If there’s such a thing as a wave of indifference and indecisiveness, JPMorgan Chase & Co. (NYSE:JPM) is riding it this morning. An hour into trading, shares are down by 0.19%, along with shares in Citigroup Inc. (NYSE:C) and Bank of America Corp (NYSE:BAC), while Wells Fargo & Co (NYSE:WFC) is trading in the green.
The markets can’t make up their mind which direction to head either. JPMorgan got some unsettling news on Thursday, which could be adding to the stock’s general malaise today.
Talk about toxic debt
Last Thursday, The New York Times reported that JPMorgan Chase & Co. (NYSE:JPM) could lose $1.6 billion in a deal involving a bankrupt county in Alabama. Terms of the settlement were announced on Wednesday. The losses revolve around a deal to finance repairs of the county’s failing sewer system. The county declared bankruptcy in 2011.
According to The Times: “The [bankruptcy] deal calls for [JPMorgan] to forfeit $842 million on the $1.22 billion of sewer debt that it holds, which comes on top of $647 million it forgave in termination fees on derivatives contracts with the county, and a $75 million penalty it paid to settle a complaint by the Securities and Exchange Commission.”
Foolish bottom line
There’s no word yet on whether or not JPMorgan Chase & Co. (NYSE:JPM) will appeal the ruling, so there’s a chance the bank won’t be on the hook for the entire $1.6 billion. And the $647 million in termination fees and $75 million SEC penalty may have already been accounted for along the way.
Regardless, $1.6 billion would be far from crippling for the superbank, and this shouldn’t turn out to be another London Whale. Investors should take some comfort in all of this.
The lackadaisical market in general is surprising. It was only last Friday that the Labor Department announced that initial jobless claims were down by 11,000 for the week ending June 1, news which the markets rallied strongly on. It could be that encouraging economic news also reminded investors that the Federal Reserve’s monthly bond-buying programs is set to be dialed back as the economy improves. We’re in a market where up can sometimes mean down.