"It's really about $2 or $3 billion if you back out various components," says Barry Ritholtz ofRitholtz Wealth Management. It's not clear exactly how the money will be distributed, but based on the details from the previously announced $4 billion settlement between JPMorgan, the Justice Department, and U.S. Department of Housing and Urban Development, it illustrates the squishy nature of the punishment. That $4 billion, which is included in the $13 billion being bandied about, includes $1.5 billion in loan forgiveness and $500 million in mortgage adjustments. JPMorgan was unlikely to see much if any of this $2 billion with or without a deal."
"Stranger still is the remaining $2 billion being split between giving JPMorgan credit for demolishing abandoned houses and issuing new loans for low and moderate income income borrowers. In other words, JPMorgan is going to be forced to do more business with high-risk borrowers as punishment for offering mortgages for unqualified would-be homeowners.
The Justice Department reserves the right to pursue criminal charges against bank officials, but the clock is ticking on the statute of limitations. Ritholtz says the absence of a credible threat regarding criminal charges all but legitimizes the settlement as a one-off charge in business as usual for JPMorgan.
Ritholtz draws a parellel to the settlement and the reltationship between a gambler and a bookie. The message according to Ritholtz is that "Uncle Sam is now your partner. You're going to have to cut off a little vig to the Fed, but you still get to rape and pillage."
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