Topic: Growth Stocks

Wall Street Stock Forecaster Hotline – Friday, November 22, 2013

Article Excerpt

J.P. MORGAN CHASE & CO., $57.46, New York symbol JPM, has agreed to settle a number of lawsuits with the U.S. Justice Department related to securities backed by subprime mortgages. Morgan, Bear Stearns and Washington Mutual sold these investments during the pre-2008 housing boom. When real estate values fell and borrowers defaulted on their mortgages, the value of these securities plunged. Morgan acquired Bear Stearns and Washington Mutual in 2008, after they collapsed, but it is still liable for these lawsuits, which claim these companies deliberately understated the risk of these investments. Under the settlement, Morgan will pay $9 billion in cash to federal and state agencies. In addition, it will reduce the principal owed on current mortgages, reduce the payment on other loans, and demolish abandoned properties. In all, these concessions total $4 billion. The total amount of this settlement—$13 billion—is equal to 6% of Morgan’s $216.0-billion market cap (or the total value of all of its outstanding shares). The company has…