image

“Ordinary people lost enormous amounts of money” when JP Morgan Chase sold millions in faulty loans – and taxpayers still paid a big chunk of its billion-dollar settlement with the government, investigative journalist Matt Taibbi told RT.

In recent story published in Rolling Stone, Taibbi detailed how a former JP Morgan employee Alayne Fleischmann helped the Justice Department in its investigation against the bank. Eventually, a $9 billion settlement was reached. However, that agreement did not require the bank to admit guilt for fraud – and it all came about to keep the information Fleischmann divulged from surfacing.

Speaking with Thom Hartmann on RT’s ‘The Big Picture’, Taibbi said that Fleischmann, a deal manager at the company, criticized JP Morgan’s banking practices when she realized that the normal procedures on due diligence and compliance on loans were not being handled in the usual way. These loans were to be packed into securities and re-sold to investors (pension funds, hedge funds, insurance companies), but the due diligence department wasn’t forthcoming with information, and deal managers were told not to send emails with their inquiries.

As a result of JP Morgan’s decision to sell these loans despite knowing they were defective, Taibbi said Americans suffered dramatically.

“Everyone who bought them experienced massive losses,” he said. “What a lot of people don’t understand in the financial crisis is that if you have a pension, or you were involved in a mutual fund or your state’s retirement fund was invested in mortgage backed securities, you probably woke up at some point in late 2008 and noticed that 30 to 40 percent of that fund had disappeared. In large part, this was because banks like Chase and other companies were selling these defective products to investors, and they were experiencing massive defaults and massive losses.”

Read more at RT News

One thought on “JP Morgan Chase cost US taxpayers millions, had them pay for settlement – Matt Taibbi”

Leave a Reply