“Time wounds all heels,” or so the saying goes. The big news lately has been JPMorgan Chase’s $13 billion settlement with the government, and in the case of the London Whale trading disaster, the Too Big To Fail institution was forced to admit wrongdoing.
In the story during and immediately after the Panic of 2008, the House of Morgan under Jamie Dimon was the one big bank that did things right. No wonder it could acquire Washington Mutual after it failed. But the whale episode, which occurred in 2012 and cost $6 billion, showed that all was not actually well inside the bank.
Now it turns out that even the neat tale of how Dimon was smart enough to avoid the trap of subprime mortgages was untrue.
According to the Wall Street Journal, before the crash JPMorgan “dealt with some of the biggest subprime lenders of the time, including Countrywide Financial Corp., Fremont Investment & Loan and WMC Mortgage, a former unit of General Electric.”
It was bundling subprime loans and selling them as securities, including to Freddie Mac, the government-backed agency that had to be saved with $100 billion in taxpayer money.More