The fact that JP Morgan, with its high-powered attorneys, is now willing to offer $13 billion to settle this and still allow at least some criminal cases to play out is highly significant.
It means that finally, the US government has decided to go after the big banks in a serious way. It also means there has to be real evidence of fraud. I don’t know what that would be. All the big banks were buying and selling these mortgage packages. They all knew what was in them: who was kidding whom?
In the latest NYT article on the subject, there was mention of a lawsuit brought by Federal Housing Finance Agency. The FHFA through its affiliates Fannie Mae and Freddie Mac was buying all the mortgage paper they could get their hands on. JP Morgan was “fooling” these huge mortgage purchasers? Hard to believe.
However, in law, precedent is important. So if the Justice Department can get a settlement from JPM of this magnitude with no protection from on-going criminal cases, other bank cases can be expected.
And in the US heartland, there will be great support for such actions. Nobody really understands what the banks did. But we know what they did led to the greatest global recession since 1929. We also know that bankers that speculate using our deposits as gambling money get paid far too much.
And for JPM, even with this settlement, there will be more problems. European governments have launched their own lawsuits and are watching the Justice Department lawsuit play out with great interest….