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Confidential Treatment

Requested by JPMorgan Chase & Co.

Page 1

March 2, 2010

Mr. Amit Pande, Accounting Branch Chief

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Mail Stop 4561

               Re:

    JPMorgan Chase & Co.

Form 8-K Filed January 15, 2010

File No. 001-05805

Dear Mr. Pande:

          We are in receipt of the letter, dated January 29, 2010, to Michael J. Cavanagh, Chief
Financial Officer of JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), from the staff (the
“Staff”) of the Securities and Exchange Commission (the “Commission”), regarding the
above-referenced filings.

          Certain confidential portions of this letter were omitted by means of redacting a portion of
the text. The word “[Redacted]” has been inserted in place of the portions so omitted. Pursuant to
the provisions of 17 C.F.R. §200.83, we have separately submitted a copy of this letter containing
the redacted portions of this letter with the Staff and have requested confidential treatment for
the redacted portions of this letter.

          To assist in your review of our responses to the comments set forth in the Staff’s letter, we
have set forth below in full the comments contained in the letter, together with our responses.

Form 8K Filed January 15, 2010

1. Please tell us, and disclose in future filings, how you establish repurchase reserves for
various representations and warranties that you have made to various parties, including the GSE’s,
monoline insurers and any private loan purchasers. Please ensure your response addresses the
following areas:

    •

    The specific methodology employed to estimate the allowance related to various
representations and warranties, including any differences that may result depending on the
type of counterparty to the contract.

    •

    Discuss the level of allowances established related to these repurchase requests and how
and where they are classified in the financial statements.

    •

    Discuss the level and type of repurchase requests you are receiving, and any trends that
have been identified, including your success rates in avoiding settling the claim.

Confidential Treatment

Requested by JPMorgan Chase & Co.

Page 2

    •

    Discuss your methods of settling the claims under the agreements. Specifically, tell us
whether you repurchase the loans outright from the counterparty or just make a settlement
payment to them. If the former, discuss any effects or trends on your nonperforming loan
statistics. If the latter, discuss any trends in terms of the average settlement amount by
loan type.

    •

    Discuss the typical length of time of your repurchase obligation and any trends you are
seeing by loan vintage.

As background information, in connection with the Firm’s loan sale and securitization
activities, JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”) makes certain representations
and warranties (“reps and warranties”) that the loans sold meet certain requirements.

The Firm primarily conducts its loan sale and securitization activities with Fannie Mae and
Freddie Mac (the “Agencies”); among the more significant reps and warranties in these
transactions are the following:

    1.

    The mortgage loan is secured by a mortgage on a 1-4 family residential real property or
a condominium unit or a unit in a planned unit development or is a co-op loan;

    2.

    Each mortgage loan was underwritten generally in accordance with standards established
by the Agencies that were in effect at the time of origination;

    3.

    Neither the borrower nor any other party to the underlying loan transaction has made
any false representation in connection with the transaction, whether or not the Firm, as
seller or servicer, was a party to, or had knowledge of, such false representation;

    4.

    Each mortgage loan with a loan-to-value ratio (“LTV”) greater than 80 percent is
covered by a primary mortgage insurance policy. Such policy is in full force and effect
and insures the excess over a 75 percent LTV, and such policy shall remain in effect until
the unpaid principal balance is reduced below 80 percent LTV; and,

    5.

    If the legal documents used to close the loan are not current documents of the
Agencies, then the seller must make further reps and warranties about its use of
nonstandard documents.

The Firm also sells loans in securitization transactions with Ginnie Mae; these loans are
typically insured by the Federal Housing Administration (“FHA”) and/or guaranteed by the U.S.
Department of Veterans Affairs (“VA”). A repurchase liability under Ginnie Mae securitizations is
reduced to the extent that securitized loans are properly insured by FHA insurance or guaranteed
by VA guarantees.

JPMorgan Chase has also engaged in loan sale and securitization activities with private loan
purchasers, but to a lesser extent than with either the Agencies or Ginnie Mae. The reps and
warranties are similar to, and in many cases based on, the standards established by the
Agencies.

Please note that the Firm has revised the order in which it has answered the Staff’s questions;
by doing so, it hopes to enhance the clarity of its response.

Confidential Treatment

Requested by JPMorgan Chase & Co.

Page 3

Typical length of time of the Firm’s repurchase obligation and trends by loan vintage

The reps and warranties typically extend throughout the lives of the loans sold. However, as
loans age, it becomes less likely that the Firm will be required to repurchase those particular
loans. This is because for loans that default later in their lives, it is often more difficult
for the purchasers to assert that the default is a direct result of any technical violation of
the reps and warranties and not a result of changes in the borrowers’ circumstances. It has
been the Firm’s experience to date that potential reps and warranties violations generally
surface and are resolved within approximately 24 – 36 months of the loan’s origination date.

For information concerning trends by loan vintage, see below.

Level and type of repurchase requests the Firm is receiving, and trends that have been
identified, success rates in avoiding settling the claim

The Firm’s experience to date relating to repurchases of previously-sold loans has been most
significant with respect to the Agencies. The Agencies regularly review a percentage of the mortgages they purchase or securitize to
ensure that the mortgages meet the applicable eligibility criteria and underwriting standards.
The Agencies also review mortgages in payment default1 or those for which they
acquire the property by foreclosure. After reviewing the mortgage loan file provided by the
Firm, the Agencies may issue a demand letter, which notes the alleged breaches. The Firm is
then given an opportunity to “cure” the identified defect, if possible (e.g., produce missing
documentation). If the Firm cannot cure the identified defect, the Firm may settle with the
Agencies by (i) repurchasing the loan, (ii) purchasing the property if the loan has already been
foreclosed upon, or (iii) reimbursing the Agencies for any loss if the foreclosed property has
been liquidated (commonly referred to as “make-whole payments”) (the actions referenced in (i)
 — (iii) are referred to as “settlements”).

Prior to 2008, demands from the Agencies under reps and warranties indemnification provisions
were not significant to the Firm. However, beginning in 2008, JPMorgan Chase experienced a
higher volume of demands; these demand volumes have steadily increased each quarter. For the
full years 2009 and 2008, the total unpaid principal balance of demands presented by the
Agencies was $2.7 billion and $1.4 billion, respectively. Losses realized upon settlement with
the Agencies during 2009 and 2008 were approximately $625 million and approximately $113
million, respectively. The $625 million realized loss amount in 2009 excludes the Firm’s
settlement with the Agencies with respect to certain Washington Mutual Bank liabilities, which
is discussed in the following section of this letter.

In
the past two years, the Firm’s overall cure rate has been
approximately 50 percent, [Redacted].

    1

    While any payment default may trigger a file
review, in general based on historical experience, the earlier in the life of
the loan the payment default occurs, the greater the likelihood that the
Agencies will issue a demand letter. An early payment default, which generally
represents a loan that becomes 90 days past due within twelve months of
origination, is particularly likely to trigger a review.

Confidential Treatment

Requested by JPMorgan Chase & Co.

Page 4

The following chart2 presents trends in repurchase demands (substantially all of
which are Agency demands) by loan vintage for heritage JPMorgan Chase exposures.

Demands for pre-2006 vintages are fairly minimal and the trend-line is relatively stable.
The 2006 vintage represents approximately 15 percent of current demands; demands against this
vintage have been steadily declining since the first quarter of 2009. The 2007 and 2008
vintages account for approximately 75 percent of current demands. To date, demands against the
2009 vintage have not been significant and currently represent less than 5 percent of total
demands. The Firm attributes the comparatively favorable performance of the 2009 vintage to the
tightened underwriting and loan qualification standards that the Firm implemented in 2007 and
2008.3

[Redacted]

With respect to FHA-insured loans that the Firm has sold to Ginnie Mae, while the FHA could
require indemnification for material violations of FHA program guidelines, the FHA to date has
not typically rescinded the mortgage insurance that it provides to lenders. However, the U.S.
Department of Housing and Urban Development recently indicated that it may terminate the
underwriting authority of lenders underwriting FHA loans with excessive default and claim rates.

    2

    Source: JPMorgan Chase 2010 Investor Day -
Retail Financial Services presentation furnished on Form 8-K dated February 26,
2010.

    3

    Since mid-2007, the Firm has tightened its
underwriting and loan qualification standards several times in an attempt to
reduce its exposure to emerging risk factors. Specifically, JPMorgan
Chase has: eliminated Alt-A loans originated by third parties (mid-2007);
eliminated stated income and stated asset Agency loans (Q2 2008); eliminated
all origination of Alt-A loans (Q3 2008); eliminated delegated mortgage
insurance (Q4 2008); exited broker channels (Q1 2009); and instituted maximum
debt-to-income ratios (Q3 2009).

Confidential Treatment

Requested by JPMorgan Chase & Co.

Page 5

[Redacted] With respect to loans sold to Ginnie Mae that are
VA-Guaranteed, VA guarantee rescissions have been infrequent and typically involve unique
circumstances and thus such repurchase requests have also traditionally not been significant.

[Redacted]

Methods of settling the claims under the agreements. Specifically, whether the Firm repurchases
the loans outright from the counterparty or just makes a settlement payment to them. For the
former, effects or trends on your nonperforming loan statistics. For the latter, trends in
terms of the average settlement amount by loan type.

With respect to demands presented by the Agencies that the Firm is unable to cure, the Firm’s
settlement statistics vary between the Firm’s Retail Financial Services (“RFS”) business segment
and the Firm’s Investment Bank (“IB”) business segment.4 In 2009, approximately 42
percent of RFS’ settlements involved make-whole payments and approximately 58 percent of RFS’
settlements involved repurchasing the loan or foreclosed property. Approximately 61 percent of
the IB’s settlements involved make-whole payments, while approximately 39 percent of the IB’s
settlements involved repurchasing the loan or foreclosed property. Historically, the Firm has
been able to present claims for recovery from third party originators on approximately 40 percent of the
loans that RFS has repurchased from the Agencies. [Redacted]

At December 31, 2009, the Firm reported $218 million of repurchased loans as nonperforming
loans, which represented 1.2 percent of the Firm’s total nonperforming loans at December 31,
2009. Accordingly, such loans represent an immaterial amount of the Firm’s nonperforming loan
balances and are not a significant driver of any related trends.

From
2008 to 2009, the average cost to the Firm of all settlements has generally been increasing due to an increase in loss severities
driven by the continued decline in property values.

Investor demands may also be resolved through negotiated transactions under the terms of the
applicable agreements. After the Firm’s acquisition of certain residential loan assets and
liabilities of Washington Mutual Bank from the FDIC in September 2008, the Firm reached
agreements with the Agencies to limit the Agencies’ repurchase demands with respect to certain
Washington Mutual Bank loan repurchase liabilities. JPMorgan Chase disclosed this settlement on
page 144 of its Form 10-Q for the quarter ended March 31, 2009, and has continued to disclose
this settlement in subsequent quarterly and annual filings.

The specific methodology employed to estimate the allowance related to various representations
and warranties, including any differences that may result depending on the type of counterparty
to the contract

As of December 31, 2009, the Firm’s allowance related to breaches of reps and warranties (the
“Allowance”) was $1.7 billion. [Redacted]

    4

    The significant majority of the Firm’s
repurchase activity with the Agencies is related to RFS.

Confidential Treatment

Requested by JPMorgan Chase & Co.

Page 6

In estimating its Allowance, JPMorgan Chase
undertakes a two-step process that considers both demands that have
been presented [Redacted] and probable future demands. The Firm analyzes these demands separately to estimate
the total loss contingency that is both probable and reasonably estimable in accordance with ASC
450-20-25.
The Firm’s response addresses the allowance methodology employed
to estimate losses in accordance with ASC 450-20-25, and not the initial measurement of the
guarantee liability, as it is the estimated losses emerging subsequent to the sale of the loans (and inception of the reps and warranties) that are the driver of the
Firm’s overall allowance level.
Exposures to the Agencies resulting from the activities of all of the Firm’s
heritage organizations are included in this calculation.

In Step 1, the Firm estimates the loss attributable to presented but unsettled demands. This
calculation begins with the aggregate unpaid principal balance of the underlying loans for which
the Agencies have made a demand and then considers the following assumptions to calculate the
expected loss:

    •

    The estimated cure rate (i.e., the amount of loan principal for which the Firm
expects to be able to demonstrate compliance with the reps and warranties);

    •

    An estimated loss severity factor (i.e., the estimated principal loss on a
particular loan); and,

    •

    Estimated recoveries from third-party originators.

The unpaid principal balance of loans expected to be cured is deducted from the total unpaid
principal balance presented but unsettled. The estimated loss severity rate, net of estimated
recoveries, is then applied to the resulting net unpaid principal balance to obtain the
estimated loss attributable to presented demands.

In assessing whether it is appropriate to include estimated recoveries from third parties in its
loss estimates, the Firm considered Staff Accounting Bulletin No. 92, Accounting and Disclosures
Relating to Loss Contingencies (SAB 92), which states:

    Paragraph 8 of Statement of Financial Ac