JPMorgan Chase has settled with the DOJ for bundling up and selling toxic mortgages as derivatives to unsuspecting investors. The settlement is $13 billion. The news prompted another round of #AskJPM twitter mega sarcasm.
The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009.
Of course those who lost their homes in foreclosure during all of this are fundamentally left out in the cold. They won't see a dime. Below is the breakdown of where the settlement money is going and most of it is to investors who purchased bundled up bad mortgages derivatives.
Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS. Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613.8 million to settle claims by the State of New York.
JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual. That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight. An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations. If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America,
Notice how one nonprofit will benefit if JPMorgan Chase falls short and it is not the original homeowners who were harmed. Zerohedge points out JPMorgan Chase holds $550 billion in excess Federal Reserves, which generates 0.25% in interest, so in essence the government just sued itself and got back some of that free money Chase gained thanks to the Federal Reserve.
Chase still has potential criminal charges and the one most interesting is the hiring of high level Chinese officials kids to work at the bank, as in industrial espionage interesting.
While the bank continues to face a criminal investigation into its role as Bernard L. Madoff’s bank and its decision to hire the sons and daughters of some of China’s ruling elite,
The Department of Justice also outlined what JPMorgan Chase must do for consumer relief. It amounts to $2 billion in loans, some anti-blight provisions and giving loans to low income and disaster areas.
JPMorgan Chase until recently is seemingly clueless on what the public thinks of them and other Too Big To Fail Banks. As a PR campaign they opened up twitter hash tag to ask Chase a career advice question. In case you missed getting your 2¢ in, don't worry, many did. The reaction on twitter was an onslaught and a vitriol slam on big finance in general. Here are some choice selections, but you can go to twitter, and see thousands more.
- What's your favorite type of whale?
- Are you really reptilian aliens in human skin?
- Would you rather negotiate with 1 horse-sized Eric Holder, or 100 duck-sized Eric Holders?
- Did you have a specific number of lives you needed to ruin before you considered your business model a success?
- I have Mortgage Fraud, Market Manipulation, Credit Card Abuse, Libor Rigging and Predatory Lending AM I DIVERSIFIED?
Matt Taibbi even held a JPMorgan Chase Haiku contest and reposted the best of the lot. If that isn't enough, here is actor Stacey Keach reading some more choice tweets from #AskJPM.
JPMorgan Chase still gets the last laugh on the twitter snarkpocalypse public relations disaster. The banks, including JPMorgan Chase, received 3.25% of the $1.82 billion Twitter IPO.
While the Department of Justice seems to think $13 billion is a great settlement, a record in history, the problem is banks are bigger and people are poorer. Until new regulations come about and some government actually takes on the global financial system instead of being run by the banks, what we have really is yet another pay to play settlement. All that has happened is the toll for corporations to travel down the super corruption, rip off nations superhighway has become much greater.