We’ve been waiting for this day for a long, long time.
JPMorgan Chase has agreed to pay $13 billion to right some of the wrongs they caused by packaging home mortgages into misleading and complex securities, ultimately upsetting not only the apple carts of millions of Americans but also (almost) tumbling the world economy.
To put this settlement into perspective, $13 billion is about 40 percent of JPMorgan’s net earnings from 2012. It’s a big sum — the biggest, in fact, that a single company has ever had to pay. But what this sum means is even bigger.
New York Attorney General Eric T. Schneiderman put it perfectly: “Today’s settlement is a major victory in the fight to hold those who caused the financial crisis accountable.”
So where does this money go? Around $7 billion will go to investors, the largest beneficiary being the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. Also included is a $2 billion fine to federal prosecutors in Sacramento and $4 billion for the homeowners we are all rooting for: people in tough areas like Detroit and parts of New York where property values still languish.
To be sure, the $13 billion settlement is not perfect. But with its staggeringly high number and the open possibility of criminal charges (the deal includes provisions to assist prosecutors with investigations into former employees who helped create the mess), it goes a long way towards making a statement to the big banks.