UPDATE: My sincere apologies. This story is a year old, I pulled it without checking the date.
I suppose this is better than nothing, and if it makes you feel better, you can always show this story to your wingnut relatives who still blame Fannie Mae and Freddie for the crash. But it's not going to make a difference. It's just money, no one's going to jail and we still can't trust anything that anyone in the banking industry (and thus, the markets) says. Which means it's likely to happen again. That's kind of a serious problem, don't you think?
JPMorgan Chase & Co. has agreed to a record $13 billion settlement over mislabeled mortgage securities that federal and state authorities said stoked the financial crisis, the Department of Justice announced Tuesday.
The deal includes $9 billion in payments to authorities and $4 billion in relief to consumers – mainly homeowners – harmed by the conduct of JPMorgan and the two failed banks it took over during the crisis, Bear Stearns and Washington Mutual.
The bank "acknowledged it made serious misrepresentations to the public – including the investing public" over the quality of residential mortgage-backed securities (RMBS) it sold ahead of the financial crisis, the Justice Department said in a statement.
Why don't you just say they lied? You know, on purpose.
As the housing market collapsed between 2006 and 2008, millions of homeowners defaulted on high-risk mortgages. That led to billions of dollars in losses for investors who bought securities created from bundles of mortgages. Those securities were sold by JPMorgan and other big Wall Street banks.
"Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown," Attorney General Eric Holder said. "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."
But since there were no criminal charges and no personal consequences that rose above the level of mere inconvenience, this is all just a big show for the folks and home and business goes on as usual. Heck, Jamie Dimon got a fat raise! In the meantime, Eric's looking forward to getting back into that revolving door and making real money again...
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Goldman Sachs, Citigroup and other big banks have similarly been accused by the Securities and Exchange Commission (SEC) of deceiving investors in sales of mortgage securities in the runup to the crisis. Together they have paid hundreds of millions in penalties to settle civil charges brought by the SEC.