Legal predicaments continue to haunt
JPMorgan Chase & Co.
). The bank has been sued by Los Angeles over its discriminatory
In the case filed in the U.S. District Court for the Central
District of California, Los Angeles is seeking unspecified damages
from JPMorgan owing to its engagement in discriminatory mortgage
practices since 2004. The banking baron is accused of denying
mortgages to the minority borrowers on the same terms as others and
also at times of providing them with loans that were beyond their
means to repay.
Hence, this led to a rise in foreclosures in Los Angeles during the
financial downturn. Further, the increased number of foreclosures
lowered Los Angeles' revenue from property taxes and at the same
time increased the expenditure for city services on these
Per the report from low-income advocacy groups, the mortgage crisis
in Los Angeles caused homeowners to lose nearly $78.8 million in
home values following over 200,000 foreclosures from 2008-2012.
Moreover, the city lost property tax revenue of roughly $481
Notably, Los Angeles has also sued
Wells Fargo & Company
Bank of America Corp.
) on similar charges in Dec 2013. Of these, Well Fargo's plea to
dismiss the case was rejected by the U.S. District Judge last week.
Deutsche Bank AG had also been previously accused by Los Angeles of
letting the foreclosed homes in low-income regions to deteriorate
into slum conditions. The case was settled in Jun 2013.
For JPMorgan, the lawsuit is yet another addition to its legal
headwinds. The company continues to face several cases and probes
regarding its business conduct preceding the financial crisis.
Though the bank has resolved many litigation issues in the past one
year, increasing legal hassles keep dragging its financials lower.
Currently, JPMorgan carries a Zacks Rank #4 (Sell).
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