Litigation costs mount at BofA, Chase over foreclosure, mortgage issues
Legal expenses at Bank of America (BAC) and JPMorgan Chase (JPM) more than doubled for the second quarter from the previous period, according to each bank's financial documents. BofA reported $1.9 billion in litigation expenses for the second quarter, most of it related to its foreclosure and mortgage issues. It's an increase from $785 million for the previous quarter. Chase reported $1.3 billion in legal expenses for the second quarter, more than triple from the $400 million for the previous quarter and nearly double the $700 million added to reserves one year ago. However, legal expenses peaked in the fourth quarter of 2010 at $1.5 billion. The looming investigation into mishandled foreclosures at both of these banks and other major servicing shops around the country has dragged on since October 2010. Now, 10 months later, servicers and the AGs have yet to strike a settlement. "This is something that is very fluid and continues to move around," said BofA Chief Financial Officer Bruce Thompson, during a conference call with investors this week. "I think everyone realizes this would be a good thing to move forward. As we look out at what's out there, during the 2Q we did provide some litigation reserves to help address any cash type penalties. We believe we have reserves we can direct toward the settlement." Chase CEO Jamie Dimon was more direct. He told investors he wanted to end the negotiations and put the foreclosure woes behind him and the overall economy as quickly as possible. "I would do anything to get it done today, but our counsel advises us that it could take quite awhile," Dimon said. "One of the reasons to do that is it's good for the United States of America to get behind us all this stuff, to fix it, and move on. Delaying foreclosures and all the uncertainty around mortgages is not a good thing for the economy." But he added an important and almost threatening caveat. "We've got to get (the settlement) right," Dimon said. "We're not going to do it and be subject to double and triple jeopardy. We'd rather litigate it." Write to Jon Prior. Follow him on Twitter @JonAPrior.