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JP Morgan Chase Historic Settlement

On November 17, 2013, the megabank JP Morgan Chase reached a record civil settlement of $13 billion and still could face criminal charges. The vast majority of the settlement, $9 billion, will go to State and Federal agencies that insured and backed the many bad mortgages the bank doled out from 2006-2009, including a $2 billion fine received by federal prosecutors. Consumers of the bad-faith mortgages will receive the benefit of the remaining $4 billion through a reduction in interest rates, temporary payment deferment, the removal of abandoned homes from low-income neighborhoods and other measures designed to offer relief to those hit hardest by the bank’s improper practices. There is no mention of the bank buying back any of the sour loans, and those who have already foreclosed are out of luck.

As a whole, the settlement stands to make little impact on the banking giant despite the historic figure. JP Morgan Chase revealed they had put aside $23 billion some time earlier just to pay for expected damages. Last year alone the company recorded over $20 billion in profits, and, despite the current litigation, the company’s stock is increasing as the housing market stabilizes. Last year, the US government budgeted just $42 billion in foreign aid and $11.2 billion in war-related aid to Afghanistan and Iraq. Sequestered litigation funds from JP Morgan Chase alone could have paid almost half of that budget.

Syria is embroiled in an incredibly costly war that has left many homeless as they flee the fighting or watch as their homes are destroyed by shelling. With the total number of refugees expected to hit 3 million by the end of this year, the UN has appealed for $5 billion in aid to house and care for these victims. Right now, they are about $2 billion short of that request. Before the US Justice Department transfers their imposed fine to the treasury, think of the millions of Syrians lacking food, healthcare, water and shelter.

Typhoon Haiyan has destroyed or damaged over 240,000 homes in the Philippines and over 800,000 people have been displaced from the storm. Though aid efforts have been swift and generous, rebuilding destruction of that magnitude will not come quickly. Hurricane survivors will need temporary shelter for months while debris is cleared, utility lines are restored and, eventually, homes are rebuilt. Estimates say the country suffered a total of $15 billion in physical damages. Federal and State investors could donate their $7 billion to the recently homeless of the Philippines and easily cover the cost of returning them to shelter.

$13 billion is a massive sum, why not think big? As of July of this year, the UN estimated a need for $12.84 billion to assist the entire world’s crises. One settlement that only represents a little more than half of JPMorgan Chase’s 2012 profits could provide adequate humanitarian relief to the entire world for the year. One company’s misdeeds resulting in relief for millions across over 25 countries; that would be historic.

– Tyson Watkins

Sources: NY Times, USA Today, Reuters, Reuters, NY Times, USAID, Yahoo News
Photo: Business Week