6 chapters across the catalog
JPMorgan Chase $13 Billion Settlement and Jamie Dimon
JPMorgan Chase reached a tentative $13 billion settlement with the U.S. Justice Department over the sale of troubled mortgage-backed securities. The deal follows a meeting between CEO Jamie Dimon and Attorney General Eric Holder regarding civil and potential criminal liabilities.
JPMorgan Chase Loss, Mary Ann Lake Litigation Reserves
JPMorgan Chase reported its first quarterly loss since 2004, totaling $398 million, primarily due to massive litigation expenses. CFO Mary Ann Lake detailed that the firm has reserved $23 billion for legal matters, mostly related to mortgage-backed securities. Despite the multi-billion dollar penalties and ongoing negotiations with the government, the bank's stock price rose following the announcement.
The Justice Department has opened an investigation into Standard & Poor's regarding the rating of mortgage securities prior to the 2008 financial crisis. This move is viewed as a retaliatory action by the Obama administration following S&P's recent downgrade of the United States' credit rating. The conflict highlights the tension between the government and ratings agencies under the new Dodd-Frank regulations.
Donor Acknowledgments, Adios Mofos, Quant T-Shirts
The hosts read a long list of donations and thank-you notes from listeners, including a child's recording of the "Adios Mofos" jingle. Gifts mentioned include Rick Perry-themed t-shirts and a shirt featuring the mathematical formula used by "quants" to value mortgage-backed securities, which is blamed for the 2008 economic collapse.
The SEC is investigating Goldman Sachs for its role in selling mortgage-backed securities while simultaneously betting against them. The hosts argue that Goldman's actions were not illegal, but rather a standard practice of hedging investments. They credit Goldman for recognizing the housing bubble early after attending seminars by trader John Paulson, unlike other firms that collapsed.
The global financial crisis is attributed in large part to the failure of rating agencies that granted "AAA" status to subprime mortgage securities. This systemic failure has led to a breakdown in the lending system, which has transitioned from personal relationships to automated, often offshore, computer-driven processes. Observers suggest that the current economic turmoil is the result of widespread "shenanigans" and a lack of transparency on Wall Street.
