Federal House Finance Agency Reaches Separate Deal with JPMorgan Chase on Mortgage Fraud

October 27, 2013 • 8:36AM

The Federal Housing Finance Agency (FHFA) announced yesterday that it had reached a separate deal with JPMorgan Chase, to settle mortgage fraud charges with a $5.1 billion fine. FHFA had been part of the global settlement negotiations underway between the DOJ and states' attorneys general with the bank, but decided to finalize a separate deal when it remained unclear what portion of the $14 billion global settlement would cover its suit. FHFA has reached similar deals this year with Citigroup, General Electric and UBS, and according to a Reuters report, a deal is now being finalized with Bank of America that will be $6 billion.

The separate deal struck between JPMorgan Chase and the FHFA will reduce the still-pending DOJ global settlement to $9 billion; however, it still remains the case that no top bank executives have been criminally prosecuted for their massive criminal operations in the post-Glass-Steagall era. Even during the savings and loan debacle of the late 1980s and 1990s, which was small-time compared to the massive theft by the too-big-to-fail banks of today, well over 1,000 bankers were carted off to prison.

Saturday's New York Times published a lead editorial signed by the entire Editorial Board, denouncing the global deal with JPMorgan Chase as a slap on the wrist, relative to the massive amount of profit the bank made from the fraudulent mortgage operations.

The furor over the JPMorgan and related deals to shut down any Wall Street prosecutions is growing around the country, and is once again putting Glass-Steagall back on the table in the media. And Rep. Peter Welch (D-Vt.) has introduced an amendment to the Internal Tax Code of 1986 that would prohibit financial institutions from taking tax deductions for fines in financial settlements. He is also circulating a letter to Jamie Dimon from members of Congress, demanding that JPMorgan Chase pay the full fine without taking a tax break. "Should a wrongdoer whose conduct caused harm to the taxpayer ask the taxpayer to help pay the fine for the wrong done? We think not. The taxpayer should not, therefore, be required to contribute a nickel towards the fines imposed for conduct that got America into this mess in the first place." The news coverage in Vermont's Times Argus noted prominently that Welch is one of 75 co-sponsors on the Kaptur-Jones bill to reinstate Glass-Steagall.