Justice? JPMorgan to Pay $2 Billion to Make Madoff Case Go Away
Federal prosecutors reportedly are nearing a deal with JPMorgan in which the bank would pay about $2 billion in fines and face a suspended indictment over accusations that some of its bankers knew that Bernie Madoff was running a Ponzi scheme, yet JPMorgan continued to serve as one of his main banks.
That means despite playing a key supporting role in what is likely the largest financial scam in U.S. history — more than 2,500 investors lost $17.3 billion in investments, and $48 billion more in what they thought were profits — none of the bankers handling Madoff for JPMorgan will pay a price. Instead, the bank once again buys its way out. From The New York Times, which broke the story:
JPMorgan’s Madoff settlements, the people briefed on the case said, would also involve a so-called deferred prosecution agreement, a criminal action that would essentially suspend an indictment as long as JPMorgan acknowledged the facts of the government’s case and changed its behavior. The agreement, nearly unheard-of for a giant American bank and typically employed only when misconduct is extreme, underscores the magnitude of the case against JPMorgan.
The bank’s settlement talks with the authorities, reported by The New York Times last month, thrust JPMorgan into the spotlight on the fifth anniversary of Mr. Madoff’s arrest.
Under the terms of the deals, the bank will pay more than $1 billion to the prosecutors in Manhattan and the remainder to the Office of the Comptroller of the Currency and a unit of the Treasury Department investigating broader breakdowns in the bank’s safeguards against money-laundering. The government plans to earmark some of the payout for Mr. Madoff’s victims, according to the people briefed on the case, who spoke on condition they not be named because they were not authorized to discuss private settlement talks.
The silver lining is that some of the penalties will go to funds handling payouts to Madoff’s victims. But once again, a big bank, rather than facing the kind of everyday justice the government exacts from the poor and the powerless, will be able to wriggle its way out of responsibility for what the government believes was criminal behavior.
We wrote recently about U.S. District Judge Jed S. Rakoff’s scathing rebuke of the federal prosecutors’ view toward Wall Street crime, and about a different but seemingly related instance of banking lobbyists supplying the wording for federal banking legislation. With that kind of hand holding between the government of the people and Wall Streeters with their rapacious greed and amoral actions, it’s easy to understand to simmering cynicism where the federal government’s priorities lie. And it’s not with Main Street.
The Times piece makes it clear why JPMorgan would want to pay a fine to settle the case:
Despite serving as painful reminders of JPMorgan’s ties to Mr. Madoff — it was his primary bank for more than two decades — the settlements would enable the bank to put another investigation behind it. The expected deal comes on the heels of JPMorgan’s payment of a record $13 billion to the Justice Department and other government authorities over its sale of troubled mortgage securities in the period leading up to the financial crisis.
The payouts reflect a new conciliatory stance at JPMorgan. Within the bank, there is growing impatience among executives who worry that the scrutiny distracts from its record profits. And while it continues to haggle over the details of each settlement, people close to the bank say, JPMorgan is keen to regain its credibility and is resigned to pulling out the checkbook to make that happen.
Buying credibility indeed. The question is, does the American public buy it?
—Posted by Scott Martelle.WAIT, BEFORE YOU GO…
If you're reading this, you probably already know that non-profit, independent journalism is under threat worldwide. Independent news sites are overshadowed by larger heavily funded mainstream media that inundate us with hype and noise that barely scratch the surface. We believe that our readers deserve to know the full story. Truthdig writers bravely dig beneath the headlines to give you thought-provoking, investigative reporting and analysis that tells you what’s really happening and who’s rolling up their sleeves to do something about it.
Like you, we believe a well-informed public that doesn’t have blind faith in the status quo can help change the world. Your contribution of as little as $5 monthly or $35 annually will make you a groundbreaking member and lays the foundation of our work.