JPMorgan Pays

A $13 billion settlement, the largest ever between government officials and a single company, resolves mortgage claims and puts other banks on notice.

Comments: 158

  1. Eric, thank're Gotham's new super hero!!

  2. But you are from California. You like the demise of Gotham's financial industry , right?

  3. It's nice to see Schneiderman finally acknowledged for his perseverance. At the inception, he received a lot of criticism, and was chided for taking the position that he took.

    There are a very few people at all levels of our government who can do that, given the monied and powerful special interests, who carve out societal exceptions for themselves, to their advantage, to the detriment of everyone else.

    In our democracy, there was once a basis of fairness and parity, which has pretty much eluded us since the '70s. This was a retrospective as what there could be.

  4. Mr. Schneiderman is one in a million and that is the problem with America today. There are far too many people in the government who are wholly owned by big business and particularly the banking industry. The American public pays and pays, the criminals go free with truck loads of money, business as usual.

  5. William Black was a regulator during the Savings and Loan crisis where he helped identify the Keating Five and senior insiders that resulted in over 1,000 felony convictions. This financial crisis is 70 times worse than the S&L scandal yet there have been no criminal prosecutions.

    Black is a white-collar criminologist and professor of economics and law at the University of Missouri. His interview with the BBC:

    “[This settlement] is a continuation of the pattern that not a single elite banker whose frauds drove this financial crisis in the United States has been prosecuted. And even when civil cases are brought they are rarely brought against the individuals and they have never recovered even more than a small fraction of the fraud proceeds. So the lesson here is still fraud pays and indeed it pays better than it ever has.

    “There is an enormous conflict of interest in those senior officers. They are happy to trade off having the corporation pay larger fines as long as they personally do not have to give back any of the fraud proceeds and never get prosecuted.

    “If we do not [provide effective deterrence or accountability], if we simply demonstrate with each of these settlements that the officers that lead the frauds can walk away wealthy then the next financial crisis is more sure and it will be much larger.”

  6. "As long as the bankers don't have to personally give anything back, they are happy to make this deal." Willliam Black
    It is so obvious. Who exactly does the DOJ think it is fooling? Or, as Matt Taibbi's haiku contest so beautifully brought out:
    "My mother wants to know how you like her house, her porch, her climbing roses."

  7. Does the settlement put "other banks on notice," or merely confirm that, aside from NYAG Schneiderman, neither JPMorgan nor USAG Holder is acting in good faith? The sum, $13B, is meaningless, almost like money slipped under the table, to avoid more substantive action, because much of it is tax deductible, cannot be seen as punitive when compared with the bank's profits, and, in light of the world financial crisis to which Morgan's actions contributed, is a mere drop in the bucket.

    I would like to see criminal prosecutions, and serious jail time, for Jamie Dimon on down, but that aspect must not obscure the complicity of USG in not acting sooner; Bush II and Obama must not emerge from this touting of a big fine blameless and unscathed. The US regulatory apparatus is rotten to the core, and AG Holder, given his own business connections and background cannot be taken seriously as a defender of the public interest.

    $13B is protection money, business as usual, the subsidence of complaints, a public relations triumph, as meanwhile the Obama administration continues its extreme partiality to the business and banking communities. This settlement cannot be divorced from the wider issue: the financialization of US capitalism, distorting its shape wherein manufacturing is in decline and the financial sector, hedge funds included, is ascendant. Relatedly, Obama's Trans-Pacific Partnership is further evidence of secretiveness and hanky-panky characterizing USG's economic profile.

  8. Fraud is a crime, massive fraud a massive crime against tens of thousands or hundreds of thousands, even millions of Americans perpetrated by banks upon the people.
    JAIL Crime is supposed to be judged and justice distributed equally across all people of society. Yet we witness Banksters holding the country hostage, people's lives kidnapped, stolen, and people left for dead, without a care in the world what was done in the name of profit for truly less than one half of one percent of Americans. These people who perpetrated these crimes belong in jail, not just fined. That is not fine !!

  9. While certainly a great deal of money $13Billion represents a mere 2 hundredths of 1 percent of the $60Trillion destroyed by these miscreants through their fraudulent and criminal schemes. Therefore, Glass-Steagall needs to be reinstated immediately and these "too big to fail" criminal enterprises need to be broken up and policed by aggressive regulators who don't retire from government service to join the industry they previously regulated. Furthermore, I look forward to the criminal prosecutions with great anticipation. I don't care if they cry about competitive disadvantages. They create no wealth for anyone but a handful of high-stakes gamblers and brazen hoodlums willing to steal in the hopes that they will somehow keep a portion of their ill-gotten gains.

  10. Well said, Mr. Spiegler. But what is missing are criminal prosecutions for the dressed-up thugs who orchestrated these frauds. As it stands, they will pass off the fines as "the cost of doing business." Jail time is another matter, which will concentrate the minds of other would-be thieves.

  11. Sounds great, a $13 billion dollar settlement. But in reality this is bupkis. More than likely most of the settlement will be written off in taxes and once again the taxpayers are left holding the bag.

    This was out and out criminal behavior. Families have been destroyed, homes lost, children displaced...all for executive bonuses. I for one would forego the "huge" financial settlement and prefer the "Executive And Managing Directors" perp walked into Federal Court. When getting caught and paying the fine is factored into the cost of doing business, there is no rationale to curtail this behavior.

  12. Whether persons go to jail depends on how crimes are defined. In our capitalist system the definition is elastic, defined for the benefit of corporations. Per our Court, they have the rights of persons, but none of the duties.

    If regulations themselves are defined as socialist and anti free enterprise, then the rule of law is undermined, putting us in peril.

    Why in the 1990s almost 1000 people were prosecuted and jailed for the S&L frauds? While now no bank criminals are personally prosecuted at all? It must be due to the outsized effect of political influence on the financial industry. This has increased exponentially.

    Per wikipedia on lobbying..."Big banks were "prolific spenders" on lobbying; JP Morgan Chase has an in-house team of lobbyists who spent $3.3 million in 2010. The American Bankers Association spent $4.6 million on lobbying."

    So they can structure laws to make it unlikely that their acts will be technically defined as criminal and subject to prosecution and prison. And the excess profits amassed take care of their fines nicely

    The cause is big money in our elections setting the debate, and writing our laws. We have to learn how other nations manage their public funding of elections, which can help eliminate some of the legalized corruption poisoning our politics and economic well being. This seems to be kept a deep dark secret by our media, with maybe a 1 sentence mention of it, when reporting on foreign election campaigns. Why?

  13. If you think young people in hoodies and baggy pants are big time criminals you've never meet a Wall Street banker in a $5K suit.

  14. When Jamie Dimon goes to prison for a long time and pays a hefty personal fine I'll believe that Eric Holder is serious. Why did Martha Stewart serve time and Dimon walks around a free man.

  15. Because Dimon has dirt on Holder and Obama or Dimon promised Obama and Holder a big time extremely lucrative job on Wall Street when they leave office...probably in their legal departments to concoct new loop holes in the laws that supposedly are to regulate the investment banks HA,HA.
    Obama touts himself as a Constitutional lawyer...what a joke!

  16. While it sounds good, the settlement is less than it appears. The funds for paying it will come out of taxes that otherwise would be paid and profits/dividends, which means that the bank's stockholders, including insurance companies and pension funds are the poorer, which means higher insurance rates and lower pension payouts.

    Until the management team at the bank either feels it personally, nothing will change.

    What if Vice Presidents and above of public companies had to put 50% of their income in escrow for x years to pay such settlements? I believe that this would be a more realistic sanction and the necessity for imposing it would be significantly reduced.

  17. Schneiderman deserves nearly all of the credit.

    As a group, the conduct of the AGs has been
    shameful, as they have put career advancement
    by helping the banks get back to business as
    usual ahead of their duty.

    This is another win for JPM.

    What is especially depressing is that public
    commentators are raising the same chorus
    that thank goodness, JPM is getting the
    scandals behind it, that we heard with regard
    to the S&Ls and GSEs in their turn.

    The zombie bank model is inherently toxic
    and will continue to be a drag on the economy
    as long as policy makers, most of whom work
    for the banks, continue to exercise the power
    to direct public funds to this benighted industry.

  18. The settlement and the regulatory efforts should have focused on decisions taken by individuals that violated law. They would have found a few, and the cause of effective regulation would have been vindicated, as would the legitimate insistence that corporations operate within the law. As it was, what really happened was that an immense amount of money was extorted by government by way of legal machinations that no corporate entity, regardless of size, can withstand indefinitely, and whose only true ends are to enrich lawyers and allow regulators to preen.

    Regulators simply caved to public pressure to spank, to find a fall guy insufficiently wary to have prepared itself for the prospect of being selected as the most convenient fall guy -- and stockholders of JPM should hold the bank's management accountable for that innocence and dereliction.

    The underlying motivation of regulators was manifestly apparent: liberals need no other justification than their visceral hatred of private wealth to go after the privately wealthy. It was really that simple. But that doesn't exculpate JPM management from responsibility for allowing the regulatory predation to happen.

    Yet the truly responsible was a government that allowed banks to get over-large, so that their mistakes can shake our societies, and the same government that encouraged a real estate bubble to inflate, in order to garner votes by claiming higher levels of home ownership, regardless of ability to pay mortgages.

  19. You can't blame the left for deregulation and mortgage fraud. I know some low level mortgage criminals who are now behind bars. The big fish got away.

    Blame the free-market shysters, not the liberals.

  20. The banks never made these loans until Rep. Barney Frank and his thug partners in Congress passed the Community Banking Act to force banks to make loans to people who couldn't verify their assets or verification their employment/income.

    The loans were made by banks to people who misrepresented ( or never represented in exchange for a loan that never would have been made in the past) their ability to repay.

    I haven't seen one case where the borrower didn't get the cash under the terms that the borrower agreed to.

    The politicians wanted to buy votes from their constituents in order to remain in power and passed stupid laws to placate the electorate into believing that housing only went up and that the Community Banking Act was going to give them access to the "American Dream of Home Ownership".

    When the inevitable bibble burst, Barney Frank and his friends gleefully blamed Wall Street for all of the problem and prayed that the masses wouildn't seek revenge against the politicians that pushed this snow ball down the mountain toward the town, touching off the financial avalanche!

    Wall Street has blame in this matter for leveraging up the risk through derivatives but certainly not exclusive blame-if you want to see a responsible party go to jail, why don't you start with retired Rep. Barney Frank!

  21. The cynicism expressed here of government efforts to achieve some measure of accountability and justice is saddening. Yes, politics in all its awfulness is in some part to blame for such views, but not to the point of being so one-sided and narrow-minded. Would that such cynicism was also felt about rampant and rapacious corporate greed, for then too corporations, or more precisely the greedy individuals within them, would be opposed, hindered, or obstructed as much as has been the effort to prosecute their crimes.

    To say “liberals” have a “visceral hatred of private wealth” sounds loud-mouthed. To claim that “the truly responsible was a government that allowed banks to get over-large” would seem satirical if the price to society had not been so destructive and painful. Again, this cynicism requires ignoring the history of powerful corporate opposition to the regulation of these markets and, yes, of the corruption of our politics with graft and bribery masquerading as campaign donations. In simplest terms, it is blaming the victim for the crime. Let’s not forget who robbed whom here, and how corporations have wrangled their way out of accountability as much as possible rather than own up accept responsibility.

    This too may sound cynical, but do not for a moment think that corporations have taken this lesson to heart. Many may already be on the hunt for some other unregulated, exploitable market. And we the unwitting will be blamed again for their crimes.

  22. Someone should have to wear stripes, otherwise it's all paperwork.

  23. $13 Billion is not enough. No one is going to prison. Jamie Dimon still has his job getting beaucoup millions of dollars a year. Where is the admission of guilt? Where is the allocution in open court, admission of the crimes committed so all who were victimized may sue for damages?

    This is a most unsatisfactory result.

  24. No jail time and no personal fines means no deterrence.

    Pointless exercise.

  25. Thank God someone still cares about justice.

    Clearly Obama and Holder could care less - very disappointing.

  26. While it's a good step, unless heads roll, there will be no moral change in the banking industry. Money knows no morality; however, people who control the money and should know better yet still make cynical decisions are at fault, and should pay. Thirteen billion hurts no bank, banks have no feelings, just a whole lot of money. The heart of a bank is the banker. Real people suffer, yet you wag a finger at a non living thing and expect it to learn a lesson?

  27. Nice, but one wonders if settlements that continually come in well below the amount of ill-gotten gains, and that include no individual punishment, will truly curb future abuses.

    Because a person bent on wrongdoing can view this as an incentive: I'll still make a fortune and there's no risk of jail.

  28. What kind of accountability is there, when a company admits no wrongdoing, can pay out a $13 billion fine as a cost of doing business and, at the same time, has it's stock go up 2/3 in less than eighteen months?

    Five guys maintained JPMorgan is a person in Citizens United. Will those five guys now insist the corporation should go to jail? Of course not; it can't and they won't. So who is actually held accountable? Best I can tell, no one!

    There is nothing apparent in this settlement that would be a deterrent to future similar activity by JPMorgan or anyone else. Nor does it appear that much of the money will go to assist homeowners who (certainly with some responsibility of their own) were duped by the bank regarding their mortgages.

    When the Times Editorial Board says, "In all, the settlement ... puts other banks on notice", I must ask, on notice about what? It would appear that the notice is that there is no net penalty for such activity. That certainly is what the market it saying, when it jumps your stock 2/3, while you are agreeing to pay out $13 billion.

    I would love to see the Times do a piece a year from now following where the money actually goes, not with vague terms such as " homeowners and communities" but, rather, with specifics. For instance, how many dollars go to relieve homeowners and how many to lawyers representing them? And how much ends up as a tax write-off for JPMorgan?

    Accountability? Show me.

  29. I find it unbelieveable that JP Morgan can deduct the fine placed on it from its taxes, and that they did not admit to any illegal wrongdoing. Just another reason to be sceptical of the American way of justice. If you are rich enough, you buy your way out of a crime. The damage has already been done to too many homeowners. The criminals... and there are many of them, should be prosecuted.

  30. Thieves always get off lighter than they deserve. Why aren't the miscreants at JPM in prison?

  31. As long as it is "money" to atone for and punish crimes committed by "corporations"and not personal names of the executives managing these corporations to name and punish WHY not repeat and and try their luck with more clever ruses in the future?
    After ALL:
    -it is shareholders' money not the managers'
    - how much those 13 billions dollars represent of JP Morgan's profits in the period under investigation?
    -how do these 13 billions dollars compare with the totality of JPM executives bonuses, golden hand shakes and other executive privileges in the same period?

    Now it is the corporations, not the executives running them, that are named, shamed and punished!
    Next it will be the boardroom and the table executives sat on and deliberated that will be named, shamed and punished by shareholders' MONEY!

  32. Most readers and I would welcome any data re
    " - how much those 13 billions dollars represent of JP Morgan's profits in the period under investigation?
    -how do these 13 billions dollars compare with the totality of JPM executives bonuses, golden hand shakes and other executive privileges in the same period? "
    Would anybody help??

  33. If only the President had made this a priority in 2009, there may never have been a Tea Party.

  34. I was saddened to hear that only "relief" is being offered to existing homeowners and not cash to those who were forced to foreclose. What about those who lost their homes as a result of all this waiting indefinitely for government to regulate assistance? Is there no financial compensation for their pain and suffering? TARP AND HARP PROGRAMS were a joke as the banks were never required to help those needing refinancing to save their homes as the banks were only expected not required to do the right thing? A sad state of affairs.

  35. Prison plus fines would have focused them a lot more on the consequences of their greedy incompetent fraudulent criminal acts.

    Since they do not have the honor or courage to resign in shame nor are they asked to resign or be fired for cause this is the only justice we can ever expect.

    Yet it seems that those who take and from the poor in order to give to the rich have bipartisan support for their antics.

    Our elected leaders have been selected by dollars from the robber baron corporate plutocrats. They have been brought and paid for to represent the elite.

  36. Wall Street and Big Banks are people in the sense that they have rights. We just can go around accusing them of criminal wrongdoing without a trial. This is part of the Constitution. As far as criminal indictments go, what laws did they break? Negligence? A lot of laws regulating these securities were written after the fact. You can't accuse someone of breaking laws that didn't exist.

  37. Even if they committed fraud, how would you prove it? These risk assessments of these securities was not well understood and it was probably par for what was already available on the market.

  38. Jason,

    There are plenty of laws on the books that can be used to prosecute Wall Street executives. Washington has turned a blind eye to the wrongdoing: securities fraud, accounting fraud, and violations of Sarbanes-Oxley are at the top of the list.

    From William Black’s interview with Democracy Now:

    “We’ve got to stop this dynamic that’s producing recurrent, intensifying crises. This one has devastated the nation. The next one would probably be equivalent to the Great Depression. And part of that answer—but only part of it—is to hold the folks accountable, especially the most elite, who caused this crisis. And they did it through FRAUD in what we call the ‘C-suites’—the CEOs, the COOs—so the absolute top.”

  39. $4 billion of this figure, over 30 percent, was announced almost a month ago as the conclusion of a lawsuit between JPMorgan and the Federal Housing Finance Agency.

    Attorney General Eric Holder, wanting to stand at a podium and give out a really big settlement number, simply folded the FHFA settlement into the Justice Department’s.

    It's understandable why the Justice Dept wants to spin it this way, but why the NY Times fails to report this is the question.

  40. I am compelled to wonder, how tiny a fraction of their profitability is the $13 billion settlement which will no doubt be whittled down and paid over time?

    When are these thieves going to jail?

  41. Cosmetic slap on the wrist. The wrong doers aren't out any personal money; in their world it's still sunshine evey day. And this 'penalty' was to only one of the players. Shame on the government, the best that can be bought, for not really hammering all of these guys, and the media, bought mouthpieces that they are, for playing this up as pennance.

  42. This is a mocking of taxpayers, something which corporations do every single day. They don't need to care; the taxpayer will pay our fines too. Obscene!

  43. $13-Billion... don't fool yourself, this is viewed by the players as nothing more than the cost of doing business. Whilst the numbers may sound mightily grand to us mere observers (as they should because these 'numbers' actually belong to us), they are just numbers on paper and screen to those playing the game.

    $13-Billion... is paltry and insignificant when compared to their causing of a near global melt-down of the economy. Indeed it might be said that it is not a bad price (or I should say, investment after the fact) to pay for an additional $700-Billion of our "numbers', and who is paying the price --- still?

    Our economy continues to splutter, our housing market is like molasses, investment is stagnant like dead water, yet the super-heros of Wall St are continuing to claim ever larger pay-checks and bonuses. For them, it's upward and onward!

    It is we, the people, who continue to suffer the consequences of the actions taken by those at J P Morgan et al, and how many of these Wall St super-heros have gone to jail or even been charged with criminality?

    Don't get too excited about $13-Billion, it's all just smoke and mirrors.

  44. Let's hear it for accountability!

  45. Let's see all the other banks also brought to account and a change in the tax code that doesn't allow them to write off the costs of the pay outs on the backs of the middle class by shirking their fair share of taxes owed.

  46. Next time you're taking a nice walk in Central Park and happen to look up at those beautiful historic apartment buildings, and wonder inside how it would be to live that way, to have such a beautiful view of the City, remember, those apartments are filled with the vipers who just paid $14 billion for destroying the economy of this country, and none of them went to jail - their wives are buying flowers or eating lunch downstairs just at the moment you're walking by.

  47. Allegations that POTUS Obama is a socialist are as imaginary as the belief that he is a Kenyan Arab Muslim usurper. Criminal prosecutions including the pursuit of prison sentences and fines for individuals was never going to happen. Wall Street barons strongly favored Obama/Biden in 2008 by emptying their wallets.

    POTUS Obama hired and took advice from Economic Wall Street Team Clinton. A nest full of an ugly cabal of robber baron corporate plutocrat welfare king and queen vipers like Robert Rubin, Jamie Dimon, Larry Summers, Peter Orszag, Tim Geithner, Rahm Emanuel, Bill Daley and Jon Corzine. They were behind the repeal of those portions of Glass- Steagall that prevented investment banks from owning commercial and retail banks.

    The climax and culmination of their greedy incompetent fraudulent enterprise was America standing on the economic precipice on 9/15/08. Followed by the raid on the American taxpayers snatching our purses and picking our pockets and taking our wallets to bail them out via TARP and games played on their in the Federal Reserve. The moral hazard of Uncle Sam bailing them out is the closest that America has come to becoming a socialist corporate crony state.

    This was a bipartisan charade that was also supported by Economic Wall Street Team George W. Bush including Henry Paulson, Ben Bernanke, Alan Greenspan, Paul O' Neil etc.

    We are the United States of Goldman Sachs, Citibank, J.P. Morgan Chase, Wells Fargo, Bank of America etc. Biden/ Warren 2016?

  48. Biden is a corporatist. How about Sanders/Warren in 2016? Now that is a ticket that I would support!

  49. I disagree vehemently with this; this is just a lot of baloney. So the way it works is: you rip off thousands of people for billions of dollars, if you get away with it, you keep it. If you get caught, you have to pay it back. That's it. What a deal. It's "the american way".

    It's so nice to see everyone patting themselves on the back about this - I hope they do some "high-fives" too and then go out for a drink.

    Jail - it's the ONLY way this practice can EVER change.


  50. The government can probably kiss goodbye any future willingness for banks to assist any regulators to acquire troubled institutions of any significance that could pose future liability for the acquiring institution. JPM bought WAMU and Bear Sterns in good faith as requested by FDIC and Treasury and the government returned that with a political stab in the back.

  51. The real news in this is not mentioned at all. That is during the next financial fiasco banks will not cooperate with the Treasury or regulators as did Morgan, Wells Fargo and BofA. These banks were forced to take over failing financial firms. The most egregious example being BofA and the Merrill Lynch merger, with Paulsen's threats of the CEO. The banks, especially Morgan, did their patriotic duty, (with the hope of making a profit), only to be demonized in the press, blamed for the gov't created mortgage problems, threatened with criminal charges and now paying fines that won't even go to those who actually experienced losses. So, the politicians and regulators are high fiving one another for extortion of the banks. Big Deal! The one's who should be called to account are the politicians and bureaucrats on the Banking Committees and Fannie and Fredie who created the subprime loans and the resulting real estate bubble. The abuses by the banks are miniscule in comparison. A smokescreen that the NYTimes wants to employ to hide the truth that social engineering rarely works. It is much more convenient to blame big banks than to take responsibility for one's failed policies. In 2009 and 2010, the Treasury should have handed Mr. Dimon a blank check for him to determine his own compensation. Morgan did not need a bailout. Far from it. They calmed the financial waters and we see how it is recognized. That won't happen again. The will tell the Treasury to take a hike. We all would.

  52. Congratulations to Mr.Scheidermen for his perseverance and courage. His office recently helped me get my security back from a landlord who had every intention of stealing it. It's depressing that corporations can write off a pay out like this on their taxes. I'd like to see legislation to change that and criminal prosecutions. We need to work toward a single tier system where all individuals are prosecuted for crimes and the wealthy don't get to pay out and serve no jail time.

  53. Not the bank, but its employees committed fraud and other possible criminal activities. So employees of JPM should be punished because they benefitted personally from their criminal behavior. Regardless of the boneheaded decision of the US Supreme Court that corporation are people, you just can't put a corporation or a bank in jail.

    Second, this is coming out of our skin as shareholders of JPM. You may not hold any JPM in your personal account, but it is very likely that one of your mutual funds in your 401(k) or IRA holds JPM.

    So it is double whammy for the shareholders, first we face the financial crisis and lose 60-75% of wealth. Then we pay 13billion in penalties. And don't you know it, JPM will exclude this legal cost when calculating performance pay for its executives for 2013. Thank you, JPM

    Is there no justice.

  54. This will mean nothing if criminal charges are not brought against CEOs. Too often, in the past, we've seen the privates go to prison while the generals live on. PBS's Frontline episode, "The untouchables" revealed how much the bank executives knew and that was three years ago. It is time to say that if your bank made bad loans, bundled them, and sold them to fund managers, then bet against the deal through derivatives, then you must have known what your bank was doing. You should go to jail.

  55. It certainly does put banks on notice. The OVERWHELMING majority of the "bad mortgages" were originated by Bear Sterns and Washington Mutual, 2 institutions that the Federal Government asked JPM to purchase, during the depths of the financial crisis. Let's see if they help next time. Meanwhile the Government is suing rating agency S+P but not Moody's, and i am unaware of any 'financial accountability' by the GSE's -- Fannie Mac and Freddie Mac -- for their part in the disaster. The NYT may opine the justness of the Government actions, but i don't, and note to the editorial board: JPM is the largest employer in NYC. Is there a state that so readily sues an organization of people whose existence is so crucial to its financial well-being?

  56. Despite the universal ululating here for prison sentences for the personnel "at the top" at JPM, it would be helpful to the cause of justice to see a trial in cases such as this. It would also be helpful to drafters of future legislation and regulation to understand what constitutes codified criminal activity and what doesn't. There are so many settlements out of court that, very clearly, most people have lost sight of the fact that many of the accusations and allegations simply may not stand up to apolitical scrutiny and due process. That's why almost all of these such cases settle; the companies have already accrued for the fines and have disclosed ongoing disputes with regulators on their annual reports. The politicians crave these headlines and the brazen, craven demagoguery in these "victories."

    Mr. Scott's pondering about Fannie and Freddie raises the most trenchant question: are they not responsible for exponentially more bailout funds, sheer mischief and misguided policy in lending than any stockholder-owned bank? This query will get no traction here, because people need scapegoats--most helpfully if they are "big" pharma or "big" tobacco or "big" oil or the age-old scourge, the venal moneylenders. The mortgage meltdown is much more nuanced and complicated than blaming the rich or the corporations or Citizens United or Bush or any of the other standard go-to populist saws. But to agitate to take political prisoners to satisfy angry mobs is appalling on every level.

  57. $13 billion is coins-in-the-seat-cushion money for JP Morgan and won't help the many homeowners who are now underwater in their mortgages as a result of the bottom falling out of the housing market as a result of JPM's toxic mortgages. That said, thank goodness Eric Schneiderman dug his heels in. It was becoming clearer with every passing year that Holder and Obama weren't really interested in going after any of the banks and if not for the State AGs all of the banks would be off the hook completely.

  58. "It is a black eye for the bank, but not particularly punitive. And it does not preclude JPMorgan from deducting most of the cash settlement from its taxes."

    Have I got this right? The bank pays nothing.
    And all the other banks have been put on notice that they will pay nothing too.

    And yet the title of the piece is "JP Morgan Pays". Very misleading.

  59. I think this is all deductible....$13 billion????
    If the execs aren't going to jail why doesn't the corporation bear that burden as a fine of let's say 20% of profits for the next ten years? The price of being a person is accountability Mr. Chase Morgan.
    There are criminal proceedings too?

  60. This will not hurt J P Morgan they will just deduct the penalty on their tax returns. So it will be just plus minus nothing.

  61. Common crooks go to prison. These corporate crooks should also.

  62. Interesting that no one is going to jail despite that there was massive wrongdoing in the entire banking industry. An additional stab in the back to the American public is that these "fines" are going to be tax deductible so, in effect, we the taxpayers are going to pay for part of the retribution. Funny that a person can sell a marijuana joint to someone and go to prison for life but the banking vultures receive the (usual) get out of jail free card along with their multi-million dollar bonuses.

  63. Isn't the lack of criminal charges against "wall street" by the DOJ another "unintended" result of the Citizens United decision?


  64. Thanks for pointing out that more than half of the settlement may be tax deductible.

    So we taxpayers are still stuck by corporate crooks and corporate servants in government.

    Government of the people, by the powerful, and for the corporations and the 1%?

    Not to take away from Mr. Schneiderman for doing his job, but please focus more on the needs of the 99% and justice.

    Remember most Americans are suffering nearly as much as during the Great Depression thanks largely to this corporate wrongdoing.

  65. Mr. Schneiderman is terrific. I hope he keeps after these guys. And Americans need to see the people who set up these malicious schemes actually GO TO JAIL. There were many conspiring to defraud investors (not to mention the poor folks duped into taking out mortgages they could never afford) and they should not be walking among us now. The Wall Street people will not go to jail because banks, the war profiteers, our friendly oil and gas corporations, the health insurance corporations and a few others have actually purchased, using campaign war chest money, the elected people in our government. I trust Mr. Schneiderman, Senators Warren and Sanders and only a few others. We need campaign finance reform to accomplish the legal tasks to take on our corrupt owners.

  66. We need to let anyone who ever stole money out of jail to reflect what these "settlements" really mean. It's our "justice system" that is the real fraud.

  67. Corporations have no memory, and individuals retire or die, are are replaced.

    What is needed is a resolution that resonates down to America's business schools, where these "hearts of darkness" business execs are trained to do the damage that they do with a clear conscience. Otherwise the cycle repeats with every fresh crop of MBAs.

  68. Somehow, it seems that the only people being punished are holders of JP Morgan stock--not that there is anything wrong with that (as an investor, you take the risk that the company will pay financial penalties for committing fraud), but the people who actually committed the fraud are not being punished, and of all the people who might be punished here, the investors are the people who had the least ability to prevent the fraud.

  69. The more you think about it the angrier you should get. The entire banking vertical is bloated with beneficiaries of lax accountability and low interest rates.

    You jam the system with 27% bogus product, your bets go bad, you get bailed out, the government lowers your cost of capital to zero, the government buys your lousy inventory, your stock goes up, you get big bonuses, and at the end of the day you complain about paying a fractional fine of annual earnings based on the conditions listed above.

    JPM's board of directors: solidly behind the leaders that oversaw this mess. Wow.

  70. They got out of it again! What is money to them! Prison time is needed, if it is ever going to stop, starting at the top!

  71. It is not the size of the penalty that astounds me, but the fact they can afford to pay it without batting an eye...all while my savings account pays a fraction of a percent in interest. This is the money they are trading speculatively with and earning these large returns.

  72. The Commodity Futures Modernization Act written by Phil Gramm, the architect of the 2008 collapse, forbid regulation of drivatives, opened the Enron Loophole and allowed the establisment of "shadow exchanges. You might be amused by the manner in which that bill was passed at the very end of the 2000 lame duck session.

    "The Republican leadership of the House incorporated "The Commodity Futures Modernization Act of 2000(H.R. 5660)" by reference, as Section 1(a)(7), in a long and complex conference report to the 11,000 page long "2000 omnibus budget bill"'

    So nobody saw the bill until the conference report on the omnibus budget bill where it was buried in a footnote. It was never debated in the House or the Senate, never sent to any committee, and it was not attached to the bill until AFTER the conference in the dead of night.

    Barney Frank didn't do it.

  73. Chuck Shumer? The senator from Wall St.?

  74. So far the shareholders have been punished for the actions of the management.

    Let me know when the people that are responsible have been punished.

  75. No banker is going to be concerned about his future as a banker when the penalty is other people's tax deductible money. They will be free to defraud the public, paying fines if they are caught. The only deterrent is licensing the individual bankers; subjecting them to investigations as needed; and taking the licenses away when violations are found. As satisfying as a jail term seems, criminal investigations take forever and the defendant has the US Constitution to hide behind. An administrative licensing proceeding, on the other hand, provides less in the way of rights and more in the way of speed. At the end of the day, no license; no banking.

  76. To belabor the obvious:

    "Where it (the settlement) falls short is in its failure to hold individuals accountable."

    Fraud is and was a crime. The actual people responsible need to:

    A: Lose their jobs so they can no longer misuse their authority; and

    B: Go to jail and pay fines from their personal resources.

    These fines come out of the pockets of JPM shareholders, which include widows, orphans, charities, and pension plans among others. These people have no idea about derivatives. It is Mr. Dimon et. al. who breached their fiduciary duty to these people in permitting these practices. Allowing as JPM was compelled by regulators to take over the most egregious perpetrators of these frauds, then it is the executives of those prior institutions who should be prosecuted. It is not as though we don't know who they are.

    There is no such thing as "corporate behavior." What corporations "do" is only the aggregate of the behavior of actual, individual people. Nothing will change until actual people (not fictitious "people" as in corporations) are at risk for their own, personal misbehvior.

  77. To belabor the obvious:
    A.) these securities were already available on the market
    B.) JPMorgan was providing competitive services and acting in their fiduciary responsibility

    The problem was with the regulations.

  78. As others have said, "yet no one is going to jail?" To which I add, "and not one of the 'deciders" will lose a penny of their ill-gotten gains?"

    So, how will this prevent the same people from doing the same thing again? Or, judging by the sociopathic avarice prevalent in those that are running our economy, by allowing them, the Dimon's, Blankfein's, et al, to keep the rewards of their decisions and actions are we not simply setting the stage for them to do even worse to us next time?

  79. In their view, the only crime is getting caught.

  80. The implications are clear, if the fines are tax deductible then they are a simple cost of doing business - kinda like Post-it Notes or Scotch Tape.

    The accountability is so refreshing.

  81. Yup, my comment as well.

  82. Why stop at J P Morgan? Oh wait, their CEO is not that well liked by the Obama admin and the left.

  83. Steal billions = no jail
    Steal a tv = 10 years

  84. No jail time for people who are as crooked as a dog's hind leg? No sale. Obama, Holder, and the rest of the DOJ are spineless tools.

  85. Now the difficult part comes for JPMorgan Chase - whether to code this expense to MIscellaneous Expense, Clawback Expense or 'Caught-in-the Act' Expense on their income statement.

    Accounting coding issues can be so vexing.

  86. They'll write it off as "Good will" in their tax statement. It's cumulative impact will not be as advertised.

  87. All for naught if they are allowed to write off legal fees, settlement and no criminal charges for the "executive director" and "managing directors."

    That, SURELY will not stop the practice, just a big headache if you are pursued for the conduct.

  88. Really? This is an editorial? More like a recitation of "facts". What are you afraid of down there at the NY Times? Really, what? Why don't you do your job?

  89. There WAS massive fraud, but do not forget that much of what was done was legal. It happened because of bad laws and poor enforcement of what laws there were.

    Alan Greenspan and the FED had the responsibility to police mortgage lending. He didn't do it. He has said that he thought the market would police itself. After all, who would want to hold a mortgage that was unlikely to be repaid? What he didn't count on were derivatives, securities based on other securities.

    In this case, a huge collection of bad mortgages was purchased by a company such as Bear Stearns and then securities were sold based on them. Here is how it worked. Say 10 levels of securities were set up. The first and "safest" paid if only 10% of the mortgages were paid by the home owners. The next paid if 20% of the mortgages were paid. And so on. The idiot rating agencies (S&P et al) rated the upper levels of these securities very highly.

    This system hid the fact that all of the mortgages were bad. They didn't meet FHA standards so could not be purchased by Fannie and Freddie and were mostly not sold by banks (and thus not subject to the CRA), but by mortgage companies like New century.

    All this was legal because Phil Gramm's Commodities Futures Modernization Act forbid the regulation of derivatives. The fraud occurred when the banks did not disclose the fragility of the underlying mortgages.

    So the sale of these bad mortgages was driven by Wall Street need for something cheap to base derivatives on.

  90. “There WAS massive fraud, but do not forget that much of what was done was legal.”

    Not true, Len. There are plenty of laws on the books that can be used to prosecute Wall Street executives. Washington has turned a blind eye to the wrongdoing: securities fraud, accounting fraud, and violations of Sarbanes-Oxley are at the top of the list.

    From William Black’s interview with Democracy Now:

    “We’ve got to stop this dynamic that’s producing recurrent, intensifying crises. This one has devastated the nation. The next one would probably be equivalent to the Great Depression. And part of that answer—but only part of it—is to hold the folks accountable, especially the most elite, who caused this crisis. And they did it through FRAUD in what we call the ‘C-suites’—the CEOs, the COOs—so the absolute top.”

  91. But RLS, the basic plan was legal, Collectivized Debt Obligations are legal and still unregulated. Selling bad mortgages is still legal unless the FED makes rules outlawing them.

    It seems to me that Black agrees with what I said,

  92. It must be great to be king. Steven Swartz broke into an MIT computer, copied some files and faced, rather rapidly, I might add, decades in prison. Many Americans growing pot in their basements get busted by the DEA and face decades in prison. Busted, by the way, often by DEA agent SWAT teams who break down the doors to their homes. JPMorgan Chase was one of the financial institutions which destroyed the lives of hundreds of thousands of Americans while making tens of billions of dollars in the process and the government tiptoes very lightly and very politely. No battering rams for bank officers, no facing decades in prison.

    There are two levels of justice in our country and this is the most corrosive part of this. Money could always by you good defense couinsel but now, with that much money, you don't even need a lawyer. Because our government does not fear or respect us, we face often extremely harsh justice while bankers and other top people in finance, they face nothing at all.

  93. You meant Aaron Swartz. Stephen Schwartz wrote the music and lyrics to "Godspell," for which, sadly, he was never prosecuted.

  94. There's an old saying: How much justice can you afford?

    These guys are lawyered up with the top guys in the legal business. Anyone who think these scoundrels with do some time in the slammer (let alone pay a fine) are dreaming.

  95. Why should ANY of this settlement be tax deductible?

  96. Because the banks paid for that legislation, fair and square.

  97. Because civil penalties are a business expense.

  98. So...out of $13B, only $4B goes to homeowners and the rest is porked out to various "federal"agencies. What nonsense. Will there ever be any accountability for where this $9B actually ends up and how the agencies put it to use? No....

  99. Others have done a great job of reminding the NYT that $13 billion is a rounding error compared to the profits this bank ILLEGALLY made on the backs of Americans. I won't regurgitate them.

    But there is another problem with this settlement. The guilty pay nothing, and keep all their winnings.

    How much has Jamie Dimon made as head of this cartel? How much of it was made illegally? How much did HE have to give back? That's right, nothing.

    They have a saying in banking. "IBGYBG".
    it stands for "I'll be gone, you'll be gone".

    So the lesson is this:
    Go work for a bank. Bilk your customers for hundreds of billions of dollars, and make hundreds of millions of dollars in bonuses and salary. When the bank gets caught, you either get to stay and get a record bonus (like Jamie Dimon) for helping the bank through the very same problems that you created, or walk away with your hundreds of millions of dollars and go work for a different bank to repeat your escapades.

    They disgust me.

  100. Real relief would have been a resolution that paved the way for individual homeowners caught up in the scam to seek individual justice in their own case. It looks like the "settlement" left them out in the cold.

  101. This is a slap on the wrist -- like requiring the NY Times to offer free subscriptions for a month.

    And the fact that the power structure -- Dimon in particular -- remains intact -- is a crime.

    You want to clean up an industry -- force the CEOs of miscreant companies out for their company's misconduct. No severance, forfeiture of nonqualified retirement plans, etc.

  102. It is good that the government went after one big bank and demanded serious fines, just as they went after just one ratings agency.

    Funny though that their targets thus far are the one bank whose CEO does not show feisty to the Democrats and the one ratings agency that had the audacity to downgrade the US credit rating.

    Maybe they were just chosen at random.

  103. It's the masters who make the rules
    for the wise men
    and the fools.
    But it's all right ma,
    it's only money.

  104. How will the government use the $2 billion in fines paid by JPMorgan? How will the rest of the money be used by state and federal agencies? It seems as though while the government is receiving the funds, there is no mention as to how previous home owners will be compensated.

  105. The very fact that JP Morgan can pay a fine of $13 billion without it affecting them one iota is proof positive of something rotten in Denmark. That they could do so while mocking both the public and the government is still more obscene. That they can do so without a single person going to jail is pornographic.

  106. " It is a black eye for the bank, but not particularly punitive. And it does not preclude JPMorgan from deducting most of the cash settlement from its taxes."

    I've been following the barrage of fines JP Morgan has been hit with over the past 6 months for all sorts of financial shenanigans, from the London Whale trade to the China nepotism charges, and of course the biggie, the toxic mortgage mess. And I'm among the many posters here crying for jail sentences for JP Morgan executives, only to be attacked by posters asking me name what "crime" was committed.

    Thus, I thank the York Times editorial board for raising the criminality of bank employees, as well as the bank itself, in these words: "The settlement leaves open the possibility of future civil and criminal charges against individuals, as well as criminal charges against the bank."

    Those wronged by the willful fraud, deceit, and greed of JP Morgan during the toxic mortgage crisis can't bet satisfied by financial penalties, even half of the bank's annual profits. First, it's tax deductible. Second, it's just "money" to an institution awash in profits from years of profits from unwitting homeowners.

    No, the only those who lost homes and jobs in the Great Recession might feel justice is by seeing these people behind bars. Time to hold financial wrongdoers personally responsible for their actions instead of hiding behind a fine they don't personally pay.

  107. @Christine - just because the settlement technically leaves open future criminal charges does not imply that there is any basis for such charges. Again - what crime has been committed? Show a criminal statute and explain how the provable facts fall within it. Otherwise, you're continuing to talk pitchfork nonsense.

  108. The crime was accounting control fraud, just ask former S&L prosecutor William Black.

    One economist has mentioned that the lawsuits against Chase and others (there's been a flurry of settlements lately.) as a result of this might be enough to destabilize the banks again.

  109. Hiding from personal responsibility behind a business structure seems to be a new norm in this country. Not a good sign.

  110. Only jail time for the miscreants will have any affect on this "business as usual" culture. As far as I can tell not a single JPMorgan executive has lost their job much less one dollar of compensation. A more fitting fine would have all of the JPMorgan profits for two years. Perhaps then would share holders wake up and run the bums out of town.

  111. Part II
    But then, under the current nefarious government, they are charged with fake crimes, and made to pay vast amounts in fines, including $2 billion to THE JUSTICE DEPT.
    This is a farce, and a serious decline in government ethics.

  112. This is nothing more than a financial slap on the wrist for the likes of JP Morgan. What's needed and is more than deserved are criminal indictments for the bank's greedy perpetrators. Twenty-five years apiece in a solitary-confinement slammer is what they need and deserve.

  113. The difficulty, of course, is that the big shots always set these swindles up so that they personally have "deniability." In practice, that means that they are prepared to be deemed incompetent, but that's a lot better than being indicted and perhaps even convicted as the criminals they so clearly are. Well, at least Mr. Dimond did not get a Medal of Freedom. Maybe next time.

  114. Is this just a great big political contribution?

  115. Fining JP Morgan 13 Billion - a company that earns that much in a single quarter - is ridiculous, impotent justice.

    The government allowed JP Morgan to retain the ability to write off much of this "fine," which means it is simply "the cost of doing business." No one goes to jail, no one is held accountable. These actions will continue and grow worse because everyone involved understands that they can game the system to make a fortune and never see any personal repercussions.

    The ultimate message here? The people who committed these crimes retain the wealth they personally accumulated from their actions and receive no punishment beyond a corporate fine that is tax deductible. This is a monumental incentive for others to repeat these actions.

  116. Where the settlement falls abysmally short is, not only the failure to hold individuals accountable as the Times charges, but in the knowing and duplicitous participation in the scam on the public that allows (once again) JPM to write off their settlement "penalties" as a tax deductible business expense, thereby once again foisting the cost of their wrong doing on the taxpayers. Same 'ol, same 'ol, back scratching of big business disguised as retribution on behalf of an exasperated public.

  117. "...JPMorgan acknowledged that its employees knowingly packaged toxic loans into mortgage-backed securities and sold them to unwitting investors. "

    "But the bank did not admit any violations of law."

    Isn't this the very definition of OXYMORON?

  118. If the money is tax deductible, then the amount they are paying would actually be zero.

  119. They can deduct some parts - probably not the $2 billion fine - but the other payments from their TAXABLE INCOME (profits), thus lowering their taxes but not by 100%.

    Just like personal income tax - most corporate tax deductions are deductions from taxable income not direct deductions from the taxes owed.

    Assuming a corporate tax rate of 35%, the settlement would still cost JP Morgan 65 cents on the dollar, but it would have been better if none of it was tax deductible.

  120. Until bankers are held personally accountable, there will be no real change. Odd thing about this countries laws. The powers continue to assert the myth that the law is applied to all equally. And yet given the facts of the matter that is not true at all. For if one stole $20 from a bank, the effort to find you would be substantial. You would be prosecuted, and you would serve time in prison. You work for a bank and create bogus loans and sell them off to others for a substantial profit in the Billions of dollars, nothing happens to you personally at all... ever.

  121. These weren't bogus loans and they provided amount of liquidity to financial markets.

  122. If corporations are people, then there is no such a thing as "corporate behavior" to hide behind. Prosecute the people involved. Jail the guilty.

  123. Too much happened behind the scenes for most of us to intelligently judge this settlement.

    But it is essential to remember that a lot, probably the large majority, of the malfeasance covered by this settlement was carried out not by JP Morgan, but by Bear Stearns and Washington Mutual, two previously independent banks which failed during the early stages of the financial crisis. During the heat of the crisis, these two failed banks were acquired by JP Morgan, at the request of the Federal government. This was done to help bring the cascading damage of the financial crisis under control, and thereby help mitigate the crisis. The acquisitions needed to be, and were, carried out hastily; JP Morgan was not given a lot of time for due diligence. And as best non-experts and non-insiders such as myself can discern, the acquisitions of Bear Stearns and Washington mutual did, in fact, help the situation.

    Now, JP Morgan did a lot of very wrong things all on its own, and I doubt it acquired these two banks strictly out of altruism. It has much to be held accountable for.

    But things are a lot more complicated than this editorial suggests. When a bank fails, the government does not try to run the bankrupt institution on its own, it tries to find a healthy bank to take over. This serves to contain the damage.

    It is worrisome that the next time the government needs a strong bank to take over a weak one, it have may trouble finding an institution willing to step up to the plate.

  124. That's why a plan needs to be in place for the Fed and other agencies to unwind them when they crash, or for them to be nationalized and converted into public banks.

  125. Let me see----------Management gets off but the Shareholders get stuck with the bill.
    Sounds to good to be true!

  126. So no one goes to jail but the penalty is $13 billion. And Johnson and Johnson, for a lousy hip joint for 8,000 people, pays $2.5 billion. And the effect from JPMorgan actions was against millions of people, destroying lives and almost breaking the country. Sounds about right. I also think it's about time to call JPMorgan a marketing company of financial instruments, not a bank giving them "mystical" powers. And if SCOTUS calls companies people, why didn't we close down JPMorgan for 5-10 years like a person when put in jail. If our society breaks, this is just another swing of the hammer. Does anyone think the rich people are going to run to Mississippi, Texas and Alabama to live and enjoy the fruits of their labor? Koch brothers live in NY don't they??????

  127. Happy now? Sure, some of you would have loved the fine to have been larger so every one in the US directly or indirectly would have been effected by the settlement, probably even you who are reading this would have been effected.

    So now can we get the same investigation with the same vigor going with Bengazhi or Fast and Furious?

  128. And which branch of government receives the 13B?
    How are the proceeds of the fine then distributed by the Govt.?

  129. I have seen the devastation these banks have done to people. the inside of these peoples homes looked like something from the movie I am legend, stuff strewn about personal possessions left behind it was a sad thing to see. these peoples lives were ruined for the sake of money. If the banks can afford to pay millions in fines they should have been made to help these poor people keep their home. But fear not a wealthy investor will buy it for cheap, and rent to some poor soul who lost their home for a profit. It is not so much that the home was lost, it is that their credit is ruined as well, and they will have to pay more for rent because they are a risk. It is a sad thing to see how the average joe has no rights against a big bank, it takes the big Government to make them pay. don't forget to use your chase credit card this holiday season. They need that law suit money back.

  130. How much of the $13billon is tax deductible?

  131. This "settlement" figure of $13 billion is mostly tax deductible! So this is not what they are going to pay. It is like they found a coupon to use and they will use this tax coupon you can be sure.
    We should calculate the real amount that JPMorgan will likely pay. The federal tax corporate rate (per NYTimes Nov 19 article about corporate tax reform) is 35%. Of course when persons argue that this (corporate tax rate) is too much they always use the highest marginal rate since it makes their argument sound better. So we will mirror their argument technique and us the highest marginal rate. And since the article say "mostly" tax deductible we will use 60% of the 13 billion. We end up with 7.8 billion being deductible at the tax rate of 35% which equals 2.7 billion savings on their federal corporate taxes.
    And New York state also has a corporate tax rate. The rate is 7.1% according to This means that, if we use the same 60% of the 13 billion, JPMorgan will save an additional 553 millions.
    So we have a total savings of 2.7 billion and 553 million or 3.2 billion. So the real cost is less than 10 billion.
    When was that last time you deducted from your taxes the fine for a speeding ticket which is most often just a civil proceeding?

  132. I switched from J P Morgan Chase in 2009 to put my money where my mouth is. That J P Morgan is an enemy of the people and therefore of the country and I will not contribute. I have many friends who bank with the big banks, especially young friends. The corporate interests are winning if we don't wake up and do at least the least we can do.

  133. IMO, Robert hit the nail on the head. Jail them. Pathologic CEO's and their decimating movable feasts will never stop, so long as we lack the will to criminally prosecute the principals.

  134. Were none of the officials at Fannie Mae or Freddie Mac aware of what the banks were selling to them? Did members of Congress encourage Fannie and Freddie to ignore what was happening so that lower income and poor people could buy houses?

  135. It's not just JP Morgan that is paying here. It is the rule of law and that means all of us. What did it do. It bailed out other banks in the midst of a financial crisis with a couple of days notice from the Fed that pressured it into doing the transaction. How is it repaid? By being prosecuted by the Feds.

  136. The settlement "does not preclude JPMorgan from deducting most of the cash settlement from its taxes."

    What?! I can't deduct a $40 parking ticket. Yet another fault of our imbalanced tax system that favors the richest.

  137. "In an important step, JPMorgan acknowledged that its employees knowingly packaged toxic loans into mortgage-backed securities and sold them to unwitting investors. JPMorgan also acknowledged similar conduct by Bear Stearns and Washington Mutual, two banks it bought during the crisis." [NYT Editorial Board]

    Part of the bank culture we need to change, and change it without any delay, to protect the public trust.

  138. The official America and the America Inc when caught hobnobbing prefer a cash deal to avert accountability questions from the public about the cheating practices of the too- big-to-fail bank, that's free now to return to past malpractices. Hasn't it paid a right amount of bribe to the government?.

  139. JP Morgan Pays?

    Not quite; we, its customers, will end up paying. So, before "you" start celebrating, think about those of us who are being punished for something we had nothing to do with.

  140. "JPMorgan acknowledged that its employees knowingly packaged toxic loans into mortgage-backed securities and sold them to unwitting investors."

    Oh, come on. JPMorgan would have admitted that the moon is made out of green cheese if that had gotten the Feds off its back.

    "Unwitting investors"?

    Do you really believe this? These victims aren't widows and orphans. they are huge institutional investors who hire the best and the brightest to analyze the risk of the securities that they invest in. And, as Foote & Willen (New Palgrave Dictionary of Economics, 2011) have reported, they had access to detailed, loan-level data for the securities they purchased.

    So what happened then?

    It was the bubble, stupid. Just like many home buyers, the investors believed that home prices would continue to appreciate or, in the worst case, would fall only slightly. The investors knew perfectly well that underwriting standards had deteriorated (who could have missed it?), but, if home prices are going to appreciate, who cares about underwriting standards?

  141. JP Morgan and the other financial hoodlums brazenly, purposefully, and willfully committed fraud for years in the mortgage-backed securities markets.

    Its brazenness can be no better characterized than the bank's purchase of credit default swaps against mortgage backed securities that they only just sold to a client. They bought these credit default swaps because they knew that the mortgage backed security would fail. That in and of itself demonstrates this was institutionalized fraud at virtually every level. At the product generation point. At the product packaging point. And at the product sale point.

    The government needs to go after the Boards of Directors of every single financial institution involved. Bankrupt the lot of them and then go after management, who will flip on their subordinates at the first hint of reduced jail time.

    The "Iceland moment" of course is politically behind us. We should have done what they did. Nationalize all the institutions involved and fire all senior managers. Then prosecute them.

    Why didn't we? Our judicial system turns the other cheek when the individual or corporations involved are important donors. In this case, a political donation is the equivalent of a bribe, and should be called that.

    The poison that floods are political system is ubiquitous, and only has one solution. It is and always has rested with the voting pubic. They must decide they're mad as hell.

    Only then will these criminals be brought to justice.

  142. Criminal convictions, not only financial transaction fees, are very much needed.

  143. This is all feel good nonsense. The amount of settlement for the Bank is trivial. No criminal charges were made. And until the next similar incident occurs we are all supposed to feel, somehow, that the financial industry has been taught a lesson. This will keep going on until perpetrators go to jail; the same way that someone who steals two hundred dollars from a convenience store does.

  144. JPMorgan contributed to the housing crisis selling bad financial products, but they are certainly not the only one's that were guilty. There's lots of blame to go around back then including the government, financial analysts and the Fed. What about the real estate agents and mortgage companies that knew this would blow up one day? We all paid a big price for JPMorgan and others arrogance and greed.

    A $13 billion settlement will not erase the problems that quite frankly have not gone away. We still have high actual unemployment and not the cooked books unemployment rate that the US Department of Labor would have you believe. Our federal debt is higher than ever and the richest 0.01% are richer than ever.

    Instead of writing a check, I propose let's start putting people in jail. The $13 billion settlement will only filter down to layoffs and other cost cutting measures at the bank to the lowest paid employees.

  145. @david1987

    I couldn't agree more. The blame can be laid on the shoulders of so many people here. I'd say this settlement is a win-win for so many of the people that had a hand in this including the banks, legislators, regulators, other government entities, Freddie & Fannie.

    High fives all around, I'm sure. For now.

  146. Critics main point may be to prevent again occurring will be indict the individual CEO as criminal not fine the Bank. But when we consider the complex of present our financial system as a whole, we have to appreciate this one achievement for society. As this editorial points that this was hardly a cure-all for damage solution, but also we should think about the efforts the concerned people brought this results and will give effects to Banking system whole in future. Our financial system still in mature not perfect and still in the process to developments. All society need this mature system and all searching more fair and secure system for future. Central administration need to implement whole country's economic stability, so they need actually working solider needs and some time need help like save the B.Stears and W. Mutual. There are the other needs of cooperation will be smooth change Fed's head, even New York will needs some advice the next governor intend to do his promise. This we have to compromise. Again this is good for society as a whole.

  147. While 13 billion is a drop in the bucket compared to the wealth destroyed by these banksters criminal activities, and even though after five years nobody has been sent to jail, I still say "Bravo" and good start. Now the Govt needs to reinstall Glass-Steagal (which would never have let this mess happen in the first place), fully implement Dodd-Frank, fully prosecute all the other financial institutions involved in these shenanigans and finally go after all the scheming banksters that brought the entire economy down on our heads. Is that really too much to ask for?

  148. Prison time is obviously only for the 99%.

  149. The title of this editorial should have been "For JPMorgan, Crime Still Pays".

  150. To paraphrase Thomas Jefferson, "I tremble for Dimon, when I remember that God is just."

  151. RE: JPMorgan Pays

    Who pays the bill ?

    The average American, either as share holder (your pension fund likely has JPM stock, or in your mutual fund, Vanguard is the largest institutional share holder of JPM) or as a JPM bank customer.

    Not the people responsible for the mess.

  152. I can't begin to image how much pressure the administration must have put onEric Schneiderman and what they must have tried to offer him to cut a deal to sweep their mistakes and the civil and criminal action of the banks under a blanket deal..

    I don't know him, but he has my admiration and respect and probably a donation if he ever runs for higher office.

  153. The bank did not pay, it won. This fine is just a cost of doing "business" and it's mostly tax deductible! The people who perpetrated these crimes will do it again, because they are profitable and risk free - ie: no one ever goes to jail. If corporations were really people, this one would be behind bars.

  154. Too big to fail is just an excuse to encourage excessive risk taking on financial endeavors which governments will underwrite when the losses are big. No government on this planet is willing to insist that big banks reserve enough assets to cover likely losses. Any bank of any size that rationally prepares to cover their likely losses will be the right size, any that does not will be prepared to avoid insolvency. When the taxpayers become enlightened to the global lack of accountability upon big banks, then too big to fail will no longer be a problem.

    In addition, we need to separate the business of financial speculations and flim-flam from our capital markets for our real economy. JP Morgan should be renamed JP Morgan Big Casino, because it's purpose is to accumulate money by any means available except to risk it on businesses engaged in making and selling things which increase the real wealth that exists. Do not let commercial banks participate in this side of the banking business, make them earn their money by investing in the real economy and not the big gambling game that is big finance.

  155. I am still not understanding why Martha Stewart served jail time for dumping about $228,000 of stock on an inside tip, and no one, repeat no one, at JP Morgan is being held personally responsible for a much greater crime.

    What this bank did adversely affected millions of people. Yet, the government can't identify a single individual to be criminally culpable???

  156. To be self regulating markets must routinely reject the kind of gross and long persisting manipulations established were conducted by JP Morgan. The financial markets not only did not reject it they paid off big to JP Morgan. I think that all those who assert that we must rely upon free and unfettered markets, and to keep government from trying to make them function better, should be rather upset by what happened.