Thursday, September 26, 2013

Why We Really Need JPMorgan to Trade Carbon

From MoneyBox:

A Guide To Everyone Suing JP Morgan
J.P. Morgan is the large bank that probably gained the most in terms of size, scope, and reputation from the housing and mortgage market collapses and subsequent financial chaos. As a big firm that had unwound most of its exposure to the housing market unusually early, it was in a position to grow as other institutions failed. Except over the past year and a half it's been sucked into an increasing whirlwind of litigation, revealing that its success has been built in part on a culture of very lax compliance with the law all across the board.

Today many papers have stories reporting (NYT, FT, WSJ) that the bank is about to settle one class of these lawsuits—brought primarily by state attorneys general, and charging the bank with fraudulent sales of mortgage-backed securities to investors. The numbers being tossed around seem to be $7 billion in cash payments plus $4 billion worth of mortgage relief. But these talks aren't quite done yet because there's still disagreement on the crucial issue of culpability. There's been a drive lately to try to force corporate defendants to admit guilt in these settlement arrangements and Morgan doesn't like the idea.

They don't like the idea of admitting guilt in part because there's so many more legal efforts against them at the moment. Massachusetts is investigating their debt collection practices, the Securities and Exchange Commission is investigating them for violating laws against bribery, and the CFTC is looking into whether the London Whale trades violated market manipulation rules.

Those newish investigations all draw strength from recent fines Morgan has already paid, including nearly a $1 billion related to the London Whale episode, modest fines over deceptive credit card billing, and $410 million in fines from the Federal Electricity Regulatory Commission for manipulative bidding practies....MORE