October 23, 2020

Fines for the rich, jail for the poor

WASHINGTON MERRY-GO-ROUND

Founded by Drew Pearson 1932

Fines for the rich, jail for the poor

By Douglas Cohn and Eleanor Clift

WASHINGTON – The record $13 billion settlement that the Justice Department reached with JPMorgan Chase was a long time coming. It’s been five years since the meltdown in the financial markets that nearly crashed the world economy and forced Congress to inject billions of taxpayer money to bail out the big banks.

Voters were furious at the time, but there wasn’t much the Obama administration could do to punish the banks for their irresponsible mortgage lending until the legal cases had been painstakingly assembled.  By now voters have moved on to other targets for their ire so there’s not a lot of political benefit for the administration in having finally moved to at least partially correct egregious wrongdoing.

The media coverage underscores that there’s never been a fine of this magnitude, but then again entities like JPMorgan Chase have earnings in the multi billions that dwarf the $13 billion levied on them. Everything is relative, and this sum as large as it appears, is a small portion of the mega-bank’s resources and earnings.

JPMorgan Chase will have no problem absorbing this slap on the wrist. Indeed, it wouldn’t be surprising if their cadre of clever lawyers and accountants found a way to deduct the cost of the settlement as the cost of doing business.

How different the rules are for the less well-heeled. Fines do not suffice. If they break the law, they go to jail. And we have yet to know if JP Morgan Chase bought its way out of a civil or a criminal misdeed because there’s still an ongoing criminal case so the top brass there shouldn’t break out the champagne, at least not yet. There could be another reckoning, but the way things are going, don’t bet on it. No one has been indicted; no one has gone to jail, and the millions of mortgage holders left holding the bag will find small consolation in the $4 billion allocated in the Justice Department settlement for mortgage holders who were wronged.

The bankers on Wall Street were made whole by the federal government in the immediate aftermath of the collapse of the financial markets in 2008-2009. The folks on Main Street who unknowingly were the victims of those exotic deals and derivatives will for the most part never receive restitution.

The Justice Department deserves two cheers for extracting $13 billion from JPMorgan Chase. That’s a sizeable sum, the largest of its kind in history. But justice won’t really be served until somebody is indicted and if proven guilty goes to jail. Less than a third of the fine will be directed toward mortgage holders when 90 percent of it should go to them.

JPMorgan Chase’s CEO, Jamie Dimon, negotiated directly with associate attorney general Tony West, and the settlement that was achieved reflects the administration’s strategy to go after big fines as a way to show the American people there is accountability on Wall Street. It’s taken some four years to get to this point. Maybe a criminal case is the next shoe to drop; otherwise the lesson may once again be that if you’re rich and well connected, paying enough money can keep you out of jail.

© 2013 U.S. News Syndicate, Inc.

Distributed by U.S. News Syndicate, Inc.

END WASHINGTON MERRY-GO-ROUND

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