Periodically I post an article on this website that deals with something I have no clue about. This is one of those articles. I understand some of the basics, but the details of this situation are very much in the financial weeds.
Peter Wallison was a guest on the Bill Bennett radio show this morning talking about some recent government actions against J P Morgan Chase. A website called bizjournals.com offers some insight as to what is going on.
The bizjournals article reports:
Warren Buffett came to the defense of JPMorgan Chase Chairman and CEO Jamie Dimon Tuesday even as the New York bank is reaching a $13 billion settlement with the Justice Department over the sale of mortgage-backed securities ahead of the financial crisis.
…”I think $13 billion is a lot of money, and I think Jamie has done a very good job of running JPMorgan,” Buffett said. “He helped out the economy enormously when he took on Bear Stearns and he didn’t get an indemnification clause. There wasn’t even time for that sort of thing.”
The thing to keep in mind here is that Jamie Dimon originally supported President Obama. Mr. Dimon became a critic of the Obama Administration after the Dodd-Frank bill was passed. The latest charge against JP Morgan is only one of several charges against JP Morgan that have come in the past three or four months.
Evidently the latest charge against JP Morgan is related to the fact that they sold sub-prime mortgages to investors. Somehow the government seems to have forgotten that they were the ones that demanded the writing of these sub-prime mortgages. Mr. Wallison also mentioned that many of the things JP Morgan is charged with are things they did not do, but that the companies they acquired at the request of the government did.
In his interview with Bill Bennett, Mr. Wallison noted that it is very worrisome that the government can go after a company in the way that they have gone after JP Morgan. This tactic could be used to discourage CEO’s of companies from speaking out against the policies of the government.