The New York Times had two interesting recent items on JPMorgan Chase. The first was a shrewd column by Andrew Ross Sorkin quoting Columbia professor John C. Coffee Jr. to the effect that a big SEC fine on JPMorgan Chase for its losses in the London Whale case just serves to punish the firm's shareholders, who were already victimized once:
on the merits of the case, the settlement, Mr. Coffee said, begins to look a lot like bribery — to some degree, on both sides. Without a strong case against any individuals, the S.E.C. looks as if it held the firm for ransom. And on the other side, the firm's senior management appears to have bribed the S.E.C., using shareholder money, not to bring cases against individuals...."This is a case about imposing a fine on someone who suffered a burglary for not taking adequate steps to avoid the burglary."
The second came in an accompanying article about other pending regulatory actions against JPMorgan Chase:
Shortly after Mr. Schneiderman filed the lawsuit, Mr. Dimon called the action "unfair" during a talk at an event in Washington for the Council on Foreign Relations. JPMorgan, the bank chief said, was being penalized for purchasing Bear Stearns in 2008 as "a favor" to the Federal Reserve.
A transcript of the CFR talk is here, and according to it, Mr. Dimon indeed did say, speaking of the Fed and the Bear Stearns purchase, "we did them a favor." Whether that is a fair characterization is up for debate, but if that is really how Mr. Dimon thought about it, it's really something to justify a significant corporate acquisition as a "favor" to a government regulator.
