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Breakingviews: Madoff strikes again

Tuesday, January 07, 2014 - 03:33

Jan 7 - JPMorgan's criminal settlement for turning a blind eye to its Ponzi scheming client is unique in the modern annals of bad banking behavior. Breakingviews editors explain why.

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The new year banking is kicking off just where it left off the old year. We've got JPMorgan with a big settlement criminal over Bernie Madoff one point seven billion dollars this one's been in the works for awhile and other works like all of these. Of course for -- us and we just and that was just announced today. Let's step back JPMorgan of course was Bernard Madoff Ponzi schemer is -- -- -- it put its money. -- to Canada's money. The feds are saying look JPMorgan you should have known this guy it was a fraud. And we think that you ignored -- -- turn a blind side it was behavior so we think that's. A violation what's called the bank secrecy act which were. Requires banks US banks congress -- just think there's activity there's extra component of the -- which is this deferred prosecution deferred prosecution agreement made it basically if you guys pay the one point seven billion dollars and and reform your money laundering. But the practices or anti money laundering practices and surveillance that we won't bring criminal charges then we'll just settle this thing and make it go away if you. Don't do what we want to do then there could be for the first time really criminal. Charge -- industry. Now this is unlike all these other bank settlements that we've seen which -- -- -- kind of evolved pretty much everyone our -- banks or whether it's Libor or. Mortgage securities this one is particular to JP more yes setting aside and you can look other banks and -- all and people have to shake up that money anti money laundering and activities from. It's small banks to big backs -- -- static shot of going -- -- the company has gotten gold rimmed it pretty bored about what that US is gonna take. But yeah I mean this is this is one client who lived and he you'll. To fight -- JPMorgan is an amalgam of many New York based. What does it say if while the biggest banks in the country even if fools that the most recent manages manages to get this account and for years doesn't -- thing. It was not like OK let's let's let's just turn a blind -- to may be someone's funding some weapons for Iran to take six months this is 1520 years with us. -- -- that's where it's Rudy I guess the point is that there's been safety in numbers some of these banks -- some of the bank CEOs the sale ever almost kind of go over signing a joint. Yes settlement agreement maybe even in some cases -- what I mean. Jimmy Carter has obviously been held out quite a bit you know so when it -- thirteen billion dollar settlement how many layers of paint can be put on the body at that corner that's that's -- The government decided backed himself into a corner pain patient because -- people's thing but how thick -- those bulls now with pain it's a tricky one a look at I mean this yeah he was he was in charge spent three years buys from the Ponzi schemes exposed. -- and everyone else missed as well. And you can talk taveras capable street in options trade level site. We are pretty shall he was a Ponzi scheme of from the start this but -- and I've spent a few people. Before we came Essex district fishy about this is gonna know that was -- trichet said it -- is it chicken little and the bank. Could not Fennessy his Jamie Dimon -- claiming for years fortress balance sheet mistress management on the street and now we've got. A problem into a woman to be the safest heirs of the bank. Transaction management few clients but he made off. And of course than on the way out in the Treasury Department and this just looks like really really bad stuff any banker frank very little bit. All right we will leave it there we'll keep an -- what happens at JPMorgan and with Jamie Dimon will be back with more breaking views.

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Breakingviews: Madoff strikes again

Tuesday, January 07, 2014 - 03:33

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