JPMorgan Pays Billions To Settle With Ambac, Lehman Brothers
JPMorgan is almost finished paying off the rich people it screwed in the run-up to the 2008 financial crisis. As for the poor? Well, not so much.
On Tuesday, a JPMorgan filing with the SEC showed the bank will pay $1.42 billion to settle a suit brought by now-defunct Lehman Brothers for damaging the firm just prior to its bankruptcy by demanding over $8 billion in collateral to make short term loans.
Lehman has long argued that JPMorgan’s credit squeeze in 2008 significantly contributed to the firm’s historic bankruptcy. The Lehman bankruptcy is widely seen as the catalyst for the actual market meltdown itself, though the underlying problems of the selling of fraudulent mortgage-backed securities drove the crisis. Something JPMorgan was also involved in.
JPMorgan also agreed to pay $995 million to resolve claims by Ambac Financial Group that JPmorgan lied to Ambac regarding the quality of the mortgages that were part of mortgage-backed securities. Ambac insured those securities, putting the firm directly in the line of fire when it turned out those securities were worthless.
This was the same fraudulent activity for which JPMorgan paid a $13 billion fine: selling mortgage-backed securities containing bad loans, which later blew up in the faces of the banks that purchased them.
JPMorgan avoided any criminal prosecutions by the Justice Department, despite a former JPMorgan compliance officer, Alayne Fleischmann, providing eye-witness testimony of JPMorgan selling fraudulent mortgage securities to clients.
JPmorgan has said the settlement payments will have no “material effect” on the bank’s earnings. The game goes on.