JPMorgan's 'Admission' Oversold by Government

NEW YORK (TheStreet) - Maybe New York State Attorney General Eric Schneiderman and U.S. Attorney General Eric Holder should have just said JPMorgan's  (JPM) $13 billion settlement on mortgage securities it sold prior to the financial crisis was a historic victory for state and federal regulators.

First off, the $13 billion settlement is a record in the banking industry. Second of all, JPMorgan is acknowledging 11-pages of facts in a damning document that outlines some of the bank's mortgage securitization activities during the housing bubble.

Normally, civil settlements contain some boilerplate language that states a firm "neither admitted or denied" allegations made in a lawsuit or case. The days of settling civil cases on Wall Street without admitting anything are over, according to newly appointed Securities and Exchange Commission head Mary Jo White.

JPMorgan's record settlement, which includes a $9 billion cash payment and $4 billion in relief to consumers, is very much in the spirit of the SEC and other regulator's newfound zeal, five years after the crisis.

The government's settlement will also provide billions of dollars in direct relief to many hit hard by the misdeeds that occurred during the mortgage bubble. 

But the settlement is not an actual admission by the bank that it committed any fraud or misrepresentation, a point the government appeared to try and press on Tuesday. 

In that sense, it appears Schneiderman and Holder oversold the settlement, which incidentally, hinged on faulty representations that JPMorgan made in selling risky mortgages to investors.

There is one statement in press releases put out by Schneiderman's office and by the Department of Justice that may cross a line in terms of what they actually wrenched out of JPMorgan in their $13 billion legal carousel.

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