JPMorgan civil suit could be a game changer
JPMorgan Chase Chairman and CEO Jamie Dimon testifies during a US House Financial Services Committee hearing in Washington, DC, June 19, 2012. Today the New York Attorney General filed suit against JPMorgan over alleged securities fraud.
Jeff Horwich: The New York Attorney General has sued JPMorgan Chase. The issue is mortgage-backed securities peddled by its Bear Stearns unit, leading up to the financial crisis.
Here's Marketplace's Eve Troeh.
Eve Troeh: Ok, here's a name you haven't heard in a while: Bear Stearns. The failed investment bank JP Morgan took over in 2008? New York's attorney general and a federal task force say they can prove that Bear Stearns knew it was selling badmortgage-backed securities. They're seeking $22 billion in civil fraud charges.
Lawrence Baxter: And it's certainly by far the biggest action that they've taken.
Lawrence Baxter at Duke University School of Law says the burden of proof is lower for civil fraud than a criminal case. He expects to see more big suits. The punishment here will be money, paid by the banks.
But economist Peter Morici says that hits stockholders, not bank executives.
Morici: Jamie Diamond's still sitting there collecting $20 million a year. How is this payback for what his executives did to the American public?
I'm Eve Troeh for Marketplace.