JPMorgan (NYSE:JPM) now owes the U.S government a whopping $3,000,000,000 ($3bn) to replenish and restore the FDIC’s insurance fund.
The bank alongside Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC Financial Services Group and Citigroup will collectively pay $8.2 billion to restore the emergency fund, reports Reuters.
JPMorgan is paying by far the most out of any of the banks.
Wells Fargo is to pay up to $1,800,000,000 ($1.8bn), Bank of America is expected to pay nearly $1,900,000,000 ($1.9bn), and Goldman Sachs $400,000,000 just for perspective.
“The fees are part of the FDIC’s “special assessment” implementation that it proposed in May to create a new system where the costs of protecting depositors is covered by payments from large financial institutions.
Under the new system, banking organizations with over $50 billion in total assets have to pay 95% of the special assessment, while those with under $5 billion won’t be subject to the assessment at all.
The FDIC says 113 firms are currently subject to the new rules,” reports DL.
“The proposal applies the special assessment to the types of banking organizations that benefitted most from the protection of uninsured depositors.
In general, large banks with large amounts of uninsured deposits benefitted the most from the systemic risk determination,” said the FDIC in a statement.
The FDIC’s move comes as the biggest US financial institutions tighten their control over the American banking system while many of their smaller competitors close down.
Other Banking News Today
Banks have now been hit with a whopping $549 million in penalties by the SEC for failing to maintain electronic records of employee communications.
U.S. regulators on Tuesday announced a combined $549 million in penalties against Wells Fargo and 10 other smaller or non-U.S. firms.
The Securities and Exchange Commission disclosed charges and $289 million in fines against 11 firms for “widespread and longstanding failures” in record-keeping, while the Commodity Futures Trading Commission also said it fined four banks a total of $260 million for failing to maintain records required by the agency.
“It was regulators’ latest effort to stamp out the pervasive use of secure messaging apps like Signal, Meta’s WhatsApp or Apple’s iMessage by Wall Street employees and managers.
Starting in late 2021, the watchdogs secured settlements with bigger players including JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup.
Fines related to the issue total more than $2 billion, according to the SEC and CFTC,” reports CNBC.
“Today’s actions stem from our continuing sweep to ensure that regulated entities, including broker-dealers and investment advisers, comply with their recordkeeping requirements, which are essential for us to monitor and enforce compliance with the federal securities laws,” Sanjay Wadhwa, deputy director of enforcement at the SEC, said in the release.
The firms admitted that from at least 2019, employees used side channels like WhatsApp to discuss company business, failing to preserve records “in violation of federal securities laws,” the SEC said Tuesday.
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