JPMorgan Chase & Co CEO Jamie Dimon has negotiated a tentative $13 billion settlement with various organisations regarding mortgage bonds that JPMorgan and its banks sold to investors. U.S. Attorney General Eric Holder, however, is not willing to let the bank off the legal hook, despite the huge monetary penalties it has so far agreed to pay. In an unprecedented move, Holder and his team demand that JPMorgan pleads guilty of its responsibility in the deal.
Despite Dimon’s pleas and complains to the U.S. Justice Department, the government has not been convinced to end its criminal probe as investigators are still uncertain of their finds. The criminal probe regards JPMorgan falsely presented the quality of the mortgages it was selling to investors in bond packages.
JPMorgan, however, is not about to admit wrongdoing. Although ending the criminal probe does not seem to be within reach, the bank does not want to hold up its other settlements to wait for it, as civil cases can be wrapped up quicker than criminal proceedings.
The U.S. government’s insistence on the criminal probe and its refusal to reach a settlement without a guilty plea shows a significant change of stance towards large banks and their culpability. With President Barack Obama’s administration having received extensive criticism for failing to prosecute bankers on their involvement in the events that led to the 2008 financial crisis, investigators now seem to have grown stricter on the issue of banking fraud.
Despite JPMorgan’s and their supporters claims that the bank is too big to be prosecuted under law, the task force is not likely to waver from its cause until it has carried its purpose out to its fullest extent.
But in protesting against the criminal probe by the U.S. government, the supporters of JPMorgan voice their concerns regarding their own future treatment in similar cases. The Justice Department hopes to use its settlement with JPMorgan as a template for deals with other banks.
Beyond mortgage-related probes, federal prosecutors are investigating whether JPMorgan broke laws in the “London Whale trades” and its handling of derivatives bets that cost the bank more than $6 billion in trading losses, and more than $1 billion in regulatory fines.
