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White House sued for covering up crimes of JPMorgan


Gabriel Black

15 February 2014

Better Markets, a non-profit Wall Street watchdog, filed a lawsuit Monday against the US Department of Justice (DOJ) alleging that its $13 billion settlement with JPMorgan Chase over the bank’s sale of toxic mortgage-backed securities in the run-up to the financial crisis was an illegal cover-up.Better Markets said the deal, worked out in November 2013, “gave JP Morgan Chase… blanket civil immunity for years of alleged pervasive, egregious and knowing fraudulent and illegal conduct that contributed to the 2008 financial crash and the worst economy since the Great Depression.”The lawsuit argues that the Department of Justice sought to use the deal—the largest settlement with a single entity in US history (by more than 300 percent)—to protect JPMorgan and its executives from prosecution. Under the terms of the settlement, the bank was not required to admit to any wrongdoing.Better Markets alleges that, “the DOJ violated the Constitution and laws of the United States by using a mere contractual agreement to resolve claims of historic importance without subjecting the Agreement to independent judicial review.”In November, the Obama administration and JPMorgan concluded a series of confidential, off-the-record, negotiations—including discussions between JPMorgan CEO Jamie Dimon and Attorney General Eric Holder—with the announcement that the bank would pay $13 billion to settle charges that it knowingly sold worthless mortgage-backed securities on false pretences.In reality, JPMorgan will pay much less than the stated amount. Only $9 billion of the total is in cash, the rest taking the form of relief to homeowners behind on their payments. It is likely that the bank was already planning to offer much of this $4 billion in relief for business reasons.Most of the remaining $9 billion will be tax-deductible, meaning the bank will end up paying only part of it. JPMorgan’s fine amounts to a sliver of the trillions of dollars of damage wrought by the global financial crisis and only a fraction of its annual profit.The complaint alleges that the Obama administration illegally sought to bypass judicial review to ensure a favorable deal for the bank. It states: “[T]he executive branch, through DOJ, acted as investigator, prosecutor, judge, jury, sentencer and collector, without any review or approval of its unilateral and largely secret actions.” It continues: “The Executive Branch simply does not have the unilateral power or authority to do so by entering a mere contract with the private entity without any constitutional checks and balances.”At a press conference, Dennis Kelleher [. . .]

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