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Political Talk
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Old 10-21-2013, 09:30 AM   #1
rapier7
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Extorting JP Morgan

In the past 2 weeks, JP Morgan Chase had two big announcements. It reported its first loss under CEO Jamie Dimon, largely attributed to the 20 billion dollars set aside for legal and regulatory costs to the company.

A few days ago, the JP Morgan announced it was on the verge of settling its civil suits with the Department of Justice for the record sum of 13 billion dollars. The suits have to do with the bank's conduct leading up to and during the financial crisis of 2008. About half of that sum relates to its dealings with Fannie Mae and Freddie Mac and deals made by Bear Stearns and Washington Mutual, two banks that the Federal government asked JP Morgan to acquire to stabilize the financial sector.

If successful, there are two scenarios.

1. Justice stays put, in which case this will certainly be the most egregious case of political targeting in American business history.

2. Justice uses it as precedent to go after every other bank to extract multi-billion dollar settlements from every bank that it feels has some culpability (ie: all of them) and proceeds to shakedown the entire financial sector.

In doing so, Attorney General Holder and by extension, the President, is trying to pin the financial crisis solely on the private banking sector, despite the fact that they were just one group of actors that had a hand in the crisis. Federal regulatory standards, the Federal Reserve's low interest rate policy post-AFC and dot-com bubble burst, individual speculator greed and financial ignorance all had significant contributions to what happened in 2007 and 2008.

This is simply terrible for business. It's sending a message to every company that if your company is part of an unpopular sector of the economy, the Federal government will have no qualms in extorting your company for money.
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Old 10-21-2013, 09:35 AM   #2
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Big bad government is picking on those poor innocent banks that made billions in profits while they wrecked our economy?

The horror.
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Old 10-21-2013, 09:56 AM   #3
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The banks may be too big to fail, but they're not too big to face justice and accountability for their crimes and ought to be hauled before the bar of justice just as surely as a street robber.
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Old 10-21-2013, 09:57 AM   #4
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The banks may be too big to fail, but they're not too big to face justice and accountability for their crimes and ought to be hauled before the bar of justice just as surely as a street robber.
These are civil suits.
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Old 10-21-2013, 10:29 AM   #5
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Big bad government is picking on those poor innocent banks that made billions in profits while they wrecked our economy?

The horror.
free market allowed them to make billions at the expense of everyone else, therefore it's ok.
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Old 10-21-2013, 11:01 AM   #6
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The high level fact pattern is pretty concerning.

1. Federal government asks JPM to buy failing, toxic banks to help stabilize the economy. JPM complies.

2. Fast forward several years and same Federal government files a civil suit against JPM partially for past transgressions of aforementioned failing, toxic banks.

Scumbag steve meme seems appropriate
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Old 10-21-2013, 11:52 AM   #7
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The US treasury is screwing over Fannie Mae and Freddie Mac too...

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Hedge fund Perry Capital sues government over Fannie Mae, Freddie Mac

By Danielle Douglas,July 08, 2013

Investors are placing more pressure on the government to release its hold on Fannie Mae and Freddie Mac as the mortgage finance giants return to profitability.

In the latest effort, hedge fund Perry Capital filed a lawsuit in federal court late Sunday to stop the government from seizing most of the profits at the finance firms.

The lawsuit, filed in U.S. District Court in Washington, alleges the Treasury Department and the Federal Housing Finance Agency (FHFA), which oversees the government-owned mortgage companies, violated a 2008 law that placed Fannie and Freddie into conservatorship to prevent bankruptcy.

Congress originally authorized Treasury to collect 10 percent dividend payments from Fannie and Freddie every quarter as a condition of the government's $188 billion bailout of them. Treasury amended the terms of the agreement last year to make Fannie and Freddie give the government most of their profits, a move known as the "sweep amendment."

The lawsuit alleges that the dividend sweep was tantamount to a purchase of new securities, which Treasury did not have the authority to make. It also says the FHFA has failed to conserve the assets of Fannie and Freddie by allowing Treasury to take most of their profits. Perry Capital is not seeking damages but is asking the court to strike down the Treasury amendment, a decision that would benefit its investors.


"This lawsuit seeks to uphold the rule of law," Theodore Olson, a partner at Gibson, Dunn & Crutcher, which is representing Perry Capital, said in a statement. "If the government wanted to assume the powers of receivership, it could have chosen that course. Instead it chose conservatorship, and with the 'sweep amendment,' it overreached."

Perry Capital alleges that the new arrangement has caused irreparable harm to all private investors, who are being shortchanged as Fannie and Freddie have returned to profitability. The hedge fund says the government "maneuvered to ensure that Treasury would be the sole beneficiary of the companies' improved financial position," according to the lawsuit.

Treasury and the FHFA declined to comment on the lawsuit.

Treasury has received $132 billion in dividend payments on the government's nearly 80 percent stake in Fannie and Freddie. Shareholders say Treasury's new terms prevent the companies from building capital that would help them redeem any of the shares the government has taken.

Perry Capital, which would not disclose its exact stake in Fannie and Freddie, began investing in the mortgage companies in 2010. It said it believed the beleaguered companies were positioned to return to profitability. In the aftermath of the financial crisis, Fannie, Freddie and other government-backed agencies have insured nearly 90 percent of new mortgages.

Investors, including Perry Capital and Paulson & Co., have urged Congress to quash plans to close Fannie and Freddie, which they say should be allowed to go private. But the overwhelming momentum in Washington is behind abolishing the troubled mortgage insurers.

A few weeks ago, Sens. Bob Corker (R-Tenn.) and Mark R. Warner (D-Va.) introduced legislation to replace the mortgage giants with a new government agency that would shift more of the risks of lending to the private sector. The lawmakers want to make the government the last line of defense in the event of another housing crash.
http://articles.washingtonpost.com/2...die-fannie-mae
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Old 10-21-2013, 11:53 AM   #8
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Originally Posted by Lair View Post
Big bad government is picking on those poor innocent banks that made billions in profits while they wrecked our economy?

The horror.
2 wrongs don't necessarily make a right
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Old 10-21-2013, 11:56 AM   #9
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I haven't found this answer but where is the $13B going? Or to whom?
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Old 10-21-2013, 12:06 PM   #10
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Old 10-21-2013, 01:14 PM   #11
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I haven't found this answer but where is the $13B going? Or to whom?
Good question, I would like to follow the money trail and see if any of it goes to any companies or individuals that are Democratic contributors and if they get paid for services rendered for collecting from Chase . To be returned in 2015 during the election cycle.

Five years ago a polling organization used by Hillary Clinton received 3M dollars to hire 3 people ......as a form of economic stimulus. It would be real easy to believe that they received the money as a form of 'paying it forward' if Hillary needs their services in the future.
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Old 10-21-2013, 03:05 PM   #12
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Extorting JP Morgan

DOJ refused JP's request that if it were to pay out, then no charges were to be filed.

Nope. DOJ stood firm.


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Old 10-21-2013, 03:11 PM   #13
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Originally Posted by evolved View Post
The high level fact pattern is pretty concerning.

1. Federal government asks JPM to buy failing, toxic banks to help stabilize the economy. JPM complies.

2. Fast forward several years and same Federal government files a civil suit against JPM partially for past transgressions of aforementioned failing, toxic banks.

Scumbag steve meme seems appropriate
My initial thoughts....

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I haven't found this answer but where is the $13B going? Or to whom?
And exactly my second thoughts...
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Old 10-21-2013, 05:20 PM   #14
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Originally Posted by Raymond42262 View Post
Good question, I would like to follow the money trail and see if any of it goes to any companies or individuals that are Democratic contributors and if they get paid for services rendered for collecting from Chase . To be returned in 2015 during the election cycle.

Five years ago a polling organization used by Hillary Clinton received 3M dollars to hire 3 people ......as a form of economic stimulus. It would be real easy to believe that they received the money as a form of 'paying it forward' if Hillary needs their services in the future.
Breitbart?

Drudge?

Beck?
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