Picture retrieved from: http://money.cnn.com/2013/11/15/investing/jpmorgan-settlement/index.html?iid=Lead
The payment of $4.5 billion in settlements to institutional investors who suffered losses on mortgage securities is a painful blow to JP Morgan Chase &Co. This amount is probably a manageable one for the investment bank considering the amount of profits they make annually, however, this no doubt will affect their operations as they tighten budgets and limit hires to make up for the lost. Although the amount pay out could be potentially higher, I still perceive it to be too much. In the financial crisis of 2008, JP Morgan made a rather important move that helped saved the American economy when it took over Bear sterns and it’s troubled assets. If the investment bank had not help buy out the toxic assets then, the American government or effectively the American people would have been the ones bearing the cost. JP Morgan is certainly not given enough credit for taking on such a huge risk for the country.
I do not discount the fact that investment banks are in some ways guilty for the financial crisis and the hefty fine does serve as a reminder to other banks to not temper with greed. The purpose of investment banks is to help, people, government and corporations raise capital, these are the founding principals of investment banks and they have an obligation to maintain the financial stability of a country. Investment banks were created with the intent to protect the interest of people, not abuse it and If they deter from this primary responsibility, they risk putting the country of perhaps the world in jeopardy just like in 2008.
References/Interesting reads:
Article: http://money.cnn.com/2013/11/15/investing/jpmorgan-settlement/
When a fine is a crime: http://www.economist.com/blogs/schumpeter/2013/09/jpmorgan-chase
Sharing the fine!: http://intellihub.com/2013/10/24/much-jpmorgans-13-billion-fine-will-taxpayers-foot/
