Wall Street banking giant JPMorgan (JPM) has reached a $13bn preliminary settlement with the US government over claims that it mis-sold mortgage-backed securities (MBS).
The fine would be a US corporate record, while JPMorgan would remain open to possible criminal charges. The bank is also pursuing a separate, $6bn deal with institutional investors.
What the commentators said
JPM’s CEO Jamie Dimon “must yearn for that kinder, gentler era when bankers’ fines were in mere single-digit billions”, said the FT. While JPM can hardly “abdicate all responsibility for its predicament”, the federal government has arguably taken a “very tough line”.
Many of the dodgy MBS came from Bear Stearns and Washington Mutual, crippled banks that the government had asked it to buy to stabilise the system.
But it’s hardly a big punishment, said The Independent. The fine is equivalent to what the bank can expect to earn in two quarters. It sold MBS even though it knew many of the home loans inside the MBS were risky, and its “reputation for probity and competence” allowed it to escape scrutiny.
The question now is whether this fine will “curb the culture of arrogance and impunity” in banks deemed too big to fail.
Don’t count on it, said Alex Pareene on Salon.com. In the “Wall Street bubble” and much of the financial press, attempts to hold banks to account are still portrayed as witch hunts.
One columnist insisted that Dimon was being targeted for criticising Obamacare and federal taxes and regulations. These people are in denial about the banks’ appalling behaviour.
The basic lesson of 2008, concluded The Independent, is that these huge banks have become unmanageable as well arrogant, and need to be broken up. But this lesson has remained unlearned, so “history may well be condemned to repeat itself”.
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