-alabama-debacle-set-to-cost-bank-1-5-billion.html