One of the big news stories of the weekend is that JP Morgan and the Department of Justice, brokering a settlement of liability across multiple Federal agencies, have reached a tentative $13 billion settlement on the bank’s mortgage-related conduct in the run-up to the crisis. The terms have not been finalized because a big open item is that JP Morgan will make an admission of some sort, and the deal could still founder over that.
While the media is all agog over the prospect of the “biggest settlement evah” with a single company, concentration has risen greatly in a lot of industries, particularly banking, so bigger companies and even mild inflation means settlements should get larger over time. So size is not a metric of accomplishment. The question is what was the actual liability and is the settlement an adequate remedy? We have the same problem here as with the mortgage settlement: save for a couple of types of bad conduct, it looks as if not enough discovery was done to know the extent of the conduct and hence what an appropriate remedy would be.
And the American public’s instinct, that even a really big-sounding number isn’t adequate given all the damage done in the financial crisis, has been confirmed, at least on a general basis, by one of the most highly respected economists in the world, Andrew Haldane, the executive director of the financial stability at the Bank of England. Haldane ascertained that no fine was big enough because the banks couldn’t begin to pay for the damage they’d done. The alternative, in that case, is prohibition and other forms of aggressive regulation. Needless to say, we haven’t seen anything like that either.
In a March 2010 paper Haldane compared the banking industry to the auto industry, since both produced pollutants: for cars, exhaust fumes; for bank, systemic risk. I’ve cited Haldane’s estimate of the world wide costs before because it is critically important:
….these losses are multiples of the static costs, lying anywhere between one and
five times annual GDP. Put in money terms, that is an output loss equivalent to between $60 trillion and $200 trillion for the world economy and between £1.8 trillion and £7.4 trillion for the UK. As Nobel-prize winning physicist Richard Feynman observed, to call these numbers “astronomical” would be to do astronomy a disservice: there are only hundreds of billions of stars in the galaxy. “Economical” might be a better description.
It is clear that banks would not have deep enough pockets to foot this bill. Assuming that a crisis occurs every 20 years, the systemic levy needed to recoup these crisis costs would be in excess of $1.5 trillion per year. The total market capitalisation of the largest global banks is currently only around $1.2 trillion. Fully internalising the output costs of financial crises would risk putting banks on the same trajectory as the dinosaurs, with the levy playing the role of the meteorite.
Yves here. A banking industry that creates global crises is negative value added from a societal standpoint. It is purely extractive. Even though we have described its activities as looting (as in paying themselves so much that they bankrupt the business), the wider consequences are vastly worse than in textbook looting.
Now keeping that in mind, let’s look at what we know about the settlement:
Focus on the cash component, which is $9 billion. $4 billion is in the form of “relief to homeowners”. In the recent mortgage settlements, the non-cash component has had PR value and has been generally meaningless in economic terms. It’s certainly not a real punishment. The company gets credit for activities that are either in its financial interest (like modifying mortgages on its balance sheet to viable borrowers) , or it would have done anyhow (giving homes to cities to be bulldozed), or it should have been doing all along (short sales). These items are mainly chits that give the bank cover to write down inflated assets on their books. Oh, and the New York Times indicates that many of the borrower relief items will be tax deductible.
The FDIC might eat as much as $3.5 billion of that total, reducing the cash component to $5.5 billion. From Huffington Post:
JPMorgan Chase & Co’s possible $11 billion settlement of government mortgage probes has been complicated by a dispute with the Federal Deposit Insurance Corp over responsibility for losses at the former Washington Mutual Inc, said people familiar with the matter […]
JPMorgan, which acquired Washington Mutual from the FDIC for $1.9 billion at the height of the financial crisis, has disputed its responsibility to cover losses incurred by investors on the failed thrift’s mortgage securities […]
Some fear the FDIC, under pressure from the Justice Department to join a global settlement, might agree to assume liability, a move that would effectively force another government agency to absorb billions of dollars in losses […]
“If the FDIC were to indemnify JPM as part of the government deal, it would likely reduce the rumored $11 billion by about $3.5 billion,” said Joshua Rosner, managing director of Graham Fisher, an independent research consultancy. “That would be an absurd outcome.”
The Administration is taking credit for a settlement that is in large measure due to the stubbornness of one of its favorite whipping boys, Ed DeMarco of the FHFA. Obama has been moving heaven and earth to try to dislodge DeMarco, and one of the reasons was the 17 suits that he had filed against banks for putback liability on mortgage backed securities (the claim that the reason was his refusal to permit Fannie and Freddie to provide principal modification was trumped up charges; the attack on DeMarco was to divert attention from its failure to take any action on that front). FHFA secured a $4 billion settlement Thursday; the DoJ suddenly cut a deal with JP Morgan so it could include the FHFA settlement in the total leaked over the weekend.
Even if you accept this fine on its own terms as punitive, you have to thank the FHFA for that outcome. And that’s where the “liberal” housing groups who have been savaging Ed DeMarco for years look particularly shameful. There’s no question that DeMarco’s stubbornness against principal reduction has been misguided, but you have to look at the whole picture. As a conservator for Fannie and Freddie, what fits his job title most perfectly is for him to recoup money from banks who swindled the GSEs with their mortgage bonds. And the 2011 lawsuit against 17 banks has quietly yielded fruit. In the past week, Citi paid $395 million to Freddie Mac and Wells Fargo paid Freddie $869 million. Those are over direct mortgage purchases, but it’s on top of several other settlements, both on mortgages and mortgage securities, worth several billion over the years. Even the Justice Department’s civil lawsuit against Bank of America, seen as the first between the government and a mega-bank over what caused the financial crisis, is about mortgages purchased by Fannie and Freddie. The GSEs are profitable now because of their dominance over the mortgage market. But these successful putback cases relieved taxpayers as well.
And while I don’t think much of the $4 billion in mortgage relief in this settlement, if you take it at face value, that’s over twice as much as the benefit to homeowners if DeMarco allowed principal reduction over his preferred option of principal forbearance.
While the one criminal case against JP Morgan executives is carved out, don’t hold your breath. But JP Morgan has agreed to cooperate with the Department of Justice in prosecuting former JP Morgan executives. That would include Bear Stearns officers like Tom Morano and Mike Nierenbergaccused of double dipping in a suit by mortgage guarantor Ambac against Bear and JP Morgan.
While a criminal case launched just last month against JP Morgan (and note this is the bank proper, not via Bear or WaMu, which it also acquired during the crisis), this part of the negotiations, as reported by the New York Times, does not sound promising:
While the deal would put those civil cases to rest, it would not save JPMorgan from a parallel criminal inquiry from federal prosecutors in California…The preliminary deal materialized late on Friday after Mr. Holder spoke on the phone to the bank’s top executives, including Mr. Dimon, and the general counsel, Stephen M. Cutler, one person said. Mr. Holder told Mr. Dimon that he could not shut down the criminal investigation, reiterating an argument he made when the two met last month in Washington.
Hhhm. Wonder how damaging this case might be? The public reports so far are sketchy. For instance, this account is from Reuters on September 23:
The U.S. Justice Department is preparing to sue JPMorgan Chase & Co over mortgage bonds it sold in the run-up to the financial crisis, a sign the bank’s legal troubles are not yet over.
A lawsuit, first reported by Reuters, could come as early as Tuesday, people familiar with the matter said on Monday…
It was not immediately clear whether the new charges would be civil, criminal or both.
A source familiar with the cases earlier told Reuters that the probes in the Eastern District of California involve mortgage bonds offered by JPMorgan itself and not those by companies it bought during the crisis such as Washington Mutual or Bear Stearns.
Notice the timeline. The case was to be filed “as early as Tuesday”. That’s September 24. Dimon met with Holder in person, an absolutely unheard-of concession, on September 26. And that ready-to-go case has apparently NOT been filed. So Dimon’s special pleading if nothing else appears to have delayed the filing of a civil, and given the way it is now being described in the media, probably a criminal case. This confirms that the appearances of cronyism are indeed valid. As Georgetown law professor Adam Levitin wrote:
I’m floored that Attorney General Eric Holder was willing to take a private meeting with JPMorgan Chase CEO Jaimie Dimon while the bank is under criminal investigation and negotiating an enormous civil (and possibly criminal) settlement. I can’t recall something like this meeting happening before. There’s not anything illegal about such a meeting, but the optics are really bad and underscore the privileged position of the too-big-to-fail banks.
Yes, perhaps the AG should have some level of involvement in a multi-billion dollar settlement, but I would be quite surprised if he was very hands on with it, and meeting personally with Dimon certainly adds a explicit political flavor to the settlement discussions. And it shows the special solicitious treatment and access that Dimon and JPM and other too-big-to-fail banks receive in DC.
Dimon appears to be riding it out…so far. Dimon has created the perception that he is indispensable, in part by making that so by virtue of refusing to have a successor lined up. But as Clemenceau famously said, “The graveyards are full of indispensable men.” It’s proof that JP Morgan’s board is captured that they’ve allowed him to get away with that. Every systemically important institution should have a succession plan.
Dimon’s inattentiveness to regulatory niceties may finally have cost the bank enough both financially and in bad press to rouse its recumbent board into insisting on basic prudent corporate governance steps, like grooming possible replacements and separating the CEO/chairman role. The Financial Times tallies the potential damage:
JPMorgan last week enumerated its litigation reserves – an enormous $23bn – for the first time and said that “reasonable possible losses” on top of that amount were $5.7bn. If that entire sum were paid, it would wipe out the last six quarters of profit.
The New York Times points out:
While a settlement will go a ways toward wrapping up a number of JPMorgan’s mortgage-related issues, the bank is still weathering a broad wave of scrutiny. With the bank’s legal woes escalating — at least seven federal agencies, several state regulators and two foreign countries are investigating the bank — JPMorgan announced this month that it would have to allot $9.2 billion to cover legal expenses alone. The huge legal bill led the bank to report its first quarterly loss under Mr. Dimon’s leadership.
While some commentators have hailed this settlement as a new “get tough” posture on the part of the Administration, it’s so out of character that it’s just not credible, particularly since Obama is not that far away from needing donors for his Presidential library.
There have been signs for some time that even by the standards of Wall Street arrogance and overweening entitlement, that Dimon was in a class by himself. That had been tolerated because he had successfully promoted the myth of his fortress balance sheet. But as banking expert Chris Whalen has pointed out repeatedly, that’s utterly misleading. JP Morgan is a $2.4 trillion bank attached to a $75 trillion derivatives clearing operation. Where do you think the real risks lie? And do you think the balance sheet of the bank tells you much about whether its derivatives operation is adequately capitalized?
But Dimon has been behaving erratically for some time. He’s blown up at least three times at central bankers, once at Bernanke, once at Mark Carney (when he was the head of the Bank of Canada) and I’m told at a meeting at the New York Fed. Dimon and others were told the New York Fed didn’t like certain thuggish behavior relative to state and municipal privatizations it had heard the banks were engaging in. Dimon basically screamed at them that it was none of their business (I haven’t gotten enough details of the meeting to report it, otherwise I would have written it up, but I’ve gotten two separate second-hand accounts, so I’m highly confident it did happen).
So it appeared that Dimon was fully aware of his TBTF status, not just in general, but in particular as being at the helm of the biggest bank involved in tri-party repo (Bank of New York Mellon is the other large player) and has been getting too big for even his very large britches. JP Morgan is impossible to resolve and Dimon knows that. My gut is that the officialdom has become concerned about Dimon’s stewardship. He’s become (until recently) even more dismissive towards regulators. He withheld information from the OCC during the London Whale fiasco, told egregious lies to shareholders, and then dialed in his Senate testimony. The Whale trade aftermath revealed glaring deficiencies in the bank’s risk controls (appallingly short of well-understood industry basics). That was followed by the publication of Josh Rosner’s “rap sheet” that showed that the bank was in a class of its own in the number and seriousness of regulatory violations across the bank (most other banks were up to their eyeballs in mortgage-related violations but largely clean otherwise).
With that record of mismanagement, any normal board would be looking for Dimon’s head. The regulators may be trying to apply external pressure to get Dimon out on an orderly timetable, say end of 2014. I doubt that will happen based on the events thus far. The myth of Dimon’s utility persists in the media and the analyst community despite the mounting regulatory and legal costs.
But there are other shoes to drop that may change that picture. If the DoJ does file criminal charges in California, and they look to be serious, that will keep JP Morgan in the spotlight. But my money is still on the prosecution of chief investment office trader Javier Martin-Artajo. Martin-Artajo was senior enough that he was engaged in a turf war with the head of the CIO, Ina Drew, trying to wrestle authority from her. He’s thus also senior enough to speak with knowledge and authority about the CIOs practices. The DoJ may be happy to take his scalp. But good prosecutorial practice is to see if you can cut a plea bargain and go after someone more senior. If Martin-Artajo has information that implicates Ina Drew or the bank generally (which means Dimon, since he was closely involved in the CIO’s operations), Dimon’s days may indeed be numbered. We can only hope.
Yves, thank you for this thorough and thoughtful analysis of the situation at Chase. I await these pieces by you because I canot ascertai the nuances.
I admit this inability is due to my personal animus towards Slimin’ – as any poor soul who reads my occasionnal outbursts in comments know Chase did a voluntary foreclosure of the historical property I had restored here in Los Angeles. It was a WaMu loan they got essentially for fre from the FDIC on which I was current, the building was fully collatoralized but the term had expired. I had also rolled in $100K of Chase’s lost rets and legal fees
When I filed Chapter 11 the judge quickly realized the receiver the bank had putin was taking all the money and not advancing the property. She threw out the receiver put me back in charge and I finished the construction of the building with the rents – not charging thebank a dime for my time. The banks lawyer, a short little nasty man with a bad. Temper who yelled at judges even when they ruled FOR him was furious with me not the least of which was that he wanted his buddy the receiver to be able to keep taking all the rents.He had earlier told me “We take buildings fast these days.” To isis which I had replied to him “Good Luck.” Which made him furious. Why the baks let the receivers steal them blindis beyond me.
Anyhow, round 2 the bank files a voluntary Notice of Default ona performing but expired loan, puts the receiver in, and forecloses. Losing $600K in the process. The next month I get charged criminally by the City of LA for criminal negligence of the building while the receiver was in charge. I have to go to criminal court with the court order granting receiversjip and the recording of trustee sale.
My point is a} Slimin’ had no trouble using every trick in the book to foreclose on WaMu loans the FDIC gave him essentially for free. He of course whines at every turn about WaMu’s so-called “liabilities.” With the exception of Yves and Jesse Eisenger at ProPublica/New York Times no one mentions Slimin’ tried to voluntarily BUY WaMu for $8 a share and was rebuffed by WaMu. And that Slimin’ bragged in the annual report what. A steal WaMu was from the FDIC and that, to paraphrase, Chase did not buy WaMu blind since they had just done due diligence when they tried to buy WaMu voluntarily.
My nausea level will be at nuclear projectile range if the FDIC pays a penny more to cover Chase on that heist.
Secondly, and even more galling to me is me getting hauled to criminal court to stand. for Chase’s neglect and abandonment of their own asset, and that piece of human excrement
Slimin’ just gets other people to continue to pay his fines. And he NEGOTIATES with the AG.
My negotiations with the D.A. here were a phone call to explain that I no longer owned the property in question and that a receiver had ben in place by court order and they needed to cite them. I was told those facts had no bearing anf they would see me in court. Which they did and then they had to anounce to a crowded courtb room and the judge “In the interest of justice we withdraw this case.” In court they had made last minute appeal to drop the case but I informed them that I would not, and I was intent on the JUDGE’s imprimatur on the dismissal.
I guess now I just have to hope the California criminal case goes forward. While that is Federal our state AG Kamela Harris had gone after Chase with a vengeance and I’m sure she’d like the Fed case to go forward. She is NOT Eric Schneiderman or even Preet Bahara of the “fine SAC a pittance and let Steven Cohan keep the office private to manage his $7 bilion in loot” school.
Truly, my fury for vengeance [once quaintly called “Justice”] is thwarted, but hope springs eternal.
Yeves, I suggest you take a look at WaPo review of Alan Greenspan’s latest book by Steven Pearlstein entitled: Alan Greenspan Still Thinks He’s Right.
It’s going to be a lot of fun watching the board cannibalize itself over at JP Morgan. I wonder who will be first?
The fact that Dimon, or the heads of any of our beloved Wall Street banks are allowed within a 1,000 yards of the White House tells you just how low the threshold for justice has descended. The Department of Injustice continues to play the game out to its inevitable conclusion, hoping that the naïve populous will forget the fact that it’s their money being used to pay the fines.
Anything settlement that didn’t wipe out that $23 billion loss reserve in full is a win for JPM. It just proves once again that they can game the system and pay only a portion of the stolen money back.
In what alternate universe to you get to rob a bank and then agree to pay 10 cents on the dollar back as restitution while at the same time getting congratulated for doing so? Oh, wait! That alternate universe is the United States of America.
Wake me up when one of these fu*ktards is behind bars.
‘A banking industry that creates global crises is negative value added from a societal standpoint. It is purely extractive.’ — YS
This principle should be chiseled into the lintel of the Marriner S. Eccles building, so that it can discerned through the dust as the demolition charges bring it down.
Far from being a disinterested regulator, the Federal Reserve is the statutory head of the bank cartel. It was the most important insider player in cheerleading the disgraceful, repugnant 2008 bailouts of the TBTF dinosaur banks.
Since banksters have an infinite supply of elastically-principled Dimons lined up to loot, only closing down their free-money tap on taxpayer-guaranteed funds can shut down this blight on humanity for good.
Abolish the freaking Fed!
Dr. Hunt provided an interesting analysis of the LSAP efforts. The only issue I would take with his argument is the naïve assumption that the operations were perhaps “well intended”. The gross distortions and rising inequality aren’t unintended consequences. This wealth extraction is a built-in feature and certainly no accident. You can’t prop up an insolvent financial sector without extracting wealth from someone, and we know the Fed isn’t going to hand the bill to its primary constituents.
Great stuff on so many dimensions, Yves. BUT:
“JP Morgan is a $2.4 TRILLION bank”!
Worse, this is only the latest in a long string of mostly civil fines they’re paying. As you hint, even $13B is a joke to these people (esp. if they can deduct it from taxes they barely pay now). To me, JP-Chase is obviously a “racketeer-influenced corrupt organization,” and should be ripped apart, just like the Mob.
Aargh, after having typed “billions” over and over in the post, I did it again!
I tend to write these AM posts and just put them up rather than re-reading carefully. Apologies.
How many people will go to prison and for how long? Thats what will change the system.
More people behind bars for longer periods of time. Anything else is just more finagling of the figures.
Not just send them to prison, make it real prison. Not some medium security facility but one of those over-crowded maximum security facilities where they’ll be scared shitless every time they have to leave the cell for chow or rec time or their every-third-day showers. Right in there with the tatted-up gangbangers and professional street thugs.
Fabulous insight and detail – much appreciated ~ will certainly be an interesting story to continue monitoring. Thank you for your perspectives!
Where’s the adult conversation that discusses the fact that since the underlying mortgages were never transferred to the trusts according to law, it’s not simply the investors who have been harmed? Exactly which of the individual homes, once owned by living breathing people underlying these same cesspool trusts, have defective notes and mortgages causing them to be unenforceable contracts? When will we the people be informed of the crimes committed against us when foreclosed upon by Dimon and his criminal cohorts?
sanctity if contract? rule of law? justice? I am out if kool aid. I mention these little niggling details to fellow land title ‘experts’ and they shrug their shoulders… WTF is going on? I seldom harbor deep, profound revulsion and antipathy for any oe person, but Jamie Daimon and Lloyd Blankfein are in that very special place in my heart and mind.
From the oil patch
Everyone on this blog should read this transcript and listen as Stu Halsan, attorney and lobbyist for the Washington Land Title Association admit that if the banks were required to follow the Deed of Trust to unwind the contract, they would not be able to reconvey property in Washington State.
Original Promissory Note? Oh, that pesky little document, not needed!!! All we need is a Lost Note Affidavit and an indemnity agreement and we’re good to go. *eye roll*
Crimes against homeowners and property rights were committed the moment the mortgage docs were submitted to MERS. Where is that discussion? Oh, I forgot; lost in the deep slime of the Obama administration.
Apologies Yves. Thanks for this killer post. It makes me sick all over again – good thing there’s Obamacare!
Why couldn’t DeMarco have both written down principal and still sued the banks for the principal? It doesn’t seem to me that this was an either/or proposition. In addition, DeMarco has totally blocked residential PACE loans which allow homeowners to access low cost funding for renewable energy and energy efficiency lows which are paid back using property tax assessments. His concern being that the tax authority would be in line ahead of the GSEs. By not allowing write downs he contributed to continued deflationary forces and he is blocking communities and homeowners from a cost effective means to invest in their properties.
Plea deal with admission = $13 billion
Plea deal without admission = $65 billion
Well expect that Jamie and his gang will get off scott free.
Oh, of course the bank (which ever one it is today) will pay a fine which will come from the shareholders – mostly mutual funds and insurance companies.
Until the principles go to jail this will continue.
And of course Jamie’s days are numbered – he will fall and most likely spent his retirement crying and creating long sobbing stories about how he was wronged.
What utter crap our justice system has become.
The question of Dimon’s hold on his position needs to be understood. I don’t have any inside information but, knowing how the corporate world works, Dimon did not get where he is or maintain his position by being competent at his defined job–he did so through Machiavellian tactics like almost every corporate head uses. The situation at Morgan probably involves who has what on whom, particularly since criminal indictments seem to be in the works.
All the principals in the secretive grand drama that is U.S. politics, I would guess, are involved from the national security state, Obama, to regulators to rival corporate officers and board members. You can be sure there will be an attempt to nail Dimon but they’ll have to give him the mother of all golden parachutes for him to go easily and that may not be worth it.
Interesting to watch though. We should not forget that Dimon got Holders attention because he probably has some leverage or some info on Holder or various members of the Executive branch. When you play at that level you come into meetings armed to the teeth.
Also remember the photo-op about 3 years ago with Dimon and (I think) the Secty of Defense. The article was about how JPM and the US Military had partnered up to develop the mineral resources (rare earths and gold, etc) in the mines of southern Afghanistan. Bringing democracy to the mountains of Afghanistan!
It does not seem to me that going after the banks and writing down loans for screwed homeowners is an either or proposition. Why couldn’t DeMarco have done both? By not writing off principal DeMarco and the FHFA contributed to the deflationary pressure on the market. Writing down principal for the homeowners would have assisted them and helped stabilize the market. In addition, DeMarco’s FHFA has completely stopped residential PACE lending. PACE loans allow homeowners to finance energy efficiency and renewable energy investments with low cost loans repaid using property tax assessments. DeMarco is concerned that the GSEs would be subordinate to the local property tax authority. This also further reduces real estate investments which could be readily funded, another lost opportunity for residential real estate markets.
Since we know they’ve got $23 billion in reserve, why not just take it all, for openers? Then negotiate the amount of jail time.
Y’all group think much? Where is an ounce of wrath for the partners in crime on the other side of all these dealings, as if poor Fan &Fred were so innocent, at the other end of due diligence transactions. And where is the contempt for the policy makers and gubmint deciders and deal makers that set the stage for all this to happen. Could you reach back more than a month or so in the interest of a more complete line of causation and context? Do that and it’s as plausible to argue that JPM is being shaken down by Holder and Lew for doing what was asked in 2008/2009: assuming the crap that other failed institutions racked up in response to gubmint policies intended to put a sheep in every house. Or maybe it’s not just a conspiracy and the bankers really do run the world. If that so, I so scared! Oh, please save us righteous Eric from dat meany Dimon.
Don’t forget that Paul Krugman repeatedly called for Ed DeMarco’s firing:
This is what Max Keiser said on twitter :
“To settle $13bn DOJ fraud fine, JPM will borrow a forgivable loan of $13 bn from Fed at 0.0001% and park it in a currency arb for a profit.”
Is he wrong?
Pablo Escobar had his own prison, (“La Catedral”; “Hotel Escobar,” or “Club Medellín”) built to his specifications after he turned himself in. . La Catedral featured a soccer field, a giant doll house, a bar, jacuzzi, and a waterfall. Escobar also had a telescope installed that allowed him to look down onto the city of Medellín to his daughter’s residence while talking on the phone with her.
PBS reports that even though the government was willing to turn a blind eye to Escobar continuing his drug smuggling, the arrangement fell apart when it was reported Escobar brought four of his lieutenants, including his head lieutenant Paul F. Sauer, Jr., to La Catedral to be tortured and murdered. The Colombian government decided it had to move Escobar to a standard prison, which he refused. In July 1992, after serving one year and one month, Escobar would again be on the run. With the Colombian National Army surrounding the facility, it is said Escobar simply walked out the back gate. The ensuing manhunt would employ a 600-man unit, specially trained by the United States Delta Force, named Search Bloc, and led by Colonel Hugo Martínez.
Even though, Jamie Dimon is no Pablo Escobar, Instead of a Drug cartel, Jamie Dimon is the head of the largest Bank Cartel.
Now there is no way Jamie Dimon will ever make a deal to turn himself in and build his own prison. The Cooperate State of the USA is just too powerful to allow such a thing.
How many Criminals have been allowed to secretly meet with the Attorney General of the USA?
Will Jamie be wearing Gitmo orange?
Then no justice will be done.
Given the Fed’s on the one hand buying billions of MBS every month, (I’d assume substantially toxic given the Too Big To Fail problem—game plan seemingly being to CPR banks back to solvency health to avert zombification–while classic market, as well as moral, discipline? fuggetaboutit!), could well be JPMorgan’s worked the math and figured they’ve come out way ahead on the balance sheet side where nobody’s (e.g. the press) looking and decided they shouldn’t upset the applecart over the face-saving “kickback” DOJ’s looking to extract from them.
The size of the proposed settlement is an encouraging sign–but the settlement doesn’t smell right, does it? It feels like it’s been Entirely Too Easy to get JP Morgan to concede on this, and given the rumbly noise that this was largely WaMu MBS baggage, why is JPM rolling so easily on this Record Fine? While the demonstrably in-house JPM illegal shenanigans get kid gloved? I mean, as the 2007-2008-2009 crisis played out, the Fed (via FDIC) made all kinds of “shared-risk” guarantees just to get others to buy the MBS and other questionable “assets” of failed banking institutions like WaMu. And I don’t know if JPM-Chase got a sweetened deal like this for these suspect MBS sales, but somehow I think they’d be referenced by JPM -somehow- (to defend or deflect JPM’s questionable sales of WaMu’s MBS pooh-pooh).
In other words, I guess, I don’t think for a minute that JPM feels or acknowledges being “chastened” in accepting this kind of settlement; they’re not pushovers, and I don’t yet see how this case produced any distinctive “smoking gun” to explain why they’d so uncharacteristically capitulate on this “record” case. I do think that there are JPM “insiders” who’re relatively quiet because they’ve seen the Powerpoint and laughing all the way to the bank, and the rest of us who’re distracted because we’re so encouraged by the record size of the fine.