The JPMorgan Shakedown Slush Fund
In my last blog post, I reported Attorney General Holder's shakedown of JPMorgan Chase for $13 billion. I supposed that Holder may have been punishing CEO Jamie Dimon for criticizing the Obama administration's "anti-business" economic policies during the 2012 election campaign.
I missed a possible second political purpose. According to University of Maryland business economist Peter Morici:
They're paying a huge fine to a cash-hungry treasury. They're also giving the president money to spread around for political purposes. Four billion [dollars] for consumers who were hurt by basically fraudulent mortgages.
A lot of those homeowners really committed fraud. They're the ones who lied on the mortgage applications. They're the ones that took out loans they had no business taking out, all at the behest of Fannie Mae and Freddie Mac who's also getting paid off. This whole thing is a travesty of justice.
Like me, Morici described the settlement as a "shakedown":
"The president is shaking down JPMorgan. There's no other word for it," Morici told "The Steve Malzberg Show" on Newsmax TV.
"They started investigating these mortgage-related securities fraud ... about the time that Morgan ... decided not to support the president in his re-election campaign. How about that?"
Morici says the Justice Department targeted JPMorgan Chase even though "most of the sins were committed by companies it acquired at the behest of the Bush Treasury Department," including Bear Stearns and Washington Mutual.
Morici predicted more shakedowns in the future:
"You can count on more shakedowns. It would be a felony for me to, for example, threaten you with fraud to get the upper hand in a civil complaint, but not so the attorney general," he said.
In an interview with Univision that aired in October 2010, President Obama once said, "We're going to punish our enemies and we're gonna reward our friends who stand with us on issues that are important to us."
Obama may have just been talking about punishments and rewards at the polls. Attorney General Holder may be administering the punishments and rewards much more directly.
The author teaches economics online. He and his father and son maintain a blog at www.idealtaxes.com and co-authored the 2008 book Trading Away Our Future.