In early October, Jamie Dimon, CEO of JPMorgan, sat in a corner instead of his usual perch across from President Obama in a reception for top bankers in the White House. Usually, he shares his opinions with the president. During this meeting, however, he didn’t say much, according to the Wall Street Journal.
Last week the Wall Street company reached a record-breaking $13 billion settlement with the Department of Justice, including $4 billion for providing troubled mortgages to Fannie Mae and Freddie Mac, the government-controlled mortgage finance monopolies. It is the biggest settlement so far in US history.
JPMorgan had already earned a bruised reputation in the “London Whale” crisis and struggled with legal investigations. Many critics have said that J.P. Morgan may not be Washington’s favorite any more.
This fiasco on Wall Street is stirring conversation at Boston College. As the biggest bank in the country, JPMorgan is one of the biggest recruiters for business majors. The company has hosted numerous information sessions on campus and invited BC students to its Private Bank Livetalk Event.
“JPMorgan’s settlement with DOJ definitely hurts its reputation. However, no one can deny the importance of the bank, and it will still be the biggest bank regardless of the penalty,” Bingjie Liu, A&S’ 15, said.
There is also debate on campus as to whether the company should pay that much money. Dimon's cooperation is just one of the 18 banks that the federal regulator accused of selling troubled mortgages to Fannie Mae, without disclosing the huge potential risk.
“It is JPMorgan’s fault that it sold troubled mortgages to Fannie Mae and Freddie Mac. However, this is not [Dimon's] own fault and $13 billion is just too much,” said Donny Wang, CSOM ’16.
“JPMorgan earns profits by reselling its mortgages, so of course, it won’t pay too much attention to its potential risk. It’s not JPMorgan that should take the full responsibility, it is the rules and regulation of the banking industry that go wrong.”
The $13 billion settlement is tentative, however. The Federal Housing Financing Agency and the Department of Justice will decide on a final agreement after further negotiations.
Featured image via 401 (K) 2013/Flickr.