This is from a story in Rolling Stone about a whistle-blower who tried to keep a big bank from committing massive fraud, and how the US Attorney General deliberately helped the statute of limitations run out for prosecuting these big banks for massive fraud.
Some excerpts from the article are below (it’s a long article). The first half of the story gives the background (re: the history of mortgage securities fraud, etc.) and the second half provides most of the outage.
The newspapers and the Justice Department described the deal as a "$13 billion settlement," hailing it as the biggest white-collar regulatory settlement in American history. The deal released Chase from civil liability. And, in what was described by The New York Times as a "major victory for the government," it left open the possibility that the Justice Department could pursue a further criminal investigation against the bank.
But the idea that Eric Holder had cracked down on Chase was a carefully contrived fiction, one that has survived to this day. For starters, $4 billion of the settlement was largely an accounting falsehood [and] what the public never grasped about these "consumer relief" deals is that the "relief" is often not paid by the bank ... but by the bank's victims.
"The kid-gloves approach that the DOJ and the SEC take with Wall Street is as inexplicable as it is indefensible," says Dennis Kelleher, who would later file suit challenging the Chase settlement. "They typically charge only one offense when there are dozens. It would be like charging a serial murderer with a single assault and giving them probation."
There can be little doubt that the DOJ and JP-Morgan were trying to avoid disclosure of their dirty deeds and prevent public scrutiny of their sweetheart deal. Kelleher asks a rhetorical question: "Can you imagine the outcry if [Bush-era Attorney General] Alberto Gonzales had gone into the backroom and given Halliburton immunity in exchange for a billion dollars?"
Because most of the settlement monies were specifically not called “fines” or “penalties”, Chase was allowed to treat $7 billion of the [actual $9 billion] settlement as a tax write-off. Couple this with the fact that the bank's share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal.
What's more, to defray the cost of this and other fines, Chase last year laid off 7,500 lower-level employees. Meanwhile, per-employee compensation for everyone else rose four percent, to $122,653. But no one made out better than [Chase CEO] Dimon. The board awarded a 74 percent raise to the man who oversaw the biggest regulatory penalty ever, upping his compensation package to about $20 million.
[The] Holder-Dimon Settlement included a tacit agreement from the DOJ not to pursue criminal charges ... It sounds outrageous, but it wouldn't be the first time that the government used a wink and a nod to dispose a bank of major liability without saying so publicly.
Back in 2010, American Lawyer revealed Goldman Sachs wanted a full release from liability in a dozen crooked mortgage deals, while the SEC didn't want to give the bank such a big public victory. So the two sides quietly agreed to a grimy compromise: Goldman agreed to pay $550 million to settle a single case, and the SEC privately assured the bank that it wouldn't recommend charges in any of the other deals.
Even after a fair amount of noise in the press, the target companies remain more ascendant than ever. The people who stole all those billions are still in place. And the bank is more untouchable than ever. [Those] who represented Chase for some of this case, have since been named to the two top jobs at the SEC. As for the bank itself, its stock price has gone up since the settlement and flirts weekly with five-year highs. They may lose the [occasional] battle, but the markets clearly believe the banks won the war.
I wonder how the new Republican Congress will deal with these banks. Will they be just as corrupt as the Democrats? It’s no wonder the Democrats lost so many seats in the recent elections. Maybe Eric Holder should have sent some bankers to prison. Maybe Rep. Darrel Issa will open an investigation of Eric Holder (Maybe Mister Holder should also go to prison.)
There was a short segment yesterday on the Ed Show on MSNBC with the whistleblower and the author of that Rolling Stone article. There were no new revelations though; the article was much more informative. There might be a rebroadcast of the interview on the MSNBC website.