A colossal legal settlement between the U.S. government and JPMorgan Chase — at $13 billion, the largest of its kind in American history — was announced Tuesday by New York Attorney General Eric Schneiderman.
The long-awaited deal settles a Department of Justice lawsuit against the megabank over its alleged mishandling of toxic mortgage-backed securities, which helped bring about the catastrophic 2008 financial crisis.
The largest U.S. bank by assets, JPMorgan has spent this year fending off attacks from federal law enforcement, housing regulators and private banking firms alike. It set aside a $23 billion cushion for legal fees, but that cushion is now nearly deflated. Including previous deals with the Federal Housing Finance Agency and two powerful investment banks, JPMorgan shelled out $18.6 billion in 2013 alone.
The assault shows no sign of slowing. A criminal investigation into the handling of toxic mortgage-backed securities by JPMorgan executives continues, and the bank faces additional federal probes into its alleged manipulation of the energy market and its hiring practices in China.
“The legal woes are far from over,” said Erik Schatzker, the editor-at-large of Bloomberg Television. He explained that through Tuesday’s settlement, $4.5 billion will go directly to the federal government and another $4.5 billion to government-backed Fannie Mae and Freddie Mac. The remaining $4 billion will be set aside as “mortgage relief,” which “in theory” will go to consumers affected by the bad bonds.
The government’s crusade against JPMorgan is remarkable, since many other large investment banks stand accused of similarly mishandling mountains of bad mortgage bonds.
CEO Jamie Dimon — once the president’s “favorite banker” — repeatedly criticized the Obama administration’s handling of the economy in the 2012 election. Some speculate the torrent of federal lawsuits and investigations is political payback for that betrayal.
Other analysts, however, are convinced JPMorgan is merely the first megabank to find itself in the government’s crosshairs. “I think the banks are going to continue to be under attack,” said Bill Priest, chairman of Epic Investment Partners. “There has to be a scapegoat for some of these issues, and unfortunately the banks are it.”
“They did do some bad things,” he added. “But at the same time I think they’ve been made the whipping boy, in some cases unnecessarily.”
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact licensing@
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact firstname.lastname@example.org.