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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.    

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Comment Preferences

  •  Diarist keeps waffling back and forth... (3+ / 0-)

    ...between, "This is a lot different dynamic..." and "...we have a long way to go..."

    Also, we're talking months, not "previous years," since Lanny Breuer left the DoJ.

    JP Morgan reported a $21.3 billion profit last year. Pardon me for curbing my enthusiasm.

    These banks have gotten away with murder. These fines still do not even begin to scratch the surface of the damage they have done--and continue to do--to our society.

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Mon Oct 21, 2013 at 07:28:19 AM PDT

    •  Ben Lawsky makes career politican Schneiderman... (0+ / 0-)

      ...look like a piker. I find my state's attorney general's performance in office to be quite underwhelming.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Mon Oct 21, 2013 at 07:30:03 AM PDT

      [ Parent ]

    •  When these crooks start going to jail (5+ / 0-)

      I will start clapping. These fines will never make it back to the people who were robbed. This money will likely go back to Freddie and Fannie to make the books look a little better. There's nothing to celebrate.

      look for my eSci diary series Thursday evening.

      by FishOutofWater on Mon Oct 21, 2013 at 07:39:47 AM PDT

      [ Parent ]

    •  I think both are correct (0+ / 0-)

      When you have a culture of completely getting away with everything, even a small correction can be seen as a different dynamic.

      Picture it this way: A hypothetical child uses many swear words, to the semi-embarassment of his parents. They tend to be the "let him explore" type. But one day, the child calls his mother the C-word. The father, having had enough, tells his child he can't watch TV for the rest of the night.

      Is it a different dynamic than normal? Yes. Do the parents have a long way to go to "curing" that behavior? Yes.

      But taking even small steps helps, in my opinion. Better that than no steps. And yes, I hope Warren's presence will lead to further looks into Wall Street.

      Sometimes, I wonder why I consider myself a Democrat. Before too long though, dumb Republicans saying dumb things come along to remind me.

      by LnGrrrR on Mon Oct 21, 2013 at 08:27:44 AM PDT

      [ Parent ]

  •  I agree with this assertion: (1+ / 0-)
    Recommended by:
    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.
    These guys should have to fork over every last dime of profit they made from sub-prime mortgages and associated securities and derivative, PLUS punitive damages.

    THAT would be both fair AND a deterrent.

    But, as you say, at least we have a sizable fine without a "criminal side settlement." We can only hope that some top dogs get serious jail time.

    Trust, but verify. - Reagan
    Vote, but Occupy. - commonmass

    by Words In Action on Mon Oct 21, 2013 at 07:32:34 AM PDT

  •  hear, hear! (1+ / 0-)
    Recommended by:
    Let’s keep our foot on the gas, and finally force the Wall Street gang to pay what they owe.    
    thanks for sharing your thoughts - an excellent analysis of where we've been, where we are and where we need to go.

    "Don't Bet Against Us" - President Barack Obama

    by MRA NY on Mon Oct 21, 2013 at 07:46:39 AM PDT

  •  . (3+ / 0-)
    Recommended by:
    marina, phonegery, PhilK

    I'll be hopeful when the executive management start going to prison which is highly unlikely.  The track record of the DoJ and the alphabet soup of 'regulatory' agencies is abysmal and that is being overly generous, their actions are far more complicit than as objective enforcers of the law or as regulators.

    "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

    by FreeTradeIsYourEpitaph on Mon Oct 21, 2013 at 07:54:25 AM PDT

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