JPMorgan settlement could cost bank close to $9 bn

Washington/New York: JPMorgan Chase & Co's preliminary $13 billion mortgage settlement with the US government could end up costing the bank as little as $9 billion after taxes, because the majority of the deal is expected to be tax deductible, two sources said.

The deduction also means the government is getting less than it appears in this deal. Banks can often deduct legal settlements from their taxes, but cannot get tax benefits for penalties for violating laws.

JPMorgan and the US government have been negotiating the tax treatment of the settlement. The outcome could have a dramatic impact on exactly what the deal ends up costing the bank, how it is perceived by the public, and whether it becomes a model for resolving government investigations of mortgage deals at other banks.

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Reuters