Cross posted from The Stars Hollow Gazette
The recent news of a thirteen billion dollar settlement agreed to by JP Morgan with the Justice Department to resolve an array of crisis-related mortgage cases may seems like a large chunk of change but in the grand scheme of the banks assets and the losses to the global economy its a drop in the bucket. JP Morgan’s current assets are valued at $$2.25 trillion and the losses to Americans alone is estimated at $22 trillion. Meanwhile, papers like The Wall Street Journal and The New York Post, both owned by Rupert Murdock, are calling the settlement “a shakedown” and “robbery.”
There are a lot of questions about the details of the settlement that Dimon personally helped negotiate with Attorney General Eric Holder in private meetings, cutting the deal without admission of any wrong doing. The New York Times‘ assistant business and financial editor, Gretchen Morgenson commented about this unusual special treatment to Bill Moyers in an interview on Moyers & Company
Transcript can be read here
BILL MOYERS: Do you find it remarkable – Jamie Dimon asking for a personal meeting with the Attorney General, Eric Holder to decide, in private, on a penalty?…
GRETCHEN MORGENSON: It seems unusual to me and it does smack of favoritism, special treatment. It certainly was unusual I would say for Eric Holder, the Attorney General of the United States of America, to have a personal meeting with someone that his office is negotiating a settlement with. That raised eyebrows with me. I know I would not be able to get that meeting if I asked – and if I implored.
I think it really sends a signal, also which is disturbing that again – two sets of rules in America. There’s one set for the people who are in positions of power, certainly in the financial world – one set of rules perhaps for them. And one set for the rest of us. I really don’t understand why Eric Holder would not have decided that it was the optics just didn’t look that good for him to meet with Jamie Dimon, but maybe there is something behind it that I don’t know.
At Democracy Now!, Yves Smith, the proprietress at naked capitalism, sat down with Amy Goodman to discuss the deal and how it is being misreported.
Transcript can be read here
Transcipt can be read here
A $13 Billion Reminder of What’s Wrong
by Gretchen Morgansen, The New york Times
t was the deal of the week – a possible $13 billion settlement between JPMorgan Chase and the Justice Department to resolve an array of crisis-related mortgage cases.
While arguments over the deal’s terms and numbers are to be expected, the discussion so far has seemed to miss its significance as a teaching moment. This possible settlement once again depicts the extensive and damaging behavior that led to the 2008 crisis and its aftermath. For those with short memories, the deal is a refresher course in how far-off the rails our largest financial institutions veered in the years leading up to the mess.
It also stands as a reminder that not enough has been done to fix the flawed incentives in our sprawling and powerful financial system. This applies to both the private sector – the mighty banks – and their supposed minders, the regulators.
The Ridiculous “Jamie Dimon as Victim” Meme on the Pending JP Morgan Mortgage Settlement
by Yves Smith, naked capitalism
Nothing like having a credulous, leak-dependent media to carry your messages.
There’s been a remarkable hue and cry about the pending JP Morgan settlement, as if the amount is somehow too high. As we’ve discussed repeatedly, the director of financial stability for the Bank of England, Andrew Haldane, already ascertained that a mere 1/20th of low-end estimate of what the banks ought to pay for all the damage they did would wipe our their market capitalization. So even if you think JP Morgan is only half as culpable as other banks (a point we will debunk in a post tomorrow) it would only be half as dead.
In other words, Dimon and all his crew should thank their lucky stars that they got off so well and didn’t have their banks turned into utilities. But that moment passed, so now we are haggling over price with ingrates.
Nobody Should Shed a Tear for JP Morgan Chase
by Matt Taibbi. Rollingstone
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.
The cost of the financial crisis hits Americans harder than banks
by Heidi Moore, The Guardian
As you rise up the financial ladder, the consequences of the financial crisis are increasingly arbitrary
What’s the real cost of a financial crisis? Apparently, it depends on who’s paying.
If you’re Jamie Dimon, the CEO of JP Morgan Chase, or Brian Moynihan, the CEO of Bank of America, it’s a price your $2tn bank can easily afford to make trouble go away.
If you’re a homeowner, it’s a price that has rendered your past five years a struggle of financial anxiety. If you’re an American, it’s a price that has resulted in a recession and recovery characterized by historically high poverty – with 42 million Americans on food stamps – and historically low rates of Americans working, with only 63% of the population gainfully employed.
As you rise up the financial ladder, the consequences of the financial crisis are increasingly arbitrary. The Department of Justice is looking for scalps – finally, after five years of drowsy hibernation – but some banks are whining about merely getting haircuts.
This week, two mortgage-crisis settlements hit the news: one potential and one official. The idea of a $13bn rumored fine to JP Morgan and an $848m fine to Bank of America would indicate two things.