Bernie Madoff’s ponzi scheme, just netted JPMorgan the largest Department of Justice penalty for breaching the Bank Security Act in US history.  JP Morgan is to pay $1.7 billion for ignoring obvious signs of Madoff’s corrupt practices, federal authorities announced today.

The Madoff scheme was a long con that went on for several decades.  Throughout this time, JP Morgan was his bank of choice.  As Larry Nuemeister writes for AP:

“Account statements for thousands of clients showing $60 billion in assets were fiction. Of the roughly $17.5 billion in principal that was real, most of it was gone.

Since then, a court-appointed trustee has recovered more than $9.5 billion to redistribute to burned clients. The trustee sued JPMorgan for $6.4 billion in 2010, accusing the bank of being “willfully blind” and “thoroughly complicit” in the fraud, but an appeals court found in 2012 that he had no legal standing to make the claim.

The JPMorgan settlement is the latest in a series of major deals it has made to resolve its legal troubles. In November, the bank agreed to pay $13 billion over risky mortgage securities it sold before the financial crisis — the largest settlement to date between the Justice Department and a corporation.”

In 2011, JPMorgan CEO Jamie Dimon wrote his annual letter to shareholders, arguing that Banks should be able to corrupt the political system by lobbying legislators for favourable legislation.  He wrote:

“You read constantly that banks are lobbying regulators and elected officials as if this is inappropriate. We don’t look at it that way.”

Given JPMorgan’s ever expanding rap sheet, it seems the cost of their criminal behaviour is about to rise a lot higher than the $7.5m they spent on lobbying that year.

January 4th 2014: Agreed to settle a lawsuit with Lawyers for the Federal Home Loan Bank of Pittsburgh, but did not disclose the amount.  The Pittsburgh FHLB sued JPMorgan and credit-ratings companies in 2009 over losses on $1.8 billion in mortgage-backed securities it bought in 2006 and 2007.

19th November 2013: Agreed to a record $13bn settlement with US authorities for misleading investors during the housing crisis.

15th November 2013: $4.5bn settlement with investors over mortgage-backed security losses that contributed to the 2007 Financial Crisis.

25th October 2013: $5.1bn settlement with the US Federal Housing Finance Agency (FHFA) over charges it misled mortgage giants Fannie Mae and Freddie Mac during the housing boom.

19th September 2013: agreed to pay four regulators $920m relating to a $6.2bn loss incurred as a result of the “London Whale” trades.

And the Bank had already settled $7bn in no fewer than 11 other suits during the previous two years.

As Zero Hedge reported back in Summer of 2013:

“There was a time when Jamie Dimon liked everyone to believe that his JPMorgan had a “fortress balance sheet”, that he was disgusted when the US government “forced” a bailout on it, and that no matter what the market threw its way it would be just fine, thanks. Then the London Whale came, saw, and promptly blew up the “fortress” lie. But while JPM’s precarious balance sheet was no surprise to anyone (holding over $50 trillion in gross notional derivatives will make fragile fools of the best of us), what has become a bigger problem for Dimon is that slowly but surely JPM has not only become a bigger litigation magnet than Bank of America, but questions are now emerging if all of the firm’s recent success wasn’t merely due to crime. Crime of the kind that “nobody accept or denies guilt” of course – i.e., completely victimless. Except for all the fines and settlements.”

It is important to remember that there are real victims of JPMorgan’s behaviour.  Between 2007 and 2011, 5 million Americans lost their homes.  When challenged on this practise of throwing families out onto the street, Dimon replied callously:

“Giving debt relief to people that really need it, that’s what foreclosure is.”

It was later revealed that JPMorgan had engaged in widespread mortgage abuse and the bank agreed to settle $9.2bn with homeowners they had illegally foreclosed upon.

So it’s refreshing to see Dimon and JPMorgan under some pressure. And times are not set to get any easier for Dimon and his renegade bank any time soon.  There is a whole lot of litigation waiting in line.

JPMorgan requested the addition of a non-prosecution agreement into the $13bn settlement for misleading federal regulators over the housing crisis.  But US Attorney General Eric holder refused.  Benjamin Wagner, the U.S. attorney for the Eastern District of California, is has opened a criminal probe into the bank’s activities, which helped cause the catastrophic Financial Crisis of 2007. “Going forward, we will have very substantial discretion in how we handle the investigation, and we will go where the evidence takes us,” Wagner told Bloomberg.

On top of this criminal case, there are a number of civil suits still under way regarding reckless and fraudulent behaviour conducted by JPMorgan in the run up to the Financial Crisis.

Dimon once said “I am not embarrassed to be a banker. I am not embarrassed to be in business.” He may well be shameless – but a growing number of people are pretty embarrassed to share a species with this frat boy bankster, whose chickens may finally be coming home to roost.

Excellent music video for Dimon below. Give it a chance, it kicks in at about 49 seconds.



About The Author

Kerry-anne Mendoza is a writer, blogger and activist. She is the author of the Scriptonite Daily blog which explores matters of current affairs, politics, economics and ideas. She is also a contributor to New Internationalist, openDemocracy, Trebuchet Magazine, the Occupy News Network and others. She is based in the UK, and left her career as a Management Consultant having held senior positions in banking, local government and the NHS to be part of the Occupy Movement. She has since worked as a writer and campaigner for social, economic and environmental justice.