The Chicago Sun-Times online’s Michael Sneed in an exclusive today is reporting that JPMorgan Chase & Co. (NYSE:JPM) may be facing a new round of headaches this year as Alderwoman Leslie Hairston plans to introduce a City Council ordinance today that would effectively delete the bank from its list of designated financial heavy hitters.
Essentially, the Alderwoman wants the city to put an end to using JPMorgan Chase & Co. (NYSE:JPM) as a depository for the city’s money. Sneed has been told that Chicago presently has $350 million in municipal funds deposited with the troubled bank.
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What’s her problem?
“The bank has violated the city code by making admissions of dishonesty and deceit in the way they dealt with their investors in the mortgage securities and Bernie Madoff Ponzi scandals,” Hairston told Sneed.
“We use this code against city contractors and all the small companies, why wouldn’t we use this against one of the largest banks in the world?” she said.
“It’s bad enough the penalties imposed against them by the feds don’t really pinch them because they are able to pay off the fines levied against them.
“What we have to do is correct the bank’s behavior . . . and this ordinance hopefully will help that along,” Hairston said
She is clearly referring to CEO Jamie Dimon’s bank scandals that led to a $13 billion settlement with state and federal agencies regarding mortgage securities prior to the most recent financial crisis. On the other hand, she could be talking about the $2.6 billion settlement the bank made to prosecutors for the failure to warn authorities of Bernie Madoff’s Ponzi scheme, one of the bank’s clients. Six of one, half dozen of the other.
JPMorgan and Madoff
Somewhat surprisingly, JPMorgan Chase & Co. (NYSE:JPM) has largely remained under the radar as being complicit in Madoff’s scheme. The agreement was a rare one at the risk of understatement and was reached solely in the interest of avoiding a criminal case.
“The bank signed off on statements of fact admitting to misrepresentations to investors and failing to inform regulators with their concerns in the Bernard L. Madoff Investment Securities LLC case,” Hairston added.
“I think that makes JPMorgan Chase & Co. (NYSE:JPM) ineligible to do business with the city because the city code states that any person or business entity who has made admissions of dishonesty or deceit . . . or failed to report suspicions of fraud is not compliant with the code,” she said.