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Wednesday, January 8, 2014

$20 Billion in Penalties? No Problem.

Posted by on Wed, Jan 8, 2014 at 6:00 AM

JPMorgan Chase, ladies and gentlemen:

To settle a barrage of government legal actions over the last year, JPMorgan Chase has agreed to penalties that now total $20 billion, a sum that could cover the annual education budget of New York City or finance the Yankees’ payroll for 10 years.

It is also a figure that most of the nation’s banks could not withstand if they had to pay it. But since the financial crisis, JPMorgan has become so large and profitable that it has been able to weather the government’s legal blitz, which has touched many parts of the bank’s sprawling operations.

Apparently the bank makes $25 billion a quarter, so, you know. Among the alternative punishments that experts say might have more impact: break the bank up.


Comments (22) RSS

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rob! 1
Break them up and make it stick (unlike the phone company).
Posted by rob! on January 8, 2014 at 6:17 AM · Report this
Kinison 2
Honestly, 20 billion is quite a lot for a fine. If this was the GW Bush administration, assuming they would even take notice, the fine would probably be 20 million.

Fine's should sting, but they shouldn't bankrupt the company.
Posted by Kinison on January 8, 2014 at 6:33 AM · Report this
Matt from Denver 3
I don't think the Yankees have an annual payroll of $2B.
Posted by Matt from Denver on January 8, 2014 at 6:40 AM · Report this
Fifty-Two-Eighty 4
Nope, Matt — $255 million.
Posted by Fifty-Two-Eighty on January 8, 2014 at 6:45 AM · Report this
CC-Rob 5
How much do you want to bet that the "regulators" who worked out this deal end up working for JP Morgan Chase?

The free market works!
Posted by CC-Rob on January 8, 2014 at 6:46 AM · Report this
Jail. Real jail.
Posted by Pol Pot on January 8, 2014 at 6:55 AM · Report this
monkey 7
So why do they need subsidies or tax breaks?
Posted by monkey on January 8, 2014 at 7:06 AM · Report this
If it's an amount that they'll agree too, then it's not enough.
Posted by SuperSteve on January 8, 2014 at 7:07 AM · Report this
passionate_jus 9
I left Chase years ago and all my "banking" is done through credit unions which are so much better.
Posted by passionate_jus on January 8, 2014 at 7:22 AM · Report this
rob! 10
@2, if you pulled in $200k a year, would you be more or less likely to park illegally on occasion? (And Chase can probably replenish their legal-contingency fund by adding a quarter percent to credit-card interest rates.)

@3, 4: Glad we got that settled.
Posted by rob! on January 8, 2014 at 7:36 AM · Report this
Original Andrew 11
Can't wait to see Jamie Demon on the cover of the next issue of Bankrupt Billionaire throwing his head back and laughing that they've gotten away with all of it (and FSM knows what else).
Posted by Original Andrew on January 8, 2014 at 7:46 AM · Report this
“The fines have been manageable in the context of the bank’s earnings capacity,” Jason Goldberg, a bank analyst at Barclays, said. “It makes $25 billion in revenue per quarter and has record capital.”

One reason that JPMorgan can absorb the $20 billion is that it has steadily set aside reserves over the last few years to finance future legal payouts. Mr. Goldberg, the bank analyst, estimates that, as of last year’s third quarter, JPMorgan had injected $28 billion into its legal reserves since the end of 2009. The legal payouts that have been subtracted from the reserves, including those booked since the third quarter, might have taken the reserve down to about $10 billion. Most analysts expect JPMorgan will be able to cover any remaining settlements, though the bank said on Tuesday that it might have to set aside an extra $400 million for the Madoff settlement.

In theory, regulators have other ways of improving ethics at banks. They can try to hold more individuals personally accountable. Some senior executives have left JPMorgan as a result of recent scandals at the bank, including the so-called London whale incident, in which the bank’s traders lost more than $6 billion on botched derivatives trades. In recent months, the bank has also added two members to its board to improve oversight.

But facts contained in the government’s Madoff action suggest that efforts to hold executives responsible may go only so far.
Posted by Phil M on January 8, 2014 at 7:47 AM · Report this
Pope Peabrain 13
They're already stealing the money from investors to pay this, so, no, it isn't shit.
Posted by Pope Peabrain on January 8, 2014 at 7:53 AM · Report this
theophrastus 14
@6 exactly! you cannot properly punish current day bankers monetarily. all fines are fungible to them. until you see the suits sent to a real prison (one without squash courts) then you will continue to see business models that include risk assessment of a few billion fines for insufficient congressional bribery.
Posted by theophrastus on January 8, 2014 at 7:59 AM · Report this
Either pay the loans back or we foreclose on them and socialize their ass.
Posted by NineOneFour on January 8, 2014 at 7:59 AM · Report this
wisepunk 16
At some point they need to be charges with an ongoing criminal enterprise.
Posted by wisepunk on January 8, 2014 at 8:16 AM · Report this
NotSean 17
@16. Sounds like organized crime to me too.
Posted by NotSean on January 8, 2014 at 8:43 AM · Report this
fletc3her 18
Criminal penalties often run a criminal out of business. The idea is to take the ill gotten gains so the criminal enterprise doesn't turn out profitable. Maybe $20 billion hits the mark in this case. Chase certainly does some legit banking, which is already highly profitable. Beyond fines I'd like to see some constraints which prevent those who have broken the law from working in this field. Jamie Dimon should not be allowed to handle money for the duration of his life.
Posted by fletc3her on January 8, 2014 at 8:58 AM · Report this
1. put the executives in jail.
2. have SPD give them jaywalking tickets and taser them.
3. break it up permanently.
4. force it to go out of business for its wrongdoing. sell off shards of assets to 10 other banks as punishment. transfer the accounts.
5. strip it of its legal personhood, unveil the corporate veil, and make the top ten owners personally liable.
6. seize all profits from the wrongoing as we are allowed to do under RICO and common law.

this is a fucking wrist slap. it's like finding out a doctor was doing 5,000 operations a year in reckless manner, because to do them properly would cost money and reduce profits, and ordering the doctor to pay a fine of earnings for one quarter. since the proceedings have taken so many years the doctor has already saved up enough and know's it's coming. so no real penalty at all.

meanwhile, if you commit a felony, say tampering with evidence, you would go to jail. unless, you know, you're a city attorney in Seattle, then you get promoted to be a judge in the municipal court where you can convict people for "assault" on an officer when they tense up their body and fail to be properly limp when spd commands them to spread 'em.
Posted by injustice department on January 8, 2014 at 8:58 AM · Report this
Dr_Awesome 20
Saw an interesting article last year- a captain of an oil tanker talked about life as a sea captain. Great scenery, fun job, high pay, luxury house on Whidbey island.

And the very real threat that if he OR ANY OF HIS CREW screw up and cause a spill he faces felony charges.

That's because of laws created after so many high-profile spills that cost all of us. He said his job was very stressful because of that and he was retiring soon for that reason.

It is time to create similar laws for banking.

You pollute the economic environment (or your minions do it) you go to the pokey.

And the threat of that should be a strong deterrent.
Posted by Dr_Awesome on January 8, 2014 at 9:08 AM · Report this
There's a bumper sticker that reads: "I'll believe that corporations are people when Texas executes one of them."

This isn't such a joke of an idea. Corporations can be found guilty of crimes and they can be sentenced to the equivalent of prison or death.

The equivalent of prison would be the seizure of their assets - at least for a period - and barring them from doing business for a period of five to ten years.

The equivalent of a death sentence would be the dissolution of their corporate charter.

We should encourage a judge to pass such a sentence.
Posted by Charlie Mas on January 8, 2014 at 9:24 AM · Report this
ScrawnyKayaker 22
@20 That would be the way to do it.

And such laws will be enacted about 5 years after politicians are barred from jizz-guzzling Wall Street money by a Constitutional amendment that says corporations are not people and if money is speech, every real person gets a voucher for government funding of election ads that they can allocate to whatever political interests they like, so everyone gets equal speech and no more.

Which will happen never.
Posted by ScrawnyKayaker on January 8, 2014 at 10:09 AM · Report this

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