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August 21, 2014

Wrecking an Economy Means Never Having to Say You’re Sorry

“The megabanks are finally feeling the hurt for the depredations of the mortgage era. That’s what the government, and some in the financial press, too, would have us believe. Bank of America is reportedly about to fork over a whopping $17 billion dollar settlement to the Justice Department, topping the previous record of $13 billion paid to the government by J.P. Morgan. Citigroup has handed over $7 billion, and Wells Fargo and others are likely to strike settlement deals next. Says The New York Times: “Prosecutors are getting creative in holding the nation’s big banks accountable.” They are indeed—and that’s the problem.”


“In February, in a delicious twist, Better Markets Inc., a reform group led by former Skadden Arps partner-turned-watchdog Dennis Kelleher, sued the Justice Department in an effort to block the J.P. Morgan settlement, which Better Markets called a “mere contract” with the bank. The department’s response was unintentionally revealing. It submitted a motion to have the lawsuit thrown out, contending that it would require an “invasive inquiry into DOJ’s decision-making process.” In the department’s estimation, the aspects of its settlement process that should remain unknowable include:

“The nature, scope, and thoroughness of DOJ’s investigation, including its duration and the number of documents reviewed and witnesses interviewed …;

“JPMorgan’s conduct, including the number, type, and content of its misrepresentations and when they occurred …;

“A calculation of the monetary harm that JPMorgan’s conduct imposed on mortgagors, investors, the markets, and the economy as a whole, as well as a calculation of any monetary gains that accrued to JPMorgan …

“And so forth. The biggest settlement of its kind in U.S. history, but we don’t get to know how many rocks DOJ looked under. Nor just what misdeeds it discovered at the bank. Nor how it came up with the number for the settlement amount.”


Read the full New Republic article by Dean Starkman here

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