New Bank Investigations: Real Action, or More of the Same?

No Evil

New Bank Investigations: Real Action, or More of the Same?

A lot of interesting things happening on the white-collar enforcement front. Evil hedge fund SAC Capital and its villainous ruler Stevie Cohen were run through the gauntlet, Goldman Sachs patsy Fabulous Fab took a beating in civil court (I love the detail that emerged, that Goldman executives now call him “the poor kid“), and now, apparently, a pair of high-profile investigations have been launched against Bank of America and J.P. Morgan Chase for subprime mortgage fraud. The latter investigations seem to be designed to answer criticisms that nobody is going after the real doers of evil systemic crimes.

The Chase case apparently involves a criminal investigation, which is indeed interesting. The company admitted as much yesterday, saying federal investigators out West have “preliminarily concluded” that Chase brazenly violated securities laws when it sold subprime mortgage-backed instruments in 2005-2007.

But I’m skeptical it will turn into a real criminal investigation. All of the stories that broke in the last day or two noted the same detail, that Chase has beefed up its estimates for litigation/settlement costs:

As the investigations drag on, the bank is racking up significant legal costs. To help cushion against potentially hefty payouts to the authorities, JPMorgan recorded a $678 million expense for additional litigation reserves in the second quarter, up from $323 million in the same period a year ago, according to the filing on Wednesday.

The bank also estimated it could incur up to $6.8 billion in losses beyond its reserves, nearly $1 billion more than the first quarter of the year.

The government may very well decide to go after Chase in what it considers a big way. It may do the same for Bank of America, and then it may keep going on down the line to other banks, until it has collected a billion dollars or so from all the usual suspects, who were virtually all engaged in the same kinds of schemes, gathering and selling to customers radioactive mortgage bonds they knew were likely to explode, or were ridden with fraud and faulty underwriting.

But to me, these investigations will be meaningless unless one of two things happens, once they reach the inevitable stage of concluding painstakingly-crafted settlements with the inevitable teams of high-priced lawyers for the offending firms:

1) Someone goes to jail.

2) The company is ordered to break itself up into smaller pieces.

Rest here…


4 Responses to “New Bank Investigations: Real Action, or More of the Same?”
  1. BOBBI SWANN says:

    Well, I guess you could conclude the investigations will be ‘meaningless’ because (dream on) no one is going to jail and they won’t break up the big boys! There is just wayyyy too much power that has been given to them from the past and now it’s too late to go back and fix it. Between Bush & Obama on ‘saving’ the economy, all they have managed to do is shore up the TBTF and solidify their ongoing power….all at the expense of the taxpayer.

    • Yode says:

      If you truly want to help “break up the big boys”, then get on the phone to your Senators and Congresspeople, demanding they co-sponsor the legislation to re-instate Glass-Steagall. Currently, there are bills before both houses. Our “sell-out” Senators, Nelson and Rubio are in the bankster’s pocket, but we can let them know that we know this and THEY ARE DONE—-OUT— AND WILL NOT SEE ANOTHER TERM IN OFFICE unless they forsake the big money criminals they are protecting and immediately sign on in support of S. 985 and S. 1282, either of which re-instates Glass-Steagall. Dimon, Blankfein, Stumpf, and the other “big boys” are chittin’ themselves because this would end them! There are already 25 states with resolutions to re-instate Glass-Steagall, which if made law, would mean these criminals have to eat it when it comes to derivatives, CDS’s, CDOs…. and all the other BS, empty box, “creative” financial instruments they manufactured and use to steal from the people, with NO CHANCE OF A BAIL-OUT! These banksters are desperately trying to convince your legislators not to pass these bills, but are losing the battle, enet though they have already spent over $300 million trying to kill it!. Please understand, once we take away their power to create unlimited funds through these fraudulent practices, they are done and THEN we will be able to bring them to justice. Even the “Ho” will not be able to protect them any longer. No one will cover for these bastages once they can no longer pay for it….DEMAND YOUR “REPRESENTATIVES” at every level (local city-county, state, and federal) support this vital legislation. Their re-actions will be a barometer for you to use in determining if they too have been corrupted by Wall Street. The National Conference of State Legislatures (NCSL) is going on right now in Atlanta, and the issue of re-instating Glass-Steagall is the most important discussion they are having. CALL YOUR REP’S OFFICES NOW!!!

      • Yode says:

        EDIT: Just for the record, Bobbi, I know from your responses to my reply last week, that you have already contacted your “reps” and are keeping the pressure on our “elected” to do the right thing. My posting above was to inform others that if they truly want to end the financial tyranny, they will have to turn off the TV, get up from the couch and participate in THEIR system of government by getting on the phone with and send E-Mails to, their legislators.

      • BOBBI SWANN says:

        @ Yode – Yep! You’re right….need more to fight, fight, fight!

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