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Latest scandal at JP Morgan makes Jamie Dimon eat his words…

According to lawsuit documents and the left-wing magazine The Nation, JP Morgan found a surprising way of reducing the enormous fines it was struck with back in 2012 and 2013. Most of the fines had to be paid in debt forgiveness to customers instead of cash to the government. The problem is, JP Morgan forgave debt that was no longer owed by customers. The bank had already sold their mortgages to others. After discovering robo-signing and various other frauds, five banks settled with the then attorney general Eric Holder for $25 billion. JP Morgan settled for $5.3 billion. But only $1.1 billion was to be paid in cash. A year later, another scandal saw the bank settle for $4 billion, entirely in “consumer relief”. At the time, the banks were selling off distressed debt at cents on the dollar. They’d package a bundle of delinquent mortgages by the thousands, and then sell them to investors as a set. Of the $8.2 billion fine which JP Morgan had to pay by forgiving debt or similar measures, an unknown amount was fulfilled by forgiving debt that JP Morgan had already sold to other financial firms. It forgave debt that was no longer owed, thereby escaping paying the fine altogether. But that’s not the half of it. The lawsuit also alleges that the bank pulled off some remarkable dodgy practices. The loans it sold to investors were only partially sold. In the sense that the paperwork and the transaction was only partially completed. One buyer of such a bundle of debt explained that, “If a payment comes in, it’s theirs; if there’s a code-enforcement issue, it’s mine.” So the bank continued to collect payments on loans that it had sold to investors, including default insurance payments, while the new owners shouldered the costs of ownership. When the new owner of the debt asked for the money, it told them an internal accounting error which couldn’t be reversed was to blame. JP Morgan allegedly specifically sold those loans which were particularly egregious frauds under...
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