“Almost five years after the worst throes of the financial crisis, the biggest U.S. banks face a widening array of legal challenges.

“The U.S. Department of Justice this month filed civil charges against Bank of America alleging it defrauded investors when selling mortgage-backed debt in 2008. J.P. Morgan indicated in its most recent securities filing that it is also facing government scrutiny related to sales of such securities, even as it continues to grapple with multiple inquiries into its “London Whale” trading debacle.

“Meanwhile they and other big banks continue to wrestle with investigations, regulatory actions and lawsuits related to dealings with mortgage bonds, derivatives markets and consumer-debt products. For investors, this adds up to more than just negative headlines and a tougher regulatory environment. It also means it may be some time before litigation expense stops being a drag on earnings.

“Many investors had hoped such legal charges would dwindle as the crisis receded further, especially since the top three U.S. banks by assets—J.P. Morgan Chase, Bank of America and Citigroup —have booked about $35 billion in litigation expense from 2010 to 2012.”

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