The greedy thieves who came around
and ate the flesh of everything they found,
whose crimes have gone unpunished now,
who walk the streets as free men now,
they brought death to my hometown.
Much ado about nothing.
That sums up the media response to the news that bond insurer Ambac Financial Group had settled its claims against JP Morgan Chase for $995 million, claims involving residential mortgage-backed securities, which contributed to the financial collapse of 2007-08.
“The settlement underscores how Wall Street is still shaking off the legacy of the U.S. subprime crisis,” Reuters reported on Tuesday, “during which mortgages were sold to people who could not afford them and then repackaged for investors without an adequate explanation of how risky they were.”
That is, banks like JP Morgan Chase, Bank of America and Goldman Sachs perpetrated an industry-wide double fraud, first misrepresenting the terms of mortgages to low-income home buyers and then misrepresenting their worth to other banks and investment firms—including you and me through Fannie Mae and Freddie Mac—who bought those mortgages. Calling it a “subprime crisis,” though, is like calling an armed robbery a “money problem.”
“Shaking off” is a good term, though. Like a dog after a bath, JP Morgan Chase and other “too-big-to-fail” banks have shaken off a few billion dollars in settlement fines—money that for the most part will remain within the financial sector—and trotted away. Chase Chairman and CEO Jamie Dimon and others responsible for the Great recession and the foreclosure of over 1 million American homes will pay not one cent of their own income and will certainly not see jail time.
And remember that while JP Morgan Chase has now paid about $14 billion in settlements, the bank has also been paid many billions in ongoing bailout money. I need not remind you whose money that was. For those who see the nearly $1 billion settlement with Ambac as a bitter pill for America’s largest bank, consider the statement Chase released for the sake of its shareholders, to the effect that the settlement would not have a material effect on its first quarter earnings.
As billions are shuffled among billionaires, Americans are increasingly burdened under an economy of stagnant wages in a country whose infrastructure—from schools to water supply—is slowly killing them. Mr. Springsteen has it right. What’s good for Wall Street spells death for our hometowns.
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