Do big fines even matter for JP Morgan Chase?

The headquarters of JP Morgan Chase on Park Avenue December 12, 2013 in New York. JP Morgan Chase and federal authorities are close to a USD $2 billion settlement over the bank's ties to financier Bernard L. Madooff that involve penalties and deffered criminal prosecution.

Another year, another big fine for JP Morgan Chase. The bank's expected to soon be paying out another $2 billion in criminal and civil settlements to the federal government. This time for ignoring signs of Bernie Madoff's Ponzi scheme. That brings the grand total of fines JPM has paid in just the past year to just about $20 billion.

But the markets aren't paying any heed: Shares are up almost a percent today and CEO Jamie Dimon is still there. The company's doing just fine, it seems. But is there a limit?

Tim Fernholz from Qz.com thinks JPM's seeming invulnerability may be due to Wall Street's indifference to anything but the bank's financial performance: 

"What I think to look for with Jamie Dimon is going to be, the company's latest earnings report. Ultimately on Wall Street and I think among the investors and these banks, they're an amoral bunch in the strictest sense of that term in that they do not care about the crime, they care about the stock price and the earnings."

Fernholz also says that it's important to remember that the fines and penalties we see today are punishing crimes and practices that aren't necessarily still happening.

"So it's hard to say...if they've cleaned up their act, and I think that's one of the reasons that prosecutors have reportedly opted for this deferred prosecution agreement," Fernholz says, "They're going to ask JP Morgan to really strengthen the controls that they supposedly put to watch out for things like Ponzi schemes or drug runners or any other kind of money laundering."

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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The first of what will probably be many rants about how this radio program is a disservice to the American public. Yes I signed up just to complain. It's been building for a while though, Marketplace. You see, I used to think you were interesting and informative, I felt I was doing something to stay informed by listening. Now I realize your true purpose is pacification and distraction. Your reporting on this story is a perfect example - you ask the question "Do big fines even matter for JP Morgan Chase?"

Not one effort was made to put 20 billion dollars in fines into quantitative context with JP Morgan's earnings over the past few years of this downturn. The casual listeners are all left thinking something like "well, 20 billion is a lot of money, I'm sure they've learned THEIR lesson".

And then the kicker: "it's important to remember that the fines and penalties we see today are punishing crimes and practices that aren't necessarily still happening" which was followed up by a tidy little anecdote about swimming naked when the tide goes out! Yes! Our regulators are revolving door nepotists! Deferred prosecution so we can give the perpetrators time to self regulate? So they can "watch out" for more Ponzi schemes? Yes, American public.. you should just wait for the tide to go out once again.. that's the only way we'll know what's what and until then, well... business as usual!!! Cue the bouncy instrumental bumper!

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