SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
To subscribe to Capitol Fax, click here.
Making the big banks pay

Wednesday, Aug 27, 2014

* From last week

Attorney General Lisa Madigan today announced a record $300 million settlement with Bank of America over of the bank’s misconduct regarding risky mortgage-backed securities.

The settlement includes $200 million in relief to fully recover for losses incurred by Illinois’ pension systems and $100 million in consumer relief.

The agreement is part of a national settlement forged by the U.S. Department of Justice and also joined by attorneys general from California, Delaware, Massachusetts, New York and Kentucky. The settlement includes recoveries for RMBS issued by Countrywide and Merrill Lynch, both of which were acquired by Bank of America.

“This settlement resolves the fourth enforcement action I have brought against Bank of America to fight the widespread fraud that was at the root cause of the economic crisis,” said Madigan. “Bank of America, and in particular Countrywide, were major players in virtually every aspect of the market that caused the crisis, from shoddy loan originations and discriminatory lending to African Americans and Latinos to fraudulent marketing of mortgage-backed securities.”

The settlement with Bank of America stems from an investigation by Madigan’s office that revealed that between 2006 and 2008 the bank failed to disclose the true risk of RMBS investments to Illinois’ pension systems and therefore misled the systems when they invested in the RMBS market. […]

Madigan has reached similar agreements with JPMorgan Chase & Company for $100 million to Illinois’ pension systems, and with Citigroup for $44 million to the state’s pension systems and an additional $40 million in consumer relief.

* The Nation has a very long, detailed story about that JPMorgan Chase settlement

In the end, the abject fear of Ben Wagner got Jamie Dimon to cave.

For much of 2013, Dimon, the chairman and chief executive of the formidable JPMorgan Chase & Company, was telling anyone who would listen that it was unfair and unjust for federal and state prosecutors to blame him and his bank for the manufacture and sale of mortgage-backed securities that occurred at Bear Stearns & Company and at Washington Mutual in the years leading up to the financial crisis. When JPMorgan Chase bought those two failing firms in 2008, Dimon argued, he was just doing what Ben Bernanke, Hank Paulson and Timothy Geithner had asked him to do. Why should his bank be held financially accountable for the bad behavior at Bear and WaMu?

It was a clever argument—and wrong. Dimon’s relentless effort to spin his patriotic story soon collided with the fact that Wagner, the US Attorney for the Eastern District of California, had uncovered evidence that JPMorgan itself was guilty of many of the same greedy and irresponsible behaviors. Piles of subpoenaed documents and e-mails revealed that JPMorgan bankers and traders had underwritten billions of dollars’ worth of questionable mortgage-backed securities that Dimon had been telling everyone had originated at Bear Stearns and WaMu. Worse, the bad behavior had occurred on Dimon’s watch.

The likelihood that the Justice Department would file Wagner’s civil complaint last fall—exposing publicly for the first time the litany of wrongdoing at JPMorgan and threatening to push it off the perch that Dimon had so artfully constructed for it over the years—ultimately brought Dimon to the table. On September 26, just weeks after the Justice Department shared a draft copy of Wagner’s complaint with Dimon, the two sides arranged for a summit meeting between Dimon and Attorney General Eric Holder. By mid-November, the bank had agreed to pay $13 billion in a comprehensive settlement of mortgage-related securities claims with various branches of the federal government and a group of states, led by the attorneys general of New York, California, Illinois, Massachusetts and Delaware.

It was the largest financial settlement of all time, and it kept Wagner’s complaint away from the prying eyes of the public. One thing is clear: Dimon’s claim that his own bankers and traders had done nothing wrong in the years leading up to the financial crisis wasn’t true. “The investigators and the lawyers were uncovering very viable evidence,” explains Associate Attorney General Tony West, who headed up the settlement negotiations on behalf of the Justice Department. “I think there was recognition that we had enough evidence there that would support the complaint and would support a robust lawsuit.”

Go read the whole thing. Whew.

- Posted by Rich Miller        

  1. - LincolnLounger - Wednesday, Aug 27, 14 @ 12:07 pm:

    Meanwhile, Dimon is rewarded with more huge pay and bonuses. Remarkable, really.

  2. - Ghost - Wednesday, Aug 27, 14 @ 12:08 pm:

    Rich you have made a huge error here.

    didn’t you know, it is Illinois tax rate, state worker salaries and pensions that caused all the problems in illinois.

    This article mistakenly makes it look like unregulated securities sales and banking practices damaged business and the economy.

  3. - Esteban - Wednesday, Aug 27, 14 @ 12:11 pm:

    Can anyone explain how no one ever seems to be brought up on criminal charges in these deals?

  4. - Ghost - Wednesday, Aug 27, 14 @ 12:19 pm:

    are you asking why jails are filled with minorities for smoking pot but the wealthy white bankers are all walking free and enjoying their multiple houses, and in some cases running for elected office?

  5. - redleg - Wednesday, Aug 27, 14 @ 12:31 pm:

    Nationwide around 42% of home owners are under water with their mortgages.

    This dance with the too big to fails, or something similar to it, will happen again. Not so sure it will be financially survivable the next time.

  6. - wordslinger - Wednesday, Aug 27, 14 @ 12:55 pm:

    Ugh, cost of doing business fines, no matter how big.

    Rob and steal and crash the world economy and you still keep the sweet gig. Bust into someones car and steal their toll change and you’re looking at a forcible felony.

  7. - Aldyth - Wednesday, Aug 27, 14 @ 12:58 pm:

    And nobody goes to jail. Until CEOs start serving jail time, nothing will change. Just factor it into the cost of doing business.

  8. - Nearly Normal - Wednesday, Aug 27, 14 @ 1:02 pm:

    Fat cats stay out of jail while the poorer who can’t afford high-priced attorneys fill them up!

  9. - Da Moat - Wednesday, Aug 27, 14 @ 1:06 pm:

    Criminal charges were brought in New York.

  10. - A guy... - Wednesday, Aug 27, 14 @ 1:08 pm:

    Lisa deserves some credit here. A lot of it, in fact.

  11. - Demoralized - Wednesday, Aug 27, 14 @ 1:34 pm:

    You’re going straight to Republican hell @A guy. lol

  12. - Formerly Known As... - Wednesday, Aug 27, 14 @ 1:35 pm:

    Plenty of fines, while no one does time.

  13. - Pat C - Wednesday, Aug 27, 14 @ 1:45 pm:

    Eric Holder, protecting the upper 1% of the upper 1%…

  14. - paddyrollingstone - Wednesday, Aug 27, 14 @ 1:50 pm:

    Take it away Bob:

    “Steal a little, and they put you in jail. Steal a lot, and they make you king.”

  15. - A guy... - Wednesday, Aug 27, 14 @ 3:41 pm:

    === Demoralized - Wednesday, Aug 27, 14 @ 1:34 pm:

    You’re going straight to Republican hell @A guy. lol===

    I might be! lol.

  16. - move on - Wednesday, Aug 27, 14 @ 5:13 pm:

    Regardless of what you think of Lisa Madigan’s father, you have to admit that when it comes to consumer protection issues she has done tremendous things for Illinois.

Sorry, comments for this post are now closed.

* They say that like it's a bad thing
* Exelon Just Received A $1.7 Billion Rate Increase Through The Market-Based Capacity Auction
* Point taken. However...
* *** UPDATED x1 *** Byrd-Bennett indicted by the feds
* Yikes, man
* The Credit Union Difference
* SUBSCRIBERS ONLY - Kotowski bash, event list
* Question of the day
* Dimas: "There's a chance we will have to introduce the FY17 budget before we have an FY16 budget"
* Unclear on the concept
* Rhetoric vs. reality
* Supremes snub Illinois Policy Institute appeal
* Aren't we forgetting something?
* True, but...
* Things are tense all over
* Unclear on the concept
* Rep. Leitch won't run again
* SUBSCRIBERS ONLY - Supplement to today’s edition and a Golar replacement update from AlderTrack
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Visit our advertisers...







Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

* iPhone 6s and 6s Plus Launching in Belarus, Guam, Moldova, Serbia and Ukraine on October 23
* Motorola’s Moto X Style finally reaches India, Flipkart starts sales next week
* Benchmark scores leak for new Samsung chip believed to be the Exynos 8890
* Mobile Searches Surpass Desktop Searches At Google For The First Time
* Episode 1 of Tales from the Borderlands free for Android devices
* Cyanogen to continue working with YU even after stock Android phone’s release
* Google Play Movies & TV crosses one billion installs

* After second base, it was no-go White Sox
* Scouting, player development key for White Sox
* Arbitration-eligible White Sox won't put dent in payroll
* Hawk Harrelson's reduced schedule creates opportunity for White Sox...
* Holliday, Ventura connection goes way back
* 2015 in 3 words: Sale, Abreu, inconsistency
* Hawk cutting '16 broadcast schedule


Main Menu
Pundit rankings
Subscriber Content
Blagojevich Trial
Updated Posts

October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005


RSS Feed 2.0
Comments RSS 2.0


* Democrats warn Illinois could go broke without .....
* Democrats: Illinois could go broke without budg.....
* Democrats warn Illinois could go broke without .....
* Democrats warn Illinois could go broke without .....
* Democrats warn Illinois could go broke without .....
* Illinois medical marijuana board to Rauner: Put.....
* Democrats warn Illinois could go broke without .....

* EPA pushes for 'smart thermostats' as way to limit pollution
* Democrats warn Illinois could go broke without state budget
* Chicago cab driver group calls for 24-hour strike
* Indiana man chose as 1st national Pig Farmer of Year
* 2 Illinois congressmen heading to Cuba on Sunday for ag trip
* EXCHANGE: Sudzy Bath and Biscuits in Anna caters to canines
* Group says interest in Chicago Halloween parade growing
* Impact of Chicago Marathon felt from now to Sunday event
* Chicago Democrats to meet to fill seat of late Rep. Golar
* Illinois approves 3,100 medical marijuana patients

* Democrats: Illinois could go broke without budget
* Gov. Rauner ends quarter with $19M in campaign fund
* Prosecutors say former Congressman Aaron Schock is 'grandstanding'
* State Rep. David Leitch won't seek re-election
* Rauner to Democrats: 'Time's up' in budget impasse
* Illinois panel OKs medical marijuana for 8 health conditions
* State Sen. McCarter to challenge Shimkus in Congressional primary
* Rauner increasing pressure on Democrats for budget deal
* Local health departments warn of budget impasse impact
* Illinois panel OKs medical marijuana for pain conditions

* The problem with using Chicago to make the case against gun control
* Two South American beer kings spar again over SABMiller-InBev deal
* GOP in disarray as McCarthy quits Speaker race
* 'Uber for auto repair' sends freelance mechanics to your home or office
* The songbird you must see now, Chicago Ideas Week bonanza

* Aldermen vent frustrations about city’s losing battle against homelessness
* Blackhawks mailbag: Crawford, Teravainen, Dano and more
* Ex-CPS CEO Barbara Byrd-Bennett, 4 others charged in contract scheme
* The Rangers thought the Blackhawks celebrated too much before their game
* Two U.S. reps from Illinois plan Cuba trip
* Clinton’s email server subject to hack attempts from China, Korea, Germany
* Rangers spoil Blackhawks party in season opener
* Gary Bettman booed very loudly during Blackhawks banner ceremony
* Sweet: Emanuel in D.C. as Chicago’s gun violence in national spotlight
* Brown: An Illinois disaster you may be missing

* Former Chicago Public Schools chief to plead guilty to bribery scheme
* Want Cubs playoff tickets? Gas up the car.
* Cops: We're prepared, but Cub fans weren't too rowdy after win
* Girl, 16, went missing 2 weeks ago near Washington Park
* Orthodox bishop ousted for sexual misconduct sues church leaders
* Jennifer Hudson on 'Chi-raq' character: 'I have the same story'
* 26.2 miles through Chicago: Interactive marathon map
* Mortgage rates fall sharply
* Chicago gun laws not as strict as GOP candidates claim
* Mike Ditka to appear on Oprah's 'Where Are They Now?'

* Bernard Schoenburg: Supreme Court refuses to hear Illinois Policy Institute appeal over press access at Statehouse
* Democrats: Illinois could go broke without budget
* Gov. Rauner ends quarter with $19M in campaign fund
* Prosecutors say former Congressman Aaron Schock is 'grandstanding'
* State Rep. David Leitch won't seek re-election
* George Will: Impeach the IRS director
* Eugene Robinson: Obama is right to be cautious on Syria
* Elizabeth Austin: 'Lawsuit climate' no obstacle to business success
* Rauner to Democrats: 'Time's up' in budget impasse
* Illinois panel OKs medical marijuana for 8 health conditions

* Updated: Want to see 'Consumed' here? Let your voice be heard
* Black to have surgery; out 4-6 weeks
* GCMS building evacuated, situation cleared after morning threat
* Updated: U.S. airman who helped thwart French train attack is stabbed
* Updated: McCarthy abruptly withdraws candidacy for House speaker
* Urbana apartment fire spurs evacuation
* Are you ready for some rock n roll (hall of fame)?
* State dismisses drug cases for lack of witness
* This day in history, Oct. 9, 2015
* 10-08-15 Dr. Jared Rogers with Jim Turpin on Penny for Your Thoughts

* Rupert Murdoch apologizes for 'real black President' tweet
* Oklahoma-Texas Preview Capsule
* In St. Louis some fans worry; others say bring it on
* Purdue Trustees committee recommends Daniels pay, extension
* EPA pushes for 'smart thermostats' as way to limit pollution

* House lawmakers overcome hurdle on key tra...
* Rodney Davis talks funding with Bloomingto...
* The agency that fought Illiana gets a new ...
* Rep. Dold takes educational cruise down Ch...
* Lawmakers decry high turnover rate of VA h...
* CBD Oil, and politics
* Simon considering state Senate bid
* Killer Congressman Tom MacArthur trying to...
* Shutdown? State may not notice
* Rep. Bob Dold

* Senate Democrats pushing gun legislation, ......
* Sen. Durbin supports Sentencing Reform and......

* POLITICO Illinois Playbook: RAUNER-MADIGAN......
* New GOP Opponent Challenges Kirk in Senate......
* New GOP Opponent Challenges Kirk in Senate......

* Former CPS CEO Byrd-Bennett Indicted On Corruption Charges
* Bustos, Davis To Visit Cuba In Search Of Farming Opportunities
* Former CPS CEO Byrd-Bennett Indicted On Corruption Charges (UPDATED)
* Di Leo: Murder, Motive and Challenging an Approach
* Kinzinger blasts House conservatives and think tanks
* St. Charles City Council Weighing Video Gambling Plan
* Kevin McCarthy Drops Out Of House Speaker's Race
* Illinois Advisory Board OK's New Conditions For Medical Marijuana Program
* State Rep. Breen Celebrates Summer Reading with Program Participants
* No Illinois GOP members part of powerful conservative House Freedom Caucus

* IEMA Announces Elgin Community College Attains ‘Ready to Respond Campus’ Designation - Elgin one of five Illinois campuses to receive distinction
* New Mortgage Loan Interface Increases Efficiency, Compliance
* State Fire Marshal Ushers In Fire Prevention Week - “Hear the Beep Where You Sleep!”
* October Is Illinois College Application Month! - Over 130 High Schools Will Hold Events to Help Students Get to College
* Illinois Takes Part in Nationwide Community Banking Study, Findings Announced

    Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller