Tag Archives: financial crisis

Bank Fraud

Several years ago, I was writing about the financial crisis, but I got away from the topic. Unclear why, but I did. It is a good thing that Matt Tiabbi is still on the case. I saw that JP Morgan Chase was about to agree to a $13 Billion settlement. Why?

From Matt:

A lot of people all over the world are having opinions now about the ostensibly gigantic $13 billion settlement Jamie Dimon and JP Morgan Chase have entered into with the government.

The general consensus from most observers in the finance sector is that this superficially high-dollar settlement – worth about half a year’s profits for Chase – is an unconscionable Marxist appropriation. It’s been called a “robbery” and a “shakedown,” in which red Obama and his evil henchman Eric Holder confiscated cash from a successful bank, as The Wall Street Journal wrote, “for no other reason than because they can and because they want to appease their left-wing populist allies.”

Look, there’s no denying that this is a lot of money. It’s the biggest settlement in the history of government settlements, and it’s just one company to boot. But this has been in the works for a long time, and it’s been in the works for a reason. This whole thing, lest anyone forget, has its genesis in a couple of state Attorneys General (including New York’s Eric Schneiderman and Delaware’s Beau Biden) not wanting to sign off on any deal with the banks that didn’t also address the root causes of the crisis, in particular the mass fraud surrounding the sale and production of subprime mortgage securities.

I have no problem with the Justice Department going after JP Morgan Chase. These guys committed fraud. This is what we must understand. Wall Street committed fraud on a large scale. 

Here’s what Matt added:

First of all, the settlement, as the folks at Better Markets have pointed out, may wipe out between $100 billion and $200 billion in potential liability – meaning that the bank might just have settled “for ten cents or so on the dollar.” The Federal Housing Finance Agency alone was suing Chase and its affiliates for $33 billion. The trustee in the ongoing Bernie Madoff Ponzi scandal was suing Chase for upwards of $19 billion.

Obviously, those plaintiffs may never have gotten that kind of money out of Chase. But just settling the mere potential of so much liability has huge value for the bank. It’s part of the reason the company’s share price hasn’t exactly cratered since the settlement was announced.

Moreover, the settlement is only $9 billion in cash, with $4 billion earmarked for “mortgage relief.” Again, as Better Markets noted, we’ve seen settlements with orders of mortgage relief before, and banks seem to have many canny ways of getting out of the spirit of these requirements.

Look, if this settlement goes thru, you know that it will be in the best interest of JP Morgan Chase. IF this goes thru, look for the rest of Wall Street to run and figure out how to settle their issues, also. 

Nanny State Nonsense

One of my life long friends, a card carrying conservative, stated during one of his rants that Obama wants Americans to live in a Nanny State. This is a Fox News induced fantasy. We know that this Nanny State is nothing but nonsense.

Here’s what I know. I need a federal government that is strong enough to protect every American’s right to vote. I know that there are powerful forces (Texas, Mississippi, North Carolina) who would rather that I shut up and sit down. As an American, it is my right to vote and it needs to be protected. We have seen elaborate plans to make me vote on the wrong day, to induce me to vote at the wrong location, to make voting very uncomfortable as I wait in long lines and, finally, really, to make my vote meaningless. These injustices need to stop. If protecting my right to vote makes America a Nanny State, so be it.

We have all read about the South Korean Airliner which crashed in San Francisco. Every time there is a near miss or a crash there is a huge federal investigation. Through rules and regulations we have made air travel safe. Planes crashes are now rare. This is a good thing. Is every rule and regulation perfect? No. These are man-made things. Nothing that we do is perfect, nor should we expected them to be. Continue reading Nanny State Nonsense

Vikram Pandit is out at Citi

Vikram Pandit came in as the Citigroup CEO back in 2007. Remember that there was a ton of stuff going on the financial world in 2007. It blew up. I have no idea whether or not Vikram Pandit was a good or bad CEO. All I know is that Citigroup is a huge company. I think it would be hard for any one person to get their arms around this company.

From WSJ:

Vikram Pandit, who was named chief executive of Citigroup Inc. C +1.61% on the eve of the financial crisis and led the bank through a bruising five-year stretch that included a $45 billion federal rescue, abruptly stepped down Tuesday. Continue reading Vikram Pandit is out at Citi