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JPMorgan In Tentative $13 Billion Deal With U.S. Justice Department

Saturday, October 19, 2013 - 7:44 PM
From Yahoo News:

       "JPMorgan Chase & Co has reached a tentative $13 billion agreement
        with the U.S. Justice Department to settle government agency
        investigations into bad mortgage loans the bank sold to investors
        before the financial crisis, a source said on Saturday."

Read more:

Several of the comments best highlight the impact this will have on
JPMorgan, eg., "This is equivalent of fining a fortune 500 ceo $1.00
for ripping off everything a senior citizen has in their life savings."
5
cumuluscumulus297 posts since
Jan 16, 2010
Rep Points: 1,368
1. Sunday, October 20, 2013 - 9:01 AM
This info about JP Morgan Chase was on the tv news yesterday and it seems the 13 Billion is only the tip of what they expect to find that Chase owes for their fraud.  Chase has already agreed to pay the 13 Billion and their CEO has accepted blame for the fraud.  What I want to know is why isn't anyone going to jail for this?  If a hungry father robbed a bank of a few dollars to feed his family, he would probably go to jail.  Chase can bilk people out of a fortune and no one does jail time??  I think Chase needs to be made an example of since they knew what they were doing was a crime and still went ahead with the bad mortgages.  I guess "money really talks".
6
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
2. Sunday, October 20, 2013 - 11:59 PM
This is a govt shakedown, comparable to holding a gun to their head if they don't pay a ransom. OTOH, it just shows you the advantage of having a monopoly when $13 billion is a slap on the wrist. Pox on both their houses.
4
loulou521 posts since
Aug 3, 2010
Rep Points: 3,237
3. Monday, October 21, 2013 - 5:46 PM
$13 billion is over 1/2 of their profits last year and they are still liable for criminal liability. It is a start.
2
AllyAlly772 posts since
Jan 16, 2010
Rep Points: 2,248
4. Tuesday, October 22, 2013 - 9:11 AM
#3  Being "liable for crimminal liability" and actually getting it is a different thing.  I don't think Diamon (CEO of Chase) or anyone else in Chase is going to face jail time for this fraud unless the public makes a loud outcry.  Most Americans are not going to care about this unless it affects their own deposits at Chase.  I still keep Chase as my basic bank since I still have earlier CDs and IRAs with them.  I plan on moving the CDs soon as they mature since their interest rates are in the gutter but I don't see a reason to move my basic checking unless they try to charge me fees.  For all we know, many other banks have the same skeletons in their closets but just haven't been caught yet.  The problems of the "bad" mortgages are still with us. Unless the government makes an example of Chase by a more severe punishment, it will stay with us for a long time.
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
5. Tuesday, October 22, 2013 - 9:42 AM
Having the proof that wrong was done is the easy part. You have outcome. Getting proof that there was intent to do wrong  is another thing. There is a big difference between criminal and civil justice. Lets hope we get both. Public outcry I do not think has anything to do with criminal justice. Public outcry has a lot to do with civil justice. 
3
AllyAlly772 posts since
Jan 16, 2010
Rep Points: 2,248
6. Tuesday, October 22, 2013 - 9:49 AM
#5  I consider "public outcry" as a way to make sure this does not get swept under the rug and forgotten. I know it cannot do anything legally about the actual case.  It can help to make sure those in power do what is necessary and help to keep it in the news.
3
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
7. Tuesday, October 22, 2013 - 1:02 PM
It might be useful to actually know what their guilty of before screaming for someone to go to jail. This settlement is regarding the mortgage portfolios of Bear Stearns and Washington Mutual. In the former case, the Sec of Treasury and the Fed Chairman practically begged them to acquire the company and in the latter, the FDIC also went to JP Morgan and requested them to acquire the institution. I am sure if they were told then that they would be liable for all the bad mortgages underwritten by these institutions, they would not have acquired either of them. It seems hypocritical now for the govt to go after JP Morgan after they were beseeched to acquire these institutions. It is also ironic of all the banks, JP Morgan had the best portfolio of motgages. For the most part, they were the most responsible bank during those years. Sometimes, I feel like we are living in Gestapo, Germany.
3
loulou521 posts since
Aug 3, 2010
Rep Points: 3,237
8. Tuesday, October 22, 2013 - 1:29 PM
#7  Your compassion for Chase astounds me.  I know about their purchase and how they got so many of the bad mortgages but I would think they had enough sense to do their due diligence in checking out what they were getting before they agreed to acquire the institution.  If they are so innocent why has Diamon agreed to the charges and to pay the 13 Billion? What about the class action suits against them?  They also agreed to pay on them also.  A bank as big as Chase does NOT pay out billions of dollars if they know they are innocent.  They just want this ended before they end up having to pay more, imo. 

As if an institution like Chase would not have gotten it in writing that they would not be liable for any bad mortgages before acquiring.  Your post makes them sound like some tiny mom and pop bank just starting out instead of being one of the world's largest banking institutions.  Maybe you think less of them than I do if you truly believe the post you wrote.   What has this got to do with Gestapo, Germany?  It's about time the Big Guys had to pay for their crimes.   The only reason Chase is really so eager to pay the Billions is because they have made tons of money from their endeavors. Have you checked out their net worth?   I am not saying everything they do is illegal  but they need to pay for what they admit to have done that they are liable for.  
3
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
9. Tuesday, October 22, 2013 - 1:40 PM
I was under the impression it had to do with the London transactions (failure to supervise) but also there have been many other suits with illegally lowering since 2007 HE lines of credits, I know of a person whose mtg was bought out by Chase so she purchased MO's for over a year and sent the MO's in and they were not credited to her account and they forclosed. She had copies of the checks and they were cashed. I also have a friend who was forclosed but some of her documents were evidently falsified by people not authorized to sign them. This loan was from Chase in the city I live. 

INVESTMENT BANKING SEPTEMBER 9, 2013, 7:35 PM 2 Comments JPMorgan and Insurer Settle Suit BY REUTERS JPMorgan Chase and a large insurer have agreed to a $300 million settlement to resolve accusations that they forced homeowners into buying overpriced property insurance and entered into kickback arrangements that inflated policy prices.

The class-action lawsuit being settled — one of several against large banks over such so-called force-placed insurance policies — said the improper practices unjustly enriched JPMorgan and the insurer, Assurant Inc., by more than $1 billion since 2008.

Then there was the case with the overdrafts and how they were processed. Also the printing of SS numbers on documents. 

According to the NYT article not all of the mtg belonged to the acquired banks. Only about 70 to 80% did. Also it said Chase had the best lawyers and they knew what they were getting. They were not forced to buy. example Lehman. They agreed to take on the legal entanglements in the deal. They took a chance and lost. 


Everything you need to know about JPMorgan’s $13 billion settlement 
3
AllyAlly772 posts since
Jan 16, 2010
Rep Points: 2,248
10. Tuesday, October 22, 2013 - 4:18 PM
Ally:  I can't believe this (Yes I can! :))  The link you posted at the end of your post is the exact one I was going to put in my post but I was hoping someone else would find it and post it.  Did not want #7 to think I was the only poster who knew about the actions about Chase.  Google is full of their problems and since I use them as my basic local bank, I do read up on their latest problems.  They got caught and I just can't feel sorry for them.   Institutions as big as Chase with lawyers who make tons of money don't agree to settle so easily unless they know they are in the wrong and will end up paying more if it blows up in their faces. 

BTW, I do not consider a "public outcry" as "screaming".  Not everyone is as emotional as I am so they might be able to do it less loudly than I would but do it they should. 
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
11. Tuesday, October 22, 2013 - 4:52 PM
I am not going to get into a political argument about this but post # 9 is mostly extraneous information that has nothing to do with this settlement, so let's not get caught up with the political nonsense.  Almost all the bad mortgages in question were from Bear Stearns and Washington Mutual. Of all the big banks, JP Morgan was the most responsible and for the most part did not engage in underwriting subprime mortgages. It is a fact that Bernanke, Geithner and Paulson begged JP Morgan to acquire Bear Stearns because they thought a bankruptcy would cause chaos in the financial markets. This premonition turned out to be true when no buyers stepped up to acquire Lehman 6 months later.

It is also true that Sheila Bair personally asked JP Morgan to acquire Washington Mutual to save the taxpayers considerable losses (billions of dollars) from bad mortgages. Without other lending institutions willing to acquire failed banks, the FDIC would have needed far more taxpayer funds to pay for the non-performing loan portfolios.

Havng said the above, I am not defending JP Morgan. This bank has become a monopoly with the help of the govt and should be broken up as soon as possible. Instead of prosecuting them, the govt should be dismantling them, a far more useful approach to solving the problem. Unfortunately, our govt would rather engage in this politically inspired prosecution to curry favor with uninformed voters rather than doing something useful.
2
loulou521 posts since
Aug 3, 2010
Rep Points: 3,237
12. Tuesday, October 22, 2013 - 5:17 PM
#11  I have read enough of your posts to know you don't post info you aren't educated about.  Knowing what is happening in our government today, what you post makes sense except for the fact that why is Chase willing to pay out billions of dollars when they can just reveal to people  how they got into this situation?.  Why are they not instead taking the government to court and showing what you say really happened?  I assure you the internet is full of negative posts about Chase now and the truth should be heard about how Chase ended up with all those bad mortgages.  I have made it clear Chase has never been my most favorite bank but I don't think any institution should be surrounded with such bad publicity if they were really trying to do something to help their country. 

Unfortunately, the information you are sharing in your recent post does not seem to be readily available on Chase and neither have I heard it mentioned when I hear reports of the Chase problems on the news.  Thank you for sharing this additional information.  I will not post further about this since it seems all the info we need to know is not readily available about Chase.  
1
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
13. Tuesday, October 22, 2013 - 5:32 PM
Paoli2, JP Morgan is willing to settle not because they believe they are guilty but because they want to get this behind them. The settlement, although large, is not going to hinder them in the future. Fighting with the govt is not good for business, creates too much uncertainty which shareholders loathe, and costs a fortune in legal fees. It is entirely a business decision, which really has nothing to do with the merits of the case.
2
loulou521 posts since
Aug 3, 2010
Rep Points: 3,237
14. Tuesday, October 22, 2013 - 6:29 PM
Lou:  What you post makes good sense.  Maybe once they get it paid and settled, the bad publicity will die out and they can put this behind them.   I was reacting to the negative info I was reading and hearing about Chase.  Thanks for sharing.
2
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
15. Saturday, October 26, 2013 - 8:01 AM
According Dan Fitzpatrick of  the WSJ this morning on C-Span's Washington Journal, JP Morgan is holding up the 13 billion dollar settlement because they now say part of the settlement should be paid by the FDIC because some of it had to do with Washington Mutual even though Dimon told the FDIC to back off that he could deal with the bank issues. JP Morgan has set aside 23 billion for all of the settlements. They are also being investigated about their hiring of Chinese officials relatives and if it had any ties to do with business dealings, Bernie Madoff and looking the other way and many other private investors are suing over securities that were bad. The legal reserve pot is so big to cover a part of these issues. 

After Bank of America's successful suit they are going back to laws that were passed during the Savings and Loan issue and not used he said. 
2
AllyAlly772 posts since
Jan 16, 2010
Rep Points: 2,248
16. Saturday, October 26, 2013 - 12:28 PM
Does anyone really believe that Chase will be accountable for their bad actions?  "Too big to Fail" should be changed to "Too Big to Punish".  I wonder if Chase will find a way to get out of that class action suit also.  I hope not.  They are too smuge about their actions.  They need to pay the piper.
1
paoli2paoli21,140 posts since
Aug 10, 2011
Rep Points: 5,078
17. Saturday, October 26, 2013 - 1:32 PM
I believe Chase is being held accountable. Some of the potential fines prove it but it isn't enough. What about those who lost their homes, jobs, lost in their 401k's, IRA's, because of their actions. Are they being made whole? Too big to fail has to do with criminally prosecuting and proving that there was fraud which is easier than proving there was fraud and those at the top knew of the fraud and still made a decision to commit it or let it be commited so they  can be held criminally responsible. I bet the best that can be proven would be "failure to supervise." Those at the top always find ways to protect themselves. The board stands behind Dimon and they believe, as he does, that it wasn't his fault. If they didn't feel that way he would no longer have his job. We will have to wait and see how far the letter about the bad loans and securites. Did it make it to the top? Don't you think that Dimon was protected from seeing it? If there was no letter there would be no prosecution I do not believe. You have to have some form of proof or semblance of proof for a reason to prosecute. 
1
AllyAlly772 posts since
Jan 16, 2010
Rep Points: 2,248
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