SOURCE: The Bedford Report

The Bedford Report

October 20, 2010 11:35 ET

Major Banks Downplay Foreclosure Crisis

The Bedford Report Provides Analyst Research on JPMorgan & Goldman Sachs

NEW YORK, NY--(Marketwire - October 20, 2010) -  Major Bank stocks struggled immensely last week as investors became concerned that the mortgage foreclosure crisis could hinder the banks' earnings. Legal experts and analysts alike argued that the recent discovery of flawed documentation being used in foreclosure proceedings could force banks to buy back bad loans at their face value -- which is usually substantially above their market value -- implying there could be massive losses. The majority of the banks in question have dismissed these concerns, and it appears as though the banking industry's better-than-expected earnings being posted this quarter are calming investor's nerves. The Bedford Report examines the outlook for companies in the Major Banks Industry and provides research reports on JPMorgan Chase & Co. (NYSE: JPM) and Goldman Sachs Group, Inc. (NYSE: GS). Access to the full company reports can be found at:

When JPMorgan reported third quarter earnings last week, the company's CEO, Jamie Dimon was on the defensive regarding the foreclosure crisis. JPMorgan is in the process of reviewing documents related to 115,000 foreclosures, yet Dimon claims there is "almost no chance we made a mistake" regarding foreclosures. Dimon did concede the foreclosure mess will increase cost and they may be required to pay penalties. JPMorgan has set aside $1.3 billion for legal costs and put an additional $1 billion into a fund for buying back bunk mortgages and mortgage products. Last Wednesday JPMorgan reported that third quarter earnings rose 23% year-on-year to $4.4 billion, or $1.01 a share.

The Bedford Report releases regular market updates on the Major Banking Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us for free at  and get exclusive access to our numerous analyst reports and industry newsletters.

Yesterday Goldman Sachs announced its net income after paying preferred dividends fell 43 percent in the third quarter to $1.74 billion, or $2.98 per share. Despite the drop, earnings beat analysts' forecast of $2.32 per share. The company's CFO, David Viniar, said that Goldman's potential losses from faulty mortgages would not be large because the firm played a small role in originating and packaging such loans.

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