Justice’s Deceit on the JPMorgan Settlement, and Why Ed DeMarco Should Get Some Apologies

[marmar]

David Dayen: Justice’s Deceit on the JPMorgan Settlement, and Why Ed DeMarco Should Get Some Apologies
By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen


The moral bankruptcy of the Justice Department’s fake crusade against JPMorgan Chase was always fairly obvious, considering that the Attorney General is holding private meetings with Jamie Dimon, the chief potential suspect in a criminal case (hey, at least those talks were “constructive”). Just yesterday, Dimon walked into the White House to meet with the President, afforded the respect of an elder statesman. The idea that he’s under “attack” is absurd.

But this has now burst into the open with Justice’s desire to stick the FDIC with half the bill:

JPMorgan Chase & Co’s possible $11 billion settlement of government mortgage probes has been complicated by a dispute with the Federal Deposit Insurance Corp over responsibility for losses at the former Washington Mutual Inc, said people familiar with the matter (...)

JPMorgan, which acquired Washington Mutual from the FDIC for $1.9 billion at the height of the financial crisis, has disputed its responsibility to cover losses incurred by investors on the failed thrift’s mortgage securities (...)

Some fear the FDIC, under pressure from the Justice Department to join a global settlement, might agree to assume liability, a move that would effectively force another government agency to absorb billions of dollars in losses (...)

“If the FDIC were to indemnify JPM as part of the government deal, it would likely reduce the rumored $11 billion by about $3.5 billion,” said Joshua Rosner, managing director of Graham Fisher, an independent research consultancy. “That would be an absurd outcome.”

It’s worse than Josh says. As reports have noted, $4 billion of that fine goes to “mortgage relief,” allowing JPMorgan to game the rules (as every bank did in the National Mortgage Settlement) to “pay” their fine with other people’s money, get credit for routine actions like bulldozing homes or waiving deficiency judgments, and other “take air out of the books” actions. So the hard money fine is $7 billion. And the FDIC would take on fully HALF of that, despite the fact that, at the time, JPMorgan swore up and down that there would be no federal cost from the WaMu transaction. This is why I bristled a bit at Alex Pareene’s appearance on CNBC (though I like him very much and thought he did well). It was too predicated on JPMorgan paying “the largest financial fine in history,” when this accords way too much respect to the game the Justice Department is playing here. ...................(more)

The complete piece is at: http://www.nakedcapitalism.com/2013/10/david-dayen-justices-deceit-on-the-jpmorgan-settlement-and-why-ed-demarco-should-get-some-apologies.html#YyvuFbtoA1Ov47vF.99

[gopiscrap]

1. No kidding

[leftstreet]

2. DURec

[KoKo]

3. Recommend!

[Scuba]

4. Kick. Not to get lost in the shutdown is Justice's prostitution to Wall Street.