Banking News: Bank of America Corp (BAC) on Defrauding Investors, JPMorgan Chase & Co. (JPM) Profits Fall by Half, Wells Fargo & Co (WFC) Insurance Managing Director

Editor’s Note: Bank of America Corp (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), UBS AG (US listing) (NYSE:UBS), American Express Company (NYSE:AXP)

Justice Sues Bank of America Over Mortgage Securities (New York Times)
The Justice Department sued Bank of America Corp (NYSE:BAC) on Tuesday, accusing the bank of defrauding investors by vastly underestimating the quality of mortgage-backed securities. The lawsuit is the latest action by President Obama’s federal mortgage task force that has vowed to hold Wall Street accountable for misconduct in the packaging and sale of mortgage securities during the housing boom. Bank of America Corp (NYSE:BAC), the Justice Department said, cloaked the risk associated with $850 million worth of securities backed by residential mortgages. In a corporate filing last week, Bank of America said it was bracing for the action.

JP Morgan profits fall by half as IFSC cost base spirals (Irish Times)
A sharp jump in the cost base at JPMorgan Chase & Co. (NYSE:JPM)’s International Financial Services Centre unit wiped out more than half its profits last year, according to accounts filed at the Companies Registration Office. JP Morgan Bank (Ireland), which provides treasury management and fund accounting services, saw its operating profits in 2012 slide from more than $26 million to just over $12 million. Most of the drop is accounted for by a $12 million rise in its operating expenses. The CRO did not make available the notes for the accounts, which would have explained the slippage further. JPMorgan Chase & Co. (NYSE:JPM), however, referred to it as a “one-off” in the preamble to the financial statements.

Wells Fargo Insurance Names Alan Boring Managing Director for Sherman Oaks (MarketWatch)
Continuing to serve the specialized insurance needs of its greater Los Angeles customers, Wells Fargo Insurance, part of Wells Fargo & Co (NYSE:WFC), named Alan Boring senior vice president and managing director for its Sherman Oaks office. Boring will lead the office’s business development, client service and sales, and cross-sell strategy for the company’s regional insurance operations. Based in Sherman Oaks, he will report to Sam Elliott, regional managing director for Wells Fargo Insurance’s West region. “I am very pleased to announce Alan’s promotion to managing director of Sherman Oaks,” said Elliott. “His company experience and extensive relationships with the greater Los Angeles business and risk management community will be an asset to our business as we continue to expand our capabilities and services in this very important market.”

Bank of America to Cut 209 Mortgage Jobs in Pittsburgh (Bloomberg)
Bank of America Corp (NYSE:BAC), the second-largest U.S. lender, told Pennsylvania regulators that it will cut 209 jobs from a unit servicing troubled mortgages. The firm is eliminating positions at 1120 Boyce Road in Pittsburgh by Sept. 30, according to a notice released yesterday on the Pennsylvania Department of Labor website. Bank of America Corp (NYSE:BAC) has announced more than 1,500 job cuts in its legacy assets and servicing division this year, shuttering facilities in Texas, New Jersey and upstate New York. The business, led by Ron Sturzenegger, had 31,700 full-time employees at the end of June. That figure will drop as the bank pushes to reduce costs caused by overdue customers.

JP Morgan buys OTC commodity derivatives business from UBS (Reuters)
U.S. bank JPMorgan Chase & Co. (NYSE:JPM), which plans to stop trading in physical commodities, has bought the over-the-counter business in commodity derivatives of Switzerland’s UBS AG (US listing) (NYSE:UBS), the banks said on Tuesday. The deal excluded precious metals and index-based trades, but included hedge positions on financial exchanges, UBS said in a statement. No financial details were released. Zurich-based UBS said in October it was closing the majority of its commodities “flow” trading business involving raw materials and financial derivatives as part of a slimming down last year, in which it withdrew from large parts of fixed income and laid off 10,000 employees.

Wells Fargo Ties Up With AmEx for Credit Card Issuing Program (Bloomberg)
Wells Fargo & Co (NYSE:WFC) will tie up with American Express Company (NYSE:AXP), the world’s biggest credit card issuer by purchases, to offer cards accepted on American Express’s network of merchants. Wells Fargo, the largest U.S. home lender, will begin a pilot program in select U.S. markets in the third quarter of 2013 before offering all customers a full program starting in the first half of 2014, the companies said in a joint statement. Financial terms of the agreement weren’t disclosed.