While the country is still shaking its collective head over the self-destructive insanity of the Republican party’s shutdown politics (my mother’s classic line: “I just keep wondering about what kinds of parents they have”), big fish are frying elsewhere. In this case, happily, that big fish is JP Morgan Chase. News broke over the weekend that JPM is about to settle with DOJ and the New York Attorney General for about $13 billion large without a dismissal of possible criminal charges of the bank or its executives. Both parts of that sentence- what they are agreeing to, and what they are not- are very big news.
Just to be clear before I go forward, JPM owes so much more than $13 billion in terms of the damage it has caused America with its financial fraud over the last decade. Even if you include its part of all the earlier settlements that it has been a part of, this is a pittance in comparison to the 13 trillion and counting in damage to the economy that the financial meltdown of 2008-9 (which they were such a huge part of causing), or the long, long rap sheet of financial crimes they have been convicted or investigated over. But even so, this is big news on the settlement front, the first domino to fall in what could be a long line. Even for a monster the size of JPM, $13B is still a whole lot of money. And by DOJ and AG Eric Schneiderman not agreeing to wash away their guilt on future criminal investigations, it means that JPM officials could still end up being brought to trial for their fraud, which would be a very big thing indeed in terms of finally dis-incentivizing future crimes of Wall Street bank executives.
Big bank executives are finally starting to sweat. Having gotten away for many years with relatively tiny, slap on the wrist fines that were in most cases less than the profits made on the crimes they committed, and fines where they were not required to admit wrong-doing but still got exemption from any future legal action, a big $13B fine with no criminal side settlement is a different ballgame entirely. And if there were actually a perp walk or two? The reckless behavior of these big bank execs might actually start to change.
This is a lot different dynamic than it was in previous years. When Lanny “Too Big To Jail” Breuer was still at DOJ refusing to do anything tough on bankers because he knew he would soon be going back to representing them, this kind of fine was unimaginable. And to have a settlement while leaving the criminal prosecution side of things still open? None of the big Wall St banks ever would have agreed to such a thing in the very recent past. We have a long ways to go before real justice and accountability makes it to big bank executive suites and boardrooms, but why are things beginning to change now? 3 reasons: the Wall Street accountability movement, Eric Schneiderman, and Elizabeth Warren.
The movement around Wall Street accountability has for the most part been one of the quiet, behind the scenes movements in American life that has kept DOJ’s feet to the fire. The most visible example of this movement were the tinderbox demonstrations that were Occupy Wall Street, but for 5 years all across the country national issue groups like Better Markets and Americans for Financial Reform, and community organizations like NPA and Home Defenders League and ACCE, have been raising hell about irresponsible Wall Street banks. From exposing the robo-signing scandals to local foreclosure fights to the move-your-money campaigns to the civil disobedience at DOJ earlier this year to working with great journalists who cover these issues like Matt Taibibi and Bill Moyers, this grassroots movement has steadily built pressure on elected officials and DOJ to finally deliver. Without these groups fighting, the $25 billion robo-signing settlement would have been far smaller and would have exempted the banks involved from future investigation on a myriad of issues, and there would have been no Residential Mortgage Backed Securities task force set up to further investigate the mortgage bank fraud that led to the financial collapse of 2008. And without their continued pressure, the task force itself would have collapsed with no staff and no accomplishments whatsoever. Now this movement’s long term strategy and impressive persistence has helped force changes in the way DOJ is doing business.
NY AG Schneiderman deserves a lot of credit as well. I will admit to having been hot and cold on him through this process. Early on, when he led the fight against a weak settlement and forced the idea of a new multi-agency investigatory task force on the Obama administration, I was a big fan. As this long process went on and on, though, and Schneiderman seemed unwilling to confront DOJ and the White House on their weak approach to prosecuting bankers, I lost some faith. But we should give credit where credit is due: Schneiderman’s patience is apparently being rewarded in this JPM case, and his refusal to settle the criminal charges is a very big deal. Once a fan, then a skeptic, I am growing more impressed with Schneiderman as the results start to bear some fruit.
Finally, it is clear that Elizabeth Warren has played a huge role in making politically powerful the idea that Wall Street should be held to account. Her brainchild and baby, the Consumer Financial Protection Bureau, has been Schneiderman’s closest ally on the task force and has set the tone for the rest of the administration when it comes to being tough on regulation and prosecution of the big banks. And Warren’s voice and steady questioning of regulators and enforcement officials on the Senate Banking Committee (“Have you ever brought a case to trial against a bank? Why not?”) has put the fear of God into enforcement and regulatory agencies that were previously pretty much completely subservient to the bank lobby. Most importantly, her brand and loyal activist following has made and kept Wall Street accountability a front burner issue all this year.
We have such a long way to go when it comes to reducing the power of the big Wall Street banks over our country’s economy and politics, and for getting them to pay back to society what they owe for the economic devastation they recklessly created. But because of a scrappy citizen movement and some great political leaders, we are finally showing some signs of progress. Let’s keep our foot on the gas, and finally force the Wall Street gang to pay what they owe.