Is $13 Billion the Right Number for JPMorgan Settlement?
Posted at 8:45 a.m. on Oct. 22, 2013
Reports indicate that JPMorgan Chase is close to agreeing to a $13 billion settlement with the Department of Justice for selling bad mortgages to investors in the lead up to the financial crisis. John Cassidy wonders whether this deal is good policy.
“Indeed, we seem to have stumbled into a new form of corporate regulation, in which nobody in the executive suite is held personally accountable for wrongdoing lower down the ranks, but the corporation and its stockholders are periodically socked with huge fines for past abuses… But it is people, not corporate abstractions, that break the law, and it is the people at the very top of the corporations who set the rules and the tone for everybody else to follow.”
NYT DealBook looks at how federal prosecutors arrived at that number: “The largest sum, more than $6 billion, will serve as compensation for investors like pension funds that suffered losses from mortgage securities sold by JPMorgan, Bear Stearns and Washington Mutual… Another $4 billion will take the form of relief for struggling homeowners in cities like Detroit… The remaining $2 billion to $3 billion will represent the only fine in the case.”