I am tired of these settlements. How can business ethics be taken seriously when massive illegality produces meager fines. Yes, 4.5 billions is chicken feed compared to what was made. If getting caught is just a cost of doing business, why not commit any illegality you can afford?
Is this is how it is going to be, why don’t we just take business ethics as a course offering and throw it out the window, then replace it with a new course. We’ll call the new course, “Rule Breaking Costs.” Instead of looking at ethical systems, we’ll apply the lessons of JPMorgan to business ethics: We obey the rules only when it is profitable to do so and we break the rules when the risk is justified by a cost-benefit analysis. See, no more nasty talk about good or bad, we just use a calculator. Of course, we have to worry that someday, somehow, against all current business free market analysis, will prosecute these criminals but what are the chances of that?
My students can go to jail for failing to pay parking tickets or using marijuana. JPMorgan can ruin tens of thousands of lives through their vicious and unprincipled manipulation of the mortgage markets, and not even be prosecuted once for a criminal offense.
Is that justice?
Is that a lesson I want my business ethics students to learn?
JPMorgan reaches tentative $4.5 billion deal with investors | Al Jazeera America
The bad news continued to pile up for JPMorgan Chase & Co. with Friday’s announcement of a $4.5 billion settlement reached with investors who said the bank deceived them about bad mortgage investments, part of a string of recent legal deals that contributed to the nation’s largest bank rare third quarter loss this year.
The newest settlement covers 21 major institutional investors, including JPMorgan competitor Goldman Sachs, BlackRock Financial Management and Metropolitan Life Insurance Co. The mortgage-backed securities were sold by JPMorgan and Bear Stearns between 2005 and 2008.
As the housing market collapsed between 2006 and 2008, millions of homeowners defaulted on high-risk mortgages. That led to billions of dollars in losses for investors who bought securities created from bundles of mortgages. Those securities were sold by JPMorgan and other big Wall Street banks.
Separately, JPMorgan has been negotiating with the U.S. Justice Department to settle a civil inquiry into its sales of mortgage-backed securities. While that case has yet to be full resolved, the bank reached a tentative deal last month to pay $13 billion.
As part of the $13 billion settlement, $4 billion will resolve U.S. government claims that JPMorgan misled mortgage finance giants Fannie Mae and Freddie Mac about risky mortgage-backed securitie
via JPMorgan reaches tentative $4.5 billion deal with investors | Al Jazeera America.
From around the web.
From the web site, Living Lies (Good Site! – jp).
The banks have paid tens of billions of dollars in settlements with Federal and State agencies and law enforcement. Where did the money go? But more importantly the real question arises out of the investigation and the question Elizabeth Warren keeps asking — which homes were found to have defective notes and mortgages as alleged by investors in their lawsuits against the investment banks? Which homes did the agency investigation find were foreclosed by parties who were strangers to the transaction. I agree with Sen. Warren who thinks that nothing could be more important to answer as required public informations hand the finding already made by investigators and admitted by the banks to be illegal Foreclosures on defective mortgage liens based on enforceable notes.
One thought on “Prosecute JPMorgan!!”
Yes, children do learn ethics in schools and No, they don’t learn to practice greed in the universities. You have to continue teach them business ethics. But they should learn how to measure ethics, subtler than the subtle.
First in the series of CREAM™ Report on Corporate Rating I have created a rating system on Hindustan Unilever that leads towards self-governance. JP Morgans, or Lehman Bros cannot be controlled but we can measure them with the published materials as to the extent of ethical values practiced within. We let them commit attrocities and try catch them. No, we have to have rating system on real-time.
CREAM™ Report on Corporate Rating on Hindustan Unilever is about 350 pages [A4] of 189 issue areas with no single issue analysed beyond a single page.The data is shrunk to arrive at their rating of 1,1,1,2,1, for the years 2008-09 onwards till date. With the optimum level of 5 the study suggests areas how they should work towards reaching self-governance.
The measurement methodology adopted is unique. I want universities and corporate to learn the technique of evaluating by ethical responsibility. It fetches more $ and better stability. Companies with better rating will attract the public to invest, as Paul Polman CEO of Unilever says: Increasingly
consumers will vote with their wallets for companies that are just and equitable. More importantly the Society is benefited. We don’t need JP Morgans but we should learn how to create companies practicing self-governance as corporate culture.
I have just published the report through Amazon http://www.amazon.com/dp/B00GR6K9UM#reader_B00GR6K9UM
I welcome your comments. I had been very busy on this work that I could not visit your site and respond. Thanks. Jayaraman
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