Defendants systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans.The office of New York Attorney General Eric Schneiderman • Discussing the fraud lawsuit filed against JPMorgan on Monday, regarding defective loans backing securities which allegedly cost their investors billions of dollars. The lawsuit involves a firm which was owned by Bear Stearns, which JPMorgan purchased in 2008 amidst the financial crisis. (JPMorgan would like to emphasize that the charges are “historic” in nature.) The lawsuit is the first action by the the Residential Mortgage-Backed Securities Working Group, a task force which is basically going back and taking on the faults that caused the financial crisis — years after the fact.
» So, um, what happened?! To put it simply, the company has a lot of work to do to unravel the bad investments they made, and while they managed to pull out from the most volatile part, they haven’t gotten out entirely. Remember how angry you were when you found out JPMorgan Chase announced the trading loss? Quadruple that.
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Video of the morning: As JPMorgan Chase head Jamie Dimon was getting grilled in front of the Senate Banking Committee, a bunch of liberal activists showed up, shouting “STOP FORECLOSURES NOW!” (among other things) before getting kicked out. In case you’d like to watch this ongoing event, click over here.
Shareholders in JPMorgan Chase & Co on Tuesday rejected a proposal calling on the company to split the roles of chairman and chief executive, a victory for incumbent Jamie Dimon.
The proposal received some 40.1 percent of votes cast in favor, the company said at the end of its annual meeting.
DEVELOPING: JPMorgan shareholders reject chairman/CEO split
This guy hasn’t had a good week.
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Not long after Dodd-Frank got passed, the company made arguments for a loophole in the Volcker Rule, which takes effect in July, to allow some of the types of portfolio hedging that that company used as it produced a $2 billion loss recently. “JPMorgan was the one that made the strongest arguments to allow hedging, and specifically to allow this type of portfolio hedging,” noted one Treasury Department official. Officials who worked on the law, such as Sen. Carl Levin, have made it clear that allowing for this type of activity was not their intention with the law. Now, they have a pretty clear $2 billion argument against allowing such a loophole to get through. (photo by Scott Eells/Bloomberg; edit for clarity)
» The American companies include: Bank of America, JPMorgan Chase, Morgan Stanley, Goldman Sachs, and Freddie Mac. Two of the top three companies on the list are Chinese. On the upside, the Treasury has as much money as Google, so that’s kind of a nice consolation prize.
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