JPMorgan settlement is biggest in U.S. history
U.S. Atty. Benjamin Wagner explains how mortgages were bundled at a news conference in Sacramento. (Rich Pedroncelli / Associated Press / November 19, 2013)
The housing bubble and subsequent collapse were deliberately engineered by elements of the banking industry and government working together to achieve this goal. This has been demonstrated conclusively by the research that I conducted in Dec 2008-Jan 2009 and have posted on this website. This has further been demonstrated in the video “Inside Job“. U.S. attorneys have demonstrated in court that JPMorgan played a major role in this catastrophe by purchasing risky mortgages and bundling them as securities that were rated as AAA investments and sold around the world.
Although $13 billion is the largest settlement in history it can in no way adequately compensate for the damage that was created. And unfortunately, in the investigation and settlement not even one JPMorgan employee was prosecuted for illegal activity. Paying a small percentage of what was reaped as a fine can be understood as the cost of doing business. Although we applaud the efforts of these attorneys to extract financial compensation, if nobody personally pays the price by going to jail, fraud will continue to be part of the “business” paradigm.
Here’s the article from the L. A. Times:
NEW YORK — JPMorgan Chase has agreed to a $13-billion settlement with the government over selling shoddy mortgage investments, ending a legal battle that signals a tougher stance against Wall Street wrongdoing.
The nation’s largest bank admitted to knowingly peddling the toxic securities that helped lead to the housing bubble and the worst financial meltdown since the Great Depression. The settlement is the largest made by any single American company in history.
California, slammed by 1 million foreclosures during the mortgage meltdown, will be a major beneficiary of the deal.
The agreement includes $4 billion to help homeowners in the Golden State and across the nation who were foreclosed on or who are struggling with their loans. California pension funds, which were big investors in mortgage securities, will receive nearly $300 million in damages to cover losses to the retirement accounts of state employees and teachers.
For the Justice Department, it was a much-needed win. Critics have lambasted the government for not doing enough to hold banks accountable for financial chicanery that helped trigger a global recession.
“Before the crisis, Big Brother was asleep on the couch,” said Mike Mayo, a banking analyst at CLSA in New York. “Now Big Brother is coming back with a vengeance.”
JPMorgan has long contended that the government’s case against it was unfair because many of the problem mortgage securities came from investment bank Bear Stearns Cos. and thrift Washington Mutual. JPMorgan purchased those crippled institutions at the depths of the financial crisis at the urging of the federal government.
Jamie Dimon, JPMorgan’s chairman and chief executive, said the bank was “pleased to have concluded this extensive agreement” that covers a “very significant portion” of its legacy mortgage problems.
Legal experts expect U.S. prosecutors to use JPMorgan’s $13-billion deal as a template to extract significant sums from other major banks accused of wrongdoing.
