Discussion
  • Read More
    BrtStlndHamilton Nolan
    10/24/13 12:03pm

    You should probably mention that most of the violations for which they are being fined happened at Bear Stearns and Washington Mutual... which they acquired at the government's request in 2008, through financing from NY Fed. Obviously, there were inappropriate practices at those two firms, and that's where the gigantic fine is coming from.

    Reply
    <
    • Read More
      TacosTacosTacosTacosBrtStlnd
      10/24/13 12:26pm

      Thanks for raising that point. It's an important issue that's neglected in this article.

      Reply
      <
    • Read More
      burningsensationBrtStlnd
      10/24/13 12:49pm

      JPM wanted Washington Mutual and had had access to their books. They knew exactly what they were buying.

      Reply
      <
  • Read More
    Lucid0neHamilton Nolan
    10/24/13 12:38pm

    Its interesting how these banks are being punished for acquisitions they were forced to make during the financial crisis. While these settlements also don't remotely equal the total bailouts, it does give the impression that its payback time.

    However, there is some moral hazard here. Assuming there is another financial crisis, what incentive would a healthy bank have to absorb a struggling bank when the misdeeds of the collapsed bank can blowback to the healthy bank at a later date? I think the government should be careful with being too overzealous in these legal pursuits.

    Reply
    <
    • Read More
      cepalgLucid0ne
      10/24/13 12:57pm

      Yes. The real moral hazard of the current financial system lies in too big to fail banks potentially not hoovering up failing competitors next time.

      Strong take.

      Reply
      <
    • Read More
      Li'l BiscuitLucid0ne
      10/24/13 1:06pm

      I understand the idea that they were urged to buy BS and WaMu during the crisis, but they did so knowing there were these liabilities. And they bought these firms at significantly reduced prices that reflected those potential liabilities. And they made reserves to pay out these liabilities. In that respect, it is clearly reasonable that they pay the fines they knew to be inevitable yet are not held criminally liable, at least on these issues to the extent that they involved solely acquired assets.

      Reply
      <
  • Read More
    TheStrategeristHamilton Nolan
    10/24/13 12:06pm

    Some of these people need to go to prison, real prison, for a long time.

    This is a great first step (i.e. having them not only pay a huge fine but actually have to admit wrongdoing *gasp!*) but there needs to be a god damn crucifixion of some of the top-dogs in the banking world.

    Fuck a few millions in fines and a slap on the wrist for repeatedly screwing over the world population, they need to drop the fucking hammer on these guys. Every time.

    Reply
    <
    • Read More
      GTAjunkyTheStrategerist
      10/24/13 12:10pm

      They never go to prison. People can steal a pack of gum and go to prison longer than an individual who lost trillions of dollars during the crisis (even if it was imaginary numbers).

      There is too much unethical stuff, that because of the way the laws are written, are currently lawful.

      Reply
      <
    • Read More
      Li'l BiscuitTheStrategerist
      10/24/13 1:01pm

      I mirror your sentiment, but it is unlikely that someone like Dimon would be the one to serve time, and I think that's what people want to see. It wouldn't be as satisfying to see some no-name junior exec take the rap. So, in that respect, I don't have a problem in hitting them where it really hurts: the balance sheet.

      Reply
      <
  • Read More
    MojiMojiHamilton Nolan
    10/24/13 2:18pm

    Can everyone without a finance or economics background stop talking about shit they don't have a rudimentary understanding of?

    First of all, JPMC was offered the chance to purchase WaMu and Bear Sterns at bargain-basement prices by the federal government, because at the time of the crash in 2008 JPMC was considered the least risk exposed commercial banks in the US (this was later proven to be not quite the case, but that's a different story). They were not "forced" to buy WaMu or Bear Sterns and the accompanying liabilities, they were given first choice, but they could have easily declined. You can maybe make the argument that they were asked to make these decisions on shorter notice than for standard mergers, and therefore didn't have the chance to conduct indepth examinations of the balance sheets of WaMu or Bear Sterns, but that was because the federal government needed a buyer ASAP, since the whole banking industry was on the cusp of a melt down. Again they were not forced to make these purchases, if they didn't want to make the purchase without fully examining the balance sheets they could have declined. So, JPMC acquired Bear Sterns on May 30, 2008, which resulted in an after tax loss of $540 million in 2008 Q2. Then WaMu on September 25, 2008, which resulted in an after-tax loss of $640 million in 2008 Q3. And at the time, these were largely considered to be smart acquisitions in the financial community, because as previously mentioned JPMC got a very good price for both all things considered. Seriously go back and look at the coverage of these purchases in the opinion pages of the WSJ or Financial Times in 2008/2009. Further, JPMC knew at the time of these acquisitions that they would be legally liable for the balance sheets of WaMu and Bear Sterns. JPMC fully expected some losses due to future litigation stemming from these acquisitions and the set aside a designated amount of money in preparation for this possibility.

    So long story short no one at the top of JPMC was surprised by this outcome, the media hysteria is completely manufactured, everyone go home.

    Reply
    <
    • Read More
      someappreciatonHamilton Nolan
      10/24/13 12:03pm

      Neither Bush Administrations nor the Clinton Administration would be this aggressive with JPMorgan. To all those on the left who bitch about the President because he isn't exactly what they want him to be at all time, some thanks to the man, please?

      Reply
      <
      • Read More
        nothinglikeadamesomeappreciaton
        10/24/13 12:41pm

        His hand has sorta been forced on this one.

        Reply
        <
      • Read More
        DangerBadgersomeappreciaton
        10/25/13 6:34pm

        They did their most fucked up work at the very end of Shrub's presidency. So yeah...

        Reply
        <
    • Read More
      ObliteratiHamilton Nolan
      10/24/13 1:00pm

      Notice to commenters:

      You will see several of the usual Wall St bootlickers claiming that these issues are a result of the evil Gubmint forcing JP Morgan to buy bad assets during the 2008 crash.

      THIS IS A BLATANT DISTORTION OF THE FACTS, AND IS IRRELEVANT TO THE MADOFF CASE.

      JPM had been Madoff's primary banker since 1986. They knew about, and covered up, Madoff's troubles long before the bailout. Anyone claiming otherwise is trying to mislead you.

      Reply
      <
      • Read More
        nothinglikeadameHamilton Nolan
        10/24/13 12:40pm

        Is this a pirate flag?

        Reply
        <
        • Read More
          Perry Downingnothinglikeadame
          10/24/13 12:55pm

          It just freaks me out that they have a flag at all. I mean, come on corporate overlords, keep in on the dl!

          Reply
          <
      • Read More
        legaltigerHamilton Nolan
        10/24/13 3:46pm

        One thing that is always missed by pretty much everyone when looking at a deferred prosecution agreement with a corporation is the underlying premise of finding criminal liability for a corporation. Almost every jurisdiction out there requires that there be 1) a crime AND 2) that the underlying crime was committed, aided and abetted, or recklessly/knowingly tolerated by an officer or director.

        Think about that for a second. Corporate criminal liability is NOT created by a bunch of bad acts, while not individually criminal, somehow aggregating together to the point of "criminality." Rather, the charge is premised on a natural person, specifically a director or officer, actually engaging in a criminal act.

        A deferred prosecution agreement should only happen if DOJ AND the bank believe that there is a basis to say an officer or director at the bank committed a crime— otherwise, what's the basis? That should lead to the immediate question: why isn't there an officer or director charged if a corporation is admitting to a crime?

        I would like to think that there may be something in the pipe— federal wire/mail fraud has a 10 year statute of limitation if it involves a bank; however, cynicism seems to be winning out.

        Reply
        <
        • Read More
          adamjohnson08Hamilton Nolan
          10/24/13 1:30pm

          So when are they going to jail?

          Reply
          <
          • Read More
            GangstaSpectreOfDefeatHamilton Nolan
            10/24/13 11:59am
            Reply
            <