JPMorgan's tentative $13 billion settlement with the Justice Department, the New York attorney general, and the Federal Housing Finance Agency over financial crisis-era mortgage loans is a "terrible deal," former federal and state prosecutor Jacob Frenkel told CNBC on Monday.
"This number is absolutely preposterous," he said in a "Squawk Box" interview. "It's almost as if what we're getting out of federal regulators … is a roulette wheel or some kind of jackpot, how much can you jack up the fine."
CNBC caught up with JPMorgan Chairman and CEO Jamie Dimon on his way into the office Monday. In reaction to the settlement talk, he said in an interview that aired on "Squawk" that he's "so damn proud of this company," adding that's what he thinks about when he "wakes-up everyday." He also stressed the bank's desire to "resolve every matter as best as we can" and then "move on and serve our clients."
(Read more: 'We're trying to get our problems behind us': Dimon)
Much of the tentative deal would settle allegations of sales of shoddy mortgage securities by Bear Stearns and Washington Mutual—companies that JPMorgan purchased during the 2008 financial crisis at the behest of the government and the Federal Reserve.
"In essence, [the bank] is being penalized for having taken over Bear Stearns and WaMu," said Frenkel, a former Securities and Exchange Commission lawyer who now heads corporate litigation as a partner at Shulman Rogers.
(Read more: JPMorgan close to $13 billion mortgage settlement)
"For JPMorgan writing a check of this amount, they should have closure on criminal investigation," he added. "They are not getting a nonprosecution agreement," so the bank could possibility of additional criminal investigation or lawsuits down the road.
Because of the legal troubles, shares of JPMorgan are trading at a "major discount to its peers," Eric Wasserstrom, bank analyst at SunTrust Robinson Humphrey, told "Squawk" in a separate appearance Monday.
(Read more: Buffett on JPMorgan: Jamie Dimon will survive just fine)
"The markert is really focused on ... the dollar cost. That's been steadily escalating," he explained. "Six weeks ago we were talking about $4 billion. Then two weeks ago we were talking about $11 billion."
But Wasserstrom added the current $13 billion number under discussion "seems pretty well-bounded by the $23 billion ligation reserve they disclosed."
—By CNBC's Matthew J. Belvedere. Follow him on Twitter @Matt_SquawkCNBC.