JPMorgan's Alabama Debacle Set to Cost Bank $1.5 Billion

The biggest U.S. bank by assets agreed to forgive $842 million of debt owed to it by Jefferson County, Alabama, where it took the lead in arranging risky securities deals that pushed the county into the largest U.S. municipal bankruptcy in November 2011.

That agreement follows a $722 million settlement in 2009 with the U.S. Securities and Exchange Commission related to the Jefferson County financing. JPMorgan's total costs amount to a quarter of the $6.2 billion trading loss in 2012 from corporate-credit bets by a trader known as the London Whale. The episode prompted an outcry in Washington and challenged Chief Executive Officer Jamie Dimon's reputation as a savvy leader.