The recent case of JPMorgan Chase, with its tentative $13 billion settlement, has focused public attention on the bank's questionable mortgage practices and the unequal approach of U.S. justice to individual and corporate criminals.
The Woody Guthrie song about the 1930s American Robin Hood, Charles Arthur "Pretty Boy" Floyd, put it well: "Some will rob you with a six-gun, And some with a fountain pen." A drug addict who holds up a 7-Eleven may get 10 or more years in prison. A banker who peddles billions of dollars in ruinous loans to poor people, then sells the paper to government-supported institutions such as Fannie Mae and Freddie Mac, receives a nominal fine years after the fact -- and doesn't go to jail.
JPMorgan Chase has become more or less the poster child for the latter type of non-justice in the last week through reports on its anticipated deal with the U.S. Department of Justice. The bank is America's largest, with net income in 2012 of $21.3 billion. Under the tentative agreement with the government, JPMorgan may have to pay $9 billion in fines and provide $4 billion in relief for struggling homeowners.
More may be coming, however, for the bank and its board chairman and CEO, Jamie Dimon. The New York Times reported Thursday that JPMorgan may have violated the Bank Secrecy Act as the primary banker for 22 years of Bernard L. Madoff, who was jailed for having operated a Ponzi scheme that stripped his clients of $64 billion. The secrecy act requires banks to blow the whistle to authorities if it suspects a customer is using it for illegal purposes.
Although the government's JPMorgan penalty would be a record high, it's a relatively gentle slap to a large Wall Street institution -- and no prison time. One reason is that a tough prosecution of a large financial company might scare the economy. The second is the personal relationships that can exist between senior Washington officials and top banking leaders.
Evenhanded justice would require that both those who carry out small holdups and those who rob Americans of billions should be subject to the same consequences. There's a lot of work to be done to reach this ideal. Let it begin with JPMorgan Chase.