Who Was Stupid, Sleazy or Crooked at JPMorgan?

Jonathan Weil joined Bloomberg News as a columnist in 2007, and his columns on finance and accounting won Best in the Business awards from the Society of American Business Editors and Writers in 2009 and 2010.
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There will be no judicial oversight of the Justice Department's out-of-courtsettlement with JPMorgan Chase & Co. This is why legislative oversight is so badly needed.

Several senators wrote to U.S. Attorney General Eric Holder before the terms of the not-really-$13 billion deal were disclosed this week. John McCain, the Republican from Arizona, in a Sept. 30 letter wrote that Holder's meeting with JPMorgan Chief Executive Officer Jamie Dimon "at the request of the CEO, while negotiations on a global settlement agreement are pending, is highly unusual and, under the circumstances that the meeting occurred, gives rise to concern."

Five Democratic senators, including Elizabeth Warren of Massachusetts,said this in an Oct. 29 letter to Holder about the JPMorgan negotiations: "Too many Americans have lost faith that their government is looking out for them and their families. They are skeptical that the rules they follow every day are the same rules that apply to the wealthy and powerful."

Now we need those lawmakers and others to follow up.

The headline figureon this week's deal was $13 billion. However, this wasn't a single settlement. That number combined the amounts for several state and federal agencies. The Justice Department, which secured a $2 billion civil penalty from JPMorgan, didn't even file claims against the company alleging any violations of the law. So no court approval of the Justice Department's portion will be required.

The only chance for serious outside scrutiny is Congress. What evidence did federal prosecutors have on JPMorgan? What do the e-mails and other records show? How did the company's actions harm homeowners and investors? Who was responsible? How and why did the settlements turn out the way they did? This week's pact included a statement of facts that contained no incriminating admissions by JPMorgan. We really have no idea what went on. Nothing was proved.

This is where the oversight role of the legislative branch becomes so vital. Sometimes informing the public is even more important than meting out punishment. And this looks like one of those occasions -- especially when you consider the importance of JPMorgan to the economy and the failure by the Justice Department to identify individuals who may have engaged in stupidity, sleaze or wrongdoing. We need congressional subpoenas to start flying. And we need hearings.

The Senate Permanent Subcommittee on Investigations, of which McCain is a member, has performed this function admirably over the years, perhaps better than any other congressional panel.

Warren sits on the Senate Banking Committee, for which there is an obvious and natural role. The Judiciary Committee, too, should be all over this.

Holder isn't saying what happened here. That's why Congress needs to find out and tell the rest of us.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Jonathan Weil at jweil16@bloomberg.net