Robert Hockett, financial regulations expert and professor of law at Cornell University, discusses today’s announcement of a $13 billion settlement between the Justice Department and JPMorgan Chase regarding low-quality mortgage-backed securities that collapsed prior to the 2008 financial crisis.
Hockett says:
“At $13 billion, JPMorgan's settlement with the Department of Justice today is, as was expected, one for the record books.
“Even more interesting than the dollar amount of the settlement is the settlement's distribution: In addition to compensating investors who purchased troubled mortgage-backed securities from Bear Stearns, Washington Mutual, and JPMorgan itself, the bank will compensate homeowners who owe on the troubled mortgages.
“This suggests that the DOJ recognizes what many critics of bubble-era securitization arrangements have pointed out now for years: that irresponsible loan origination and securitization practices have profoundly harmed creditors and debtors alike.
“Scarce wonder that the entire economy fell into crisis once the bad loans began to come due. Look next for yet larger settlements with Bank of America, Wells Fargo, and others.”
RSS