JPMorgan ‘Agrees’ to Tentative $13 Billion Penalty for Role in 2008 Financial Crisis

AFP Photo / Robyn Beck

In a telephone call on Friday between the US attorney general and the bank’s CEO, the two sides tentatively agreed to a $13billion settlement for JPMorgan’s alleged sales of fraudulent mortgage-backed securities.
The tentative agreement concludes a civil investigation by the California attorney general over the bank’s sale of mortgage-backed securities (MBS) to Fannie Mae and Freddie Mac from 2005 to 2007, as well as the New York attorney general’s probe of Bear Stearns’ sale of MBSs to these two companies. JPMorgan, the largest US bank by assets, still faces a criminal investigation by the state of California.

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Originally posted on RT.com

The $13 billion penalty is a drop in the bucket compared to the massive amount forked over by the US government to keep the global economy from total collapse. Forbes reported in 2011 that the estimated $16 trillion emergency lifeline tossed to banks and corporations during the worst of the crisis was actually an underestimate of the true cost to US taxpayers.

The record civil settlement includes investigations of the mortgage businesses of Washington Mutual and Bear Stearns, which were both acquired by JPMorgan just as the crisis was making landfall for a mere fraction of their total worth.

President Barack Obama, who pledged on two dusty campaign trails to hold companies legally responsible for unethical conduct leading up to the financial crisis, has come under fire in the past for not doing enough to punish those responsible for the crisis.

“[W]hen faced with the greatest economic crisis, the greatest levels of economic inequality, and the greatest levels of corporate influence on politics since the Depression, Barack Obama stared into the eyes of history and chose to avert his gaze,” wrote Drew Westen in the New York Times in August 2011. “Instead of indicting the people whose recklessness wrecked the economy, he put them in charge of it.”

Back in May, the US Department of Justice put JPMorgan Chase & Co on notice that it was under investigation for violating federal securities law by selling highly volatile subprime and Alt-A residential mortgage securities from 2005 to 2007, just before the housing bubble burst.

The $13 billion penalty, $9 billion in fines to the government and $4 billion in mortgage relief programs to homeowners, some of whom lost their homes in the crisis.

The agreement between the Justice Department and the financial powerhouse does not include a non-prosecution agreement that JPMorgan had originally insisted be part of the deal.

The company, one of the few financial brokerages that emerged largely unscathed from the 2008 crisis, has agreed to cooperate with investigations against bank employees who may have knowingly committed fraud, CBS News, citing an anonymous inside source, reported.

In its latest quarterly earnings, JPMorgan booked a $9.2 billion litigation charge related to the probes. JPMorgan also disclosed a huge $23 billion in litigation reserves. It made about $20 billion net profit in all of 2012.  JPMorgan Chase has spent $22 billion since 2008 on an estimated 18 federal, state and overseas probes.

The settlement is the latest in a string of legal woes for JPMorgan.

In September, the company agreed to pay about $920 million in fines to US and UK regulators over charges related to the so-called “London Whale” incident that saw a team of traders last year bet heavily on complex derivatives that ultimately resulted in some $6 billion in losses.

JPMorgan reported a third-quarter loss in the wake of mounting legal expenses.

CEO Jamie Dimon said in a press release accompanying the earnings statement that earnings could be choppy in the near future.

“While we expect our litigation costs should abate and normalize over time, they may continue to be volatile over the next several quarters,” he said.

JPMorgan posted a loss of 17 cents per share in the latest quarter, compared with net income of $1.40 per share one year earlier.

 

Comments

  1. I know two people personally who lost over $100k  and $70k respectively in the collapse of washington mutual.  I don’t claim to understand why they had so much money in a single bank stock (they are not uber wealthy), but why JP Morgan was spared and washington mutual died is, imho, a totally unjust highly selective collapse.

  2. LMAO I beat Silver Doctors to the story Lol seen it last night. It was 13 Bn not 19 as I said. Lol



     

    • Is this weekend a “Lehman Brothers” for JPM? Got Silver?
      http://www.godlikeproductions.com/forum1/message2387180/pg1#40857757
      My Post :)
      OP means  Original Poster.
      Some good feedback from around the world

    • LOL ! ! ! ! !
      The video so nice, I watched it twice.
       
      Thanks Charlie, I’m recharged for another week!
       
      I think I’ll invest in a wetsuit and snorkel, this afternoon.  :)
       
      Cheers

    • GLP has clear intelligence community ties. How do I know? I am banned from there at home, work, and on my phone for stating as much there. Where there’s smoke there’s fire.
       
      Either way, F**k Jp morgan in the back door with a running start. They manipulate every thing and any thing, yet miraculously they leave the silver market alone? Oh right, that is for the benefit of the US government so that’s OK.
       

    • @Canadian Dirtlump
      Yeah, I mostly read there.  I just had an urge to post that and see what I could
      get in feedback.
       
      Have you tried to get on there lately?  Maybe you’ve been un-banned?

    • Disregarding the immature form of expression, what do you think about this feedback @silverhawk?
      http://www.godlikeproductions.com/forum1/message2387180/reply40858806
      It is something worth paying attention to and consider?
      I am interested to know how many in here think that maybe, just maybe, looking at things objectively, this story is not all it is hyped up to be.
       
      BTW @AGXIIK I have read your long post in that other thread (saw it by luck actually since I nowadays mostly only check back when I have a @ “mention”) but have not come around to reply. I agree with most you are saying. I just want to say: understand I do not see things as black or white. There are a lot of shades between “all doom” and “all normal” and choose to have to open mind to accept them (I try my best anyway). If anything, I have taken overly precautionary measures, because they can get out of hand too and become a risk, especially for the mind. The Chase explanation for the account changes makes sense.

  3. @silverhawk Good luck finding it especially in another month or two. Lol I felt so charged up myself this morning that  I bought another 15 Sovereigns. Lol That’s for my escape route for Canada. LMAO Keep Stacking

    • @Marchas45
      LOL.  Was just kidding with ya.  I have no desire to steal anything from anyone.
      Yeah, I’m about 100 miles or so from Canada also.  It’s an option, if need be.
      But it’s possible that Canada (border) will come to me, if that Russian who saw the
      breakup of the USA, is correct.
       
      Time will tell, and that time is rapidly approaching.
       

    • My guess is that Canada will say:
      “Ahhh, your ancestors should have moved here in 1776 and been a Loyalist. You may remain in your ‘home of the brave and land of the free’ and enjoy being free from the ‘tyranny of the British monarchy’”.

  4. Yes, and who knows how many tens or hundreds of billions JPM made during that time. These fines are a joke and do nothing to correct the widespread fraud and corruption so prevalent in the markets.
     
    When BS was taken down in 2008, these crooks took gold from over $1000 to $692 and silver from $21 to under $9. All planned, orchestrated and green lighted by the US govt itself. Rigging gold and silver have been the centerpiece of criminal activity for the bullion banks via the UST, ESF and FED. And I imagine the BIS is another leading force behind all of this too.

    • I know.  It’s like if you robbed a bank and got $25,000 cash.
      The cops show up at your door and say, “Pay a $2000 fine or go
      to jail.”  You hand them 20 of the 100 dollar bills, and they leave.
       
      Pass Go, and Collect $200 Dollars.  Again.  And again.  And again.
       
       

    • What choice does the government of the US or any other country have but to rig and manipulate the PMs lest their own currencies wither and die?! I stack for the future…maybe not mine but my generations to come.

  5. Investment bankers like JPMorgan are legalized thieves protected by laws and loopholes put in place by compliant politicians.

  6. I’ve seen the MSM coverage of this story… the gist of all the headlines is “RECORD FINE PAID BY JPM!!!”   byline:  “See sheeple, we REALLY REALLY are cracking down on the bankers!   (who own us, btw)  …oops, I added that… didn’t actually see THAT little factoid in the coverage…  (my bad)
     
    But… what I can’t find ANYWHERE in the MSM coverage is…  wait for it…. wait….. here it comes…….TA DAH!!!!     HOW MANY HUNDREDS of BILLIONS the bank defrauded from the investors in the MBS’s and the homeowner losses….   Crap!  And here I am, trying to do DUE DILIGENCE on the business opportunity the JPM tried… and I can’t even get a decent income statement view of Revenue and Expenses….  Expenses?  $13-14 Billion…  But WHERE’S THE TOP-LINE REVENUE numbers you media whores???  How the hell am I supposed to evaluate the viability and the risk of the JPM business model when these lame-shit journos can’t even provide the useful TOP-LINE revenue…
     
    Oh…. wait…. they might not wanna print that huh?  Might make the Sheeple kinda uppity…
     
    @!#$%^
     

  7. There was way more money put into the banks than they are claiming. A lot of under the table from the federal reserve that the news never mentions. How much did they profit from the sales before the collapse? And I bet no banker goes to jail for it.

  8. what about silver manipulation fraud?

  9. R.I.C.O got Capone,maybe Jamie D.?

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