Saturday, October 13, 2012

In Shadow of Lawsuits, Wells Fargo, JP Morgan Profits Surge

Posted By on Sat, Oct 13, 2012 at 2:00 PM

JP Morgan and Wells Fargo announced a surge in profits Oct. 12, the result of record-low mortgage rates and help from the Federal Reserve.

Wells Fargo's profits increased 23 percent, to $4.7 billion from $3.8 billion last quarter; JP Morgan saw earnings increase by 34 percent to $5.71 billion.

The Federal Reserve is spending $40 billion a month to keep mortgage rates low to encourage Americans to buy homes, which may be benefiting the banks more than buyers, according to the Washington Post.

Both banks, however, are facing several lawsuits: This week, Wells Fargo was served a federal lawsuit for "recklessly issuing mortgages backed by a federal insurance program," and last week, New York Attorney General Eric Schneiderman filed a civil lawsuit against JP Morgan over alleged fraud in selling mortgage-backed securities.

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