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Rewarding Bad Behavior – J.P. Morgan

So, J.P. Morgan Chase was able to settle with the Justice Department for $13 billion. This is rewarding bad behavior. Don’t get me wrong, $13 billion is a lot of money. But J.P. Morgan Chase, like many other of these financial behemoths, broke the law and committed fraud.

From WSJ:

The historic settlement ends a number of investigations and lawsuits targeting soured mortgage bonds issued before the financial crisis and amounts to the biggest combination of fines and damages extracted by the U.S. government in a civil settlement with any single company.

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Attorney General Eric Holder said in a statement. “J.P. Morgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior.” (more…)

By |2013-11-21T19:45:33-04:00November 20th, 2013|Economy, Legal|2 Comments

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. 

By |2013-11-03T16:44:34-04:00November 1st, 2013|Economy|Comments Off on Bank Fraud

Michelle Obama at DNC

Michelle Obama at the DNC. She knocks it out of the park, again.

A portion of the Transcript of Michelle Obama’s speech at the DNC:

When it comes to the health of our families, Barack refused to listen to all those folks who told him to leave health reform for another day, another president.

He didn’t care whether it was the easy thing to do politically – that’s not how he was raised – he cared that it was the right thing to do.

He did it because he believes that here in America, our grandparents should be able to afford their medicine…our kids should be able to see a doctor when they’re sick…and no one in this country should ever go broke because of an accident or illness. (more…)

By |2012-09-06T20:11:01-04:00September 5th, 2012|Elections, Obama administration, Party Politics|Comments Off on Michelle Obama at DNC
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