* Illinois’ $100 billion unfunded pension liability just got a bit smaller. Illinois Issues…
As part of a $13 billion national settlement, JPMorgan Chase & Co. has agreed to pay millions to Illinois’ public employee pensions systems for not disclosing the risks associated with some investments.
As part of the settlement, JPMorgan Chase admitted that it the misrepresented the quality of mortgage-backed investments it sold. “Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” Attorney General Eric Holder said in a prepared statement. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.”
Under the deal, the bank will pay $100 million to Illinois pension systems that purchased the investments prior to 2009. “We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” Attorney General Lisa Madigan said in a written statement. “Today’s settlement with Chase will assist Illinois to recover its losses from the dangerous and deceptive securities that put our economy on the path to destruction.” Madigan has been working with President Barack Obama’s Financial Fraud Enforcement Task Force. The group’s investigations spurred this and other settlements from big banks and mortgage servicers. […]
The settlement is the largest in U.S. history. It also includes a $4 billion settlement with the Federal Housing Finance Agency and a $4 billion for the U.S. Department of Housing and Urban Development. Some of that money will go toward loans the bank is forgiving or giving more favorable terms to borrowers. Some will go to new low-interest loans to borrowers in areas hit hardest by the housing crisis. The funds will also be used to tear down long-abandoned homes.
Rob a liquor store, go to prison. Steal billions, send the international economy into a devastating tailspin and give some money to the government.
* More…
The biggest chunk, $72.4 million, will go to the Illinois Teachers’ Retirement System; $16.2 million will go to the State Universities Retirement System; and $11.4 million will go to a unit that invests on behalf of funds that cover other state workers.
Imagine how horrible that settlement would’ve been for former JPMorgan Chase Midwest Chairman Bill Daley if he’d stayed in the governor’s race.
- Dee Lay - Thursday, Nov 21, 13 @ 9:34 am:
“Imagine how horrible that settlement would’ve been for former JPMorgan Chase Midwest Chairman Bill Daley if he’d stayed in the governor’s race.”
You don’t think he saw that coming?
- CircularFiringSquad - Thursday, Nov 21, 13 @ 9:37 am:
Imagine how bad it will be when criminal cases start and guy charged with lobby unions to save Jamie Dimon’s butt is wandering around.
Wonder if the $100 million equals what they stole AND lost interest earnings or just what they stole
- A guy... - Thursday, Nov 21, 13 @ 9:40 am:
According to estimates from Gov. Quinn’s office, this will cover the interest on 20 days of not achieving pension reform. I’m not one to look a gift horse in the mouth, so it’s good news to get $100M. That’s a lot of money that most people should be able to get their heads around. Now extrapolate that to the problem to 1000 times worse than what the banks just coughed up. Eek.
- low level - Thursday, Nov 21, 13 @ 9:40 am:
How long will it be before Bruce has a new ad blaming this on unions, Madigan, etc.? Or the BGA does some fantastic investigation and concludes that the only way out of the mess is to send Andy a contribution???
- Michelle Flaherty - Thursday, Nov 21, 13 @ 9:44 am:
This would have been a huge plus for Bill Daley.
Name another candidate who delivered $100 million to shore up the pension funds.
- Ghost - Thursday, Nov 21, 13 @ 9:58 am:
Notice how none of the top people at these places have lost any of thier multi million to 100’s of miilions in personal fortunes, multiple-houses etc.
When a minority commits a crime with a gun we want them to serve extra time in jail… when a white guy in a 10,000 dollar suit commits a crime we let his company (we dont want him to lose anything personnaly) write a check and move along.
- Ready To Get Out - Thursday, Nov 21, 13 @ 10:00 am:
A guy….”I’m not one to look a gift horse in the mouth”
Isn’t that what you’re doing?
- Grandson of Man - Thursday, Nov 21, 13 @ 10:00 am:
“Rob a liquor store, go to prison.”
That is correct. Incarceration disproportionally affects poorer people. The bank executives will skate away from this without losing their freedom.
- thechampaignlife - Thursday, Nov 21, 13 @ 10:00 am:
===or just what they stole===
Or, more likely, part of what they stole.
- train111 - Thursday, Nov 21, 13 @ 10:05 am:
“Rob a liqouor store, go to prison……”
Take a look at Florida Congressman Trey Reydel. Dude buys coke from an undercover cop, pleads guilty, and is getting on year probation. Now he is taking a leave of absence to do ‘drug rehab’
Try that one on the West
Side of Chigago once.
Do drugs as an upper class successful white person and its probation and rehab.
Do drugs as a minority in a rough neighborhood and youre going to do hard time. (Heck, in Cook County you’ll do a year possibly before the Clerk of Circuit Court can actually assemble the paper work to process your case.)
- Formerly Known As... - Thursday, Nov 21, 13 @ 10:10 am:
The banksters did serious damage to our country. Some deserve prison time.
But they did not run up our pension debt and skip the tab. Politicians did.
They did not fail to execute proper oversight of the banking industry. Politicians and government agencies did.
And they did not fail to prosecute themselves. Politicians and government agencies did.
There is a list of culpable individuals responsible for causing this crisis, and if bankers are 1, then politicians are 1A.
- wordslinger - Thursday, Nov 21, 13 @ 10:10 am:
I’ll believe criminal prosecutions when I see them.
This is a cost of doing business. Even after the economy tanked in 2008, JP Morgan Chase was consistently booking net earnings in a range from $3 billion to more than $6 billion a quarter.
Plus, according to JP Morgan Chase, more than half the fine is tax-deductible, so the taxpayers will share their pain.
http://www.npr.org/blogs/thetwo-way/2013/11/19/246143595/j-p-morgan-chase-will-pay-13-billion-in-record-settlement
http://investor.shareholder.com/jpmorganchase/earnings.cfm
- Ghost - Thursday, Nov 21, 13 @ 10:12 am:
== They did not fail to execute proper oversight of the banking industry. ===
after the credit union crash the GOP, lead by McCain, fought to keep governemnt from regualting the banks, as it would interfere with the free market etc etc.
- Formerly Known As... - Thursday, Nov 21, 13 @ 10:14 am:
=== Rob a liquor store, go to prison. Steal billions, send the international economy into a devastating tailspin and give some money to the government. ===
Is that anything like the billions our esteemed legislators are about to steal from pensioners?
Sometimes it seems the politicians should have been banksters, and vice versa.
And yet, we re-elect those same politicians year after year.
- dupage dan - Thursday, Nov 21, 13 @ 10:17 am:
I wonder what punishment awaits Fannie Mae and Freddie Mac?
- Bill White - Thursday, Nov 21, 13 @ 10:21 am:
==== or just what they stole ====
== Or, more likely, part of what they stole. ==
A [small] part of what they stole
- Bill White - Thursday, Nov 21, 13 @ 10:23 am:
@Formerly
=== If bankers are 1, then politicians are 1A ===
Trace the campaign contributions, and we see the problem is that we elect politicians who serve the bankers, not us.
Of course, electing Bruce Rauner would allow us to skip the middleman and there is something to be said for efficiency. /snark
- langhorne - Thursday, Nov 21, 13 @ 10:27 am:
i am with wordslinger on this. i will believe criminal prosecution when i see someone in cuffs. the cubs will win the pennant before that happens.
- walkinfool - Thursday, Nov 21, 13 @ 10:29 am:
One of the things holding up this settlement, which was almost final three months ago, was the Bank’s demand that their officers be exempt from criminal prosecution for these activities. The Feds refused, and Dimon finally caved.
We’ll see.
A complicating factor, not to be forgotten, is that much of the bad acts occurred in Bear Stearns, and Wash Mu, which the Feds originally pressured the Bank to take over and keep afloat during the crisis. Not sure where those folks are now.
- frustrated GOP - Thursday, Nov 21, 13 @ 10:31 am:
It is important to note that most of the fine paid by JPM is due to companies they bought and kept the economy a float. Had they not bought Bear and Wamu, one of them would have gone down. Imagine the impact of Lehman times 2.
Additionally, if there is a place that should remember what happens to companies that get a criminal charge against them and the economic impact we should remember what happened to Anderson when a few partners went off the reservations with Enron. I’m sure most the people in Chicago that lost their jobs after it closed did nothing but their job, yet a criminal charge, later dropped, killed a huge employer in our state.
- Rarely Posts - Thursday, Nov 21, 13 @ 10:33 am:
Rich: I didn’t see anywhere in the DoJ statement of facts that JP Morgan “stole billions”. Could you give your source for that?
Statement of Facts is here:
http://www.nytimes.com/interactive/2013/11/19/business/dealbook/20chase-documents.html
Sorry if I missed that.
- frustrated GOP - Thursday, Nov 21, 13 @ 10:33 am:
“Not sure where those folks are now.” I’m guessing not employed by JPM.
- Fed up - Thursday, Nov 21, 13 @ 10:34 am:
Train 111
You couldn’t be more wrong. First time offender convicted of drug possession in Cook Co get probation. Your first court date is within 2 days, second Probable cause hearing within 21 days you can plead guilty (like Reydal) at any time.
Rob a liquor store go to jail, stal billions and pay a fine couldn’t agree more. You have to wonder why Obama and Holder are not putting these guys in prison. Derrick Smith is a jaywalker compared to what has happened on Wall Street and with pension funds yet he is going to be convicted.
- Paddyrollingstone - Thursday, Nov 21, 13 @ 10:38 am:
Rich - not too much of a surprise, as Bob Dylan sang, “steal a little and they throw you in jail; steal a lot and they make you a king.”
- wordslinger - Thursday, Nov 21, 13 @ 10:43 am:
–I wonder what punishment awaits Fannie Mae and Freddie Mac?–
They were issuing fraudulent subprime MBS?
- A guy... - Thursday, Nov 21, 13 @ 10:46 am:
- Ready To Get Out - Thursday, Nov 21, 13 @ 10:00 am:
A guy….”I’m not one to look a gift horse in the mouth”
Isn’t that what you’re doing?
NO. Read it again. I’m guess I’ve got to get remedial with you. $100M is a lot of dough. Think of it as one stair in a staircase with 1000 more steps. Being “cute” doesn’t work here.
- ~pfft - Thursday, Nov 21, 13 @ 10:55 am:
~word
Did Daley take the baton from Rhambo?
abcnews.go.com/Blotter/story?id=6201900
- walkinfool - Thursday, Nov 21, 13 @ 11:05 am:
Note: Best book on the subject: “All the Devils are Here” by McLean and Nocera
A lot of things beyond mortgage backed securities caused the meltdown, and most of the key “criminals” were not in the traditional commercial banks, considered too big to fail. They played their part, of course. But what they have are deep pockets right now, so they bear the brunt of law suits.
My top list for criminal prosecution: AIG from top to bottom, the ratings agencies, mortgage brokers, investment banking houses, Countrywide and other sub-prime mortgage issuers.
For public censure: the (mostly GOP plus Clintonian) politicians who deregulated the financial industry starting in 1980, exempted the secondary and tertiary markets from any regulation, and defunded the regulators who remained. Fannie Mae and the big commercial banks were late comers to the party, but then did turn around and make a lot of money in the cesspool.
- train111 - Thursday, Nov 21, 13 @ 11:09 am:
Fed Up
I’m prepared to eat crow for making an emotion based response.
Where do you get your information from? Also is this for possession of marijauna and not cocaine?
train111
- Ready To Get Out - Thursday, Nov 21, 13 @ 11:11 am:
A guy….you’re doing it again! Everyone knows there is a problem, take the money and leave it alone.
“I’m guess…”
Looks like you need someone to get remedial with you. Sorry, couldn’t pass that one up.
- A guy... - Thursday, Nov 21, 13 @ 11:25 am:
Are you really ‘ready to get out’, cause now would be an exceptional time.
- dupage dan - Thursday, Nov 21, 13 @ 11:30 am:
The 2 FMs were bundling and selling the mortgages. How could they not know they were subprime?
There is plenty of blame to go around. To identify one culprit to the exclusion of others does not do the public well. Who was pushing lenders to make the questionable loans in the first place? I understand the banks have a part in this but them alone? There is too much history about the urging/pressuring of lenders to make loans to folks who were not qualified so that more and more Americans could buy into the American dream. That doesn’t excuse the bankers part in this but to make them the sole villains is the easy way to explain what happened.
- Soccertease - Thursday, Nov 21, 13 @ 11:40 am:
$100 million is nice, but in perspective that’s 1/10th of 1% of the state’s pension debt-Scary!
- Ruby - Thursday, Nov 21, 13 @ 11:40 am:
==The banksters did serious damage to our country. Some deserve prison time == and the Democrats need a high profile banker on trial to distract from the Obamacare rollout problems. We can expect to see a bankster trial soon. Never waste a good crisis!
- wordslinger - Thursday, Nov 21, 13 @ 11:45 am:
–Who was pushing lenders to make the questionable loans in the first place?–
Yes, who?
The private-label issuers of MBS weren’t acting under government mandate like CRA. They were out on their own making predatory loans then selling them off with AAA ratings.
Fannie and Freddie held and bundled some higher risk mortgages. They weren’t players in the subprime business.
After the crash, 98% of Fannie and Freddie mortgages were performing on time. But their stock was wiped out because they held 75% of all mortgages in the country, and the underlying values of the assets had also crashed.
- Formerly Known As... - Thursday, Nov 21, 13 @ 11:59 am:
@Bill White - to be a bit snark-tastic, it is like the cycle of life.
Candidates
/ \
/ \
Bankers Voters
\ /
\ /
Politicians
Voters elect politicians so they can return to the bankers for campaign donations.
Rinse, wash, repeat.
The entire cycle is obviously driven by selfless service and the public good.
- CircularFiringSquad - Thursday, Nov 21, 13 @ 11:59 am:
“But they did not run up our pension debt and skip the tab. Politicians did.
They did not fail to execute proper oversight of the banking industry. Politicians and government agencies did.”
Mr/Ms Formerly…:
Did you bump your head or just gargle with silly sauce this a.m. The bankers and Wall Street hustlers ran that show….they took a little law that encouraged home ownership (which they lobbied) and used it and “leverage” (the term for borrowing on Wall St.) and screwed everyone across the world
The good news is Eric Holder preserves the right to have criminal cases
- Formerly Known As... - Thursday, Nov 21, 13 @ 12:01 pm:
Let’s try that again, shall we?
………Candidates……….
……../……….\………
……./…………\……..
….Bankers……..Voters….
…….\…………/……..
……..\………./………
………Politicians………
- pensioner - Thursday, Nov 21, 13 @ 12:14 pm:
@ Michelle
You are discounting the billions they stole.
- Fed up - Thursday, Nov 21, 13 @ 12:16 pm:
Train 111
Yes it’s for cocaine, heroin, marijuana. Any drug. First time/ second time offenders do not go to prison. Nor should they. I don’t have the stats with me, they are availble. How about you find a first time drug offender with a small amount that went to prison. The congressman recieved a sentance comparable to most first time offenders. Worse if you count the publicity.
- Formerly Known As... - Thursday, Nov 21, 13 @ 12:43 pm:
@Mr/Ms Circular - surely you jest. Even the government itself disagrees such a one-sided view of events.
“First, to pin this crisis on mortal flaws like greed and hubris would be simplistic…. We do place special responsibility with the public leaders charged with protecting
our financial system, those entrusted to run our regulatory agencies, and the chief executives of companies whose failures drove us to crisis.”
When you have a chance, read the “Final report of the national commission on the causes of the financial and economic crisis in the United States”. www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf
If pressed for time, then simply google “Brooksley Born”, “Sheila Bair” or “Susan Bies”.
- Norseman - Thursday, Nov 21, 13 @ 12:49 pm:
Pensioner - See definition of snark. Michelle is the honored master.
- Ready To Get Out - Thursday, Nov 21, 13 @ 12:55 pm:
A guy….thanks for the advice. In fact, I will have to change my nickname in January!
- dupage dan - Thursday, Nov 21, 13 @ 1:37 pm:
=== The private-label issuers of MBS weren’t acting under government mandate like CRA ===
We will have to disagree on that point. The banks certainly took the opportunity to do what they did. That they were able to unload those loans makes one wonder. Where were the regulators? Who was watching this? There were folks who sounded the alarm. Why were they ignored?
You wrap it up so nicely, word. I wish it were so. If it was so easy to follow the path, why isn’t the current administration - so eager to pin the blame during the campaign in 2008 - pursuing this with the fervor they exhibited back then?
- Bill White - Thursday, Nov 21, 13 @ 1:44 pm:
@ Formerly . . .
Posting ASCII art does suggest that one is of a certain age.
Of course, appreciating ASCII art means the same thing.
Thanks!
- wordslinger - Thursday, Nov 21, 13 @ 1:46 pm:
–That they were able to unload those loans makes one wonder. Where were the regulators? Who was watching this? There were folks who sounded the alarm. Why were they ignored?–
They were unregulated. They were able to bundle and sell the loans because they carried AAA ratings.
- Ghost - Thursday, Nov 21, 13 @ 1:52 pm:
lets not forget that the builders were working with bankers and appraisers to way over vaule property in support of these loans.
- wordslinger - Thursday, Nov 21, 13 @ 2:15 pm:
There was a moral hazard.
Loan originators did not care about creditworthiness. They would take their origination fees and sell the loans to the private label bundlers.
The bundlers didn’t care about creditworthiness because they had the credit rating agencies in their pockets passing out AAA ratings like candy. They’d bundle and sell as quickly as the loans came in.
Investors around the world loved high-yield AAA securities.
The whole scam continued to work as long as real estate kept going up. If individual loans went bad, it didn’t matter. The underlying asset was worth more than the mortgage. Just foreclose and move on.
The the bubble burst.
- A guy... - Thursday, Nov 21, 13 @ 4:17 pm:
W Slinger. Precisely correct.
- West Side the Best Side - Thursday, Nov 21, 13 @ 4:37 pm:
Train 111 - A lot of first time weed and drug offenders on possession cases in Cook County get the State’s Attorney’s Office Drug School. If they complete it the charges are dropped. If they don’t get and if they have no drug background they can get a probation that can be expunged.
- walkinfool - Thursday, Nov 21, 13 @ 4:43 pm:
Word: all true.
Just don’t forget credit default insurance products pushed and then bundled into CDSs by AIG, which provided justification/cover for the willfully blind, including the ratings agencies and banks. AIG made billions on what was a fraudulent product from day one. And then the CDS market-makers who multiplied the risks in the system beyond any chance of recovery, and provided the actual trigger for collapse.
My only point is that the big commercial banks are easy targets, especially with the public, but many others deserve prosecution as well.
- Original Rambler - Thursday, Nov 21, 13 @ 8:12 pm:
Michelle Flaherty 9:44
Post of the Year!