E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad

[gator996]

IF [sarcastic] JPM is found guilty, is everyone here in favor of Fannie, Freddie, & the FHFA kicking the crap out of Jaime Dimon in court?



http://dealbook.nytimes.com/2013/02/...eals-were-bad/


E-Mails Imply JPMorgan Knew Some Mortgage Deals Were Bad
By JESSICA SILVER-GREENBERG

When an outside analysis uncovered serious flaws with thousands of home loans, JPMorgan Chase executives found an easy fix.

Rather than disclosing the full extent of problems like fraudulent home appraisals and overextended borrowers, the bank adjusted the critical reviews, according to documents filed early Tuesday in federal court in Manhattan. As a result, the mortgages, which JPMorgan bundled into complex securities, appeared healthier, making the deals more appealing to investors.

The trove of internal e-mails and employee interviews, filed as part of a lawsuit by one of the investors in the securities, offers a fresh glimpse into Wall Street’s mortgage machine, which churned out billions of dollars of securities that later imploded. The documents reveal that JPMorgan, as well as two firms the bank acquired during the credit crisis, Washington Mutual and Bear Stearns, flouted quality controls and ignored problems, sometimes hiding them entirely, in a quest for profit

The lawsuit, which was filed by Dexia, a Belgian-French bank, is being closely watched on Wall Street. After suffering significant losses, Dexia sued JPMorgan and its affiliates in 2012, claiming it had been duped into buying $1.6 billion of troubled mortgage-backed securities. The latest documents could provide a window into a $200 billion case that looms over the entire industry. In that lawsuit, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has accused 17 banks of selling dubious mortgage securities to the two housing giants. At least 20 of the securities are also highlighted in the Dexia case, according to an analysis of court records.

In court filings, JPMorgan has strongly denied wrongdoing and is contesting both cases in federal court. The bank declined to comment

[busigator96]

Dimon is too busy being being a congressional advisor.....about six months after he was questioned before the congressional banking committee. It was all a dog and pony show. The big banks own the president, congress, and the wage slaves.

[G8trGr8t]

Too big to jail.

[rivergator]

A big part of the reason the lenders were doing all these mortgages that were bound to fail is because they weren't keeping them. Packaging and selling. After they took their cut, of course.

[orangeblueorangeblue]

Originally Posted by G8trGr8t

Too big to jail.

It really isn't this.

It's distributed culpability, which is a large part of the inherent structure of corporations. If a department manager or a VP or a C-level guy is "guilty," then the shareholders are similarly complicit.

If you could trace blame to a single person, you could jail them. But you can't. You'll never be able to.

If I were a gang, I'd start thinking about incorporating, ASAP. Wells Fargo openly broke money laundering laws, got a slap on the wrist. It's a problem.

[g8trjax]

Dimon will get what's coming to him. Just look at Jon Corzine case, for example.

[gatorman_07732]

Originally Posted by orangeblueorangeblue

It really isn't this.

It's distributed culpability, which is a large part of the inherent structure of corporations. If a department manager or a VP or a C-level guy is "guilty," then the shareholders are similarly complicit.

If you could trace blame to a single person, you could jail them. But you can't. You'll never be able to.

If I were a gang, I'd start thinking about incorporating, ASAP. Wells Fargo openly broke money laundering laws, got a slap on the wrist. It's a problem.

Yep, this is someone that is wider and broader than JP Morgan. Also, these corporations are so large and complex it can't be pin pointed to a single person. Really, it got to a point where all these corporation eyeball deep with bad debt that ecerybody was complicit. Freddie Mac and Fannie May are not exempt by any means.

[orangeblueorangeblue]

More importantly, making horrific business choices isn't a crime unless you're doing it willfully to manipulate the value of the company. That isn't the case here.

[gator996]

Originally Posted by rivergator

A big part of the reason the lenders were doing all these mortgages that were bound to fail is because they weren't keeping them. Packaging and selling. After they took their cut, of course.

Retaining some of the product was a major issue, river....

What's better than selling the crap to the street or the Govt monthly and getting it off the books?

Gain On Sale was like crack and earnings expectations drove doing more and more crack...