Sunday 20 October 2013

So How Big a Deal is the Pending “$13 Billion” JP Morgan Settlement? « naked capitalism

So How Big a Deal is the Pending “$13 Billion” JP Morgan Settlement? « naked capitalism:

"One of the big news stories of the weekend is that JP Morgan and the Department of Justice, brokering a settlement of liability across multiple Federal agencies, have reached a tentative $13 billion settlement on the bank’s mortgage-related conduct in the run-up to the crisis. The terms have not been finalized because a big open item is that JP Morgan will make an admission of some sort, and the deal could still founder over that.

While the media is all agog over the prospect of the “biggest settlement evah” with a single company, concentration has risen greatly in a lot of industries, particularly banking, so bigger companies and even mild inflation means settlements should get larger over time. So size is not a metric of accomplishment. The question is what was the actual liability and is the settlement an adequate remedy? We have the same problem here as with the mortgage settlement: save for a couple of types of bad conduct, it looks as if not enough discovery was done to know the extent of the conduct and hence what an appropriate remedy would be."

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