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Bank of America and JPMorgan, Oh How Illegal Activity Pays

What a surprise. The big banks are not playing by the rules — the rule of law, that is.

News last week revealed that Bank of America Corp. (NYSE:BAC) and JPMorgan Chase & Co. (NYSE:JPM) are dirty, dirty, dirty.

The Justice Department announced that it is pursuing a civil lawsuit against Bank of America on the grounds that the bank lied about the quality of the mortgages underlying its mortgage-backed securities (MBS) prior to the housing collapse and financial crisis. The Justice Department is still on a high from its successful civil lawsuit against Goldman Sachs Group Inc.'s (NYSE:GS) mid-level toxic securities shill, Fabrice Tourre.

The charges allege out-and-out fraud in Bank of America's soup-to-nuts loan origination and securitization of mortgages. Loans, bad from the start, were knowingly bundled and securitized into trade-able MBS, unbeknownst to buyers.

As we all know, this play went wrong (or worked spectacularly well, if you were short housing like John Paulson) and spread poison throughout the global financial system. It is alleged that this particular fraud led to losses of at least $100 million among investors who thought they were buying securities backed by mortgages that weren't worthless.

Bank of America Not Alone

Meanwhile, JPMorgan Chase announced that it was the subject of criminal and civil investigations by Justice for precisely the same misdeeds as Bank of America and Goldman Sachs. It is alleged that JPMorgan knowingly originated bad mortgages, packaged and securitized them and… you know the rest.

We also learned that JPMorgan may have been the first to do so in 2005. And the toxic securities of Bear Stearns, which JPMorgan picked up for a song just before the music ended in 2008, are thought to have cost investors $22.5 billion.

And with these revelations, JPMorgan and Bank of America join the Wall Street rogues gallery; to mangle Winston Churchill, a "grisly gang who work their wicked will." Three of the largest banks in the world, and they are being pursued like criminals.

But it actually gets worse, dastardly worse…

Join the conversation. Click here to jump to comments…

  1. J Rawlins | August 12, 2013

    If billions were given to BOA in the 2009 bailout,will there be
    money returned and who researched the recipients of
    the bailout? Could it be the same administration that
    put us in the economic crisis that we are in?
    Will the IRS handle this? Good Luck America.

  2. Louise | August 13, 2013

    You asked: "Will there be money returned?" Come on…what do you think? And, if there is, that money won't find its way back into the accounts of the victims. No, it'll go to some government agency!

  3. fallingman | August 13, 2013

    Well written and dead on the money Mr. Madison. Thanks for not shying away from telling the unvarnished truth.

    If only they were "being pursued like criminals."

    Can you imagine bank robbers being caught red handed and, instead of being prosecuted in criminal court for robbery, they were simply fined a percentage of the proceeds?"

    Well, as you correctly point out, that's what these DOJ and SEC civil actions amount to…a cost of doing business…criminal business.

    It's a complete and utter disgrace. Welcome to the Kleptocracy we call the USSA.

  4. J | August 13, 2013

    Shock. And why do you think Holder was placed into that position.. yeah. We're being run by the most corrupt government in our history. Period.

  5. Charles | August 13, 2013

    It appears to me that our regulators have become no better than the mob bosses who offered "protection" for a fee, except in this case it's protection against criminal prosecution.

  6. robert | August 13, 2013

    It might have been possible to avoid some of these problems if the Bush administration had shown any interest in (pardon the bad word), regulation.
    Cleaning up after Bush, without jailing Chaney and the whole lot is impossible.

  7. Brad M | August 15, 2013

    Looks to me to be a "nice", legal and official method of old fashioned neighborhood protection payouts. As long as the right people get their cut in some manner ( fines in this example ), no one gets hurt ( or imprisoned in this case ), and just carry on with business as usual. Regulation only works if it is properly enforced and the violaters are then properly sentenced in a criminal and civil manner. Do we believe this happens enough anymore? No!

  8. nuttin | August 17, 2013

    Are you a bank whose wrongdoings are catching up with you?

    Just HSBC it!

    1. Apologize profusely.
    2. Shift your staff people around.
    3. Pay the fee.
    4. Continue with business as usual.

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