Complaint Against Jp Morgan Securities

The bank at some point received negative attention for issuing credit to arms companies, including companies like Boeing, Lockheed Martin, General Dynamics, Textron, Colbun, BAE Systems and EADS. Some companies within the bank’s portfolio have also been involved in environmental and labor rights violations scandals, for instance Wal-Mart and Total USA. This negative attention may lead to loss of investor confidence in the bank.

JP Morgan bundled subprime mortgages into securities and marketed them as for sale as investments. Investors that bought the securities being offered by JP Morgan because they thought they were relatively safe is what led to the housing bubble. When hundreds of thousands of homeowners defaulted on their mortgages because they could not afford to make their payment, the value of the securities plummeted leaving investors with huge losses. This conduct of bundling toxic loans into securities and misleading investors contributed to the financial crisis of 2008 (USDOJ, 2005). JP Morgan's unethical behavior left many families homeless and caused taxpayers billions of dollars in taxpayer bailouts of the financial industry.

Jp Morgan has done a few negative things such as being accused of suppressing the economy when things were good. Another is that during the US economy crisis, Morgan put together group of investors that unwrote a $62 million bond that was issued to the US government, it saved the economy but during the process JP Morgan and his investors made a good amount of profit causing them to become unpopular. Morgan faced criticism that he had too much power and was accused of manipulating the nation’s financial system. Morgan has also paid a president to take over Roosevelt's place although the president died so therefore Roosevelt had to become the president by default.

The regulation that I have chosen for this paper is amendment in the Regulation X i.e. “Real Estate Settlement Procedures Act” and Regulation Z which is for “Truth in Lending”, for establishing the new disclosure requirements and forms in Regulation Z for the most closed-end consumer credit transactions secured by the real property. This regulation is controlled by the Bureau of Consumer Financial Protection. The role of the Consumer Financial Protection Bureau (CFPB) is to provide consumers information related to the terms of their agreements with financial companies during their application for a mortgage, choosing among credit cards, or using any number of other consumer financial products. The mortgage market is the single largest market for the consumer of financial products and the services in the United States, with approximately $10.4 trillion in loans outstanding. Since last decade, market went through an unprecedented cycle of the expansion and the contraction that was fuelled in the part by securitization of mortgages and the creation of increasingly sophisticated derivative products. This led to the collapse of financial system in 2008 and sparked the most severe recession in United States.

Mortgage fraud is one of the costliest, yet seldom prosecuted crimes in the criminal world. CoreLogic estimates approximately $13 billion in fraud losses occurred in 2012, according to the latest available data in the 2012 Mortgage Fraud Trends Report (Gerding, 2013). While these numbers may seem high, the approximate $13 billion in losses is only a fraction of what it would be if every case were to be prosecuted. Mortgage fraud was also a major contributing factor towards a national, and nearly global economic collapse in 2008 when the United States economy saw the worst recession it has seen since the great depression. Anyone that has seen the films “99 homes” starring Andrew Garfield and Michael Shannon or “The Big Short” starring Christian Bale and Ryan Gosling has seen a largely realistic glimpse of mortgage fraud and how devastating it can be.

The plaintiff, First Colonial Bank for Savings entered into an interpleader action in the District court to determine who was entitled to the surplus proceeds from the foreclosure sale. The foreclosed property belonged to the defendants, Robert H. and Sherrell L. Bergeron, and the codefendants, Ford Motor Credit Company, the junior mortgagee of the foreclosed property as a result of corporate restructuring Ford Consumer Finance Company was substituted as the defendant for Ford Motor Credit Company. Both the Bergerons and Ford filed motions for summary judgement as they both felt entitled to the surplus. The district court ruled in favor of Ford Motor Credit Company and denied the Bergerons motion. The Bergerons appealed the decision of the District Court because they argued that they filed for and were discharged from bankruptcy prior to the foreclosure sale, therefore they believed that the security interest granted to Ford prior to their petition does not carry over to the surplus funds received after filing the petition.

JPMorgan Chase is amongst the big four banks in the U.S. with Bank of America, CitiGroup, and Wells Fargo. According to Bloomberg, in of October 2011 they surpassed Bank of America as the largest bank by assets. JPMorgan Chase & Co is considered to be a universal bank.

The banking crisis of the late 2000s, often called the Great Recession, is labelled by many economists as the worst financial crisis since the Great Depression. Its effect on the markets around the world can still be felt. Many countries suffered a drop in GDP, small or even negative growth, bankrupting businesses and rise in unemployment. The welfare cost that society had to paid lead to an obvious question: ‘Who’s to blame?’ The fingers are pointed to the United States of America, as it is obvious that this is where the crisis began, but who exactly is responsible? Many people believe that the banks are the only ones that are guilty, but this is just not true. The crisis was really a systematic failure, in which many problems in the

Q. 1. What were the major factors that led to the recent financial crisis? How did we get here?

William Erbey, a small town boy who grew up in Moon Township, Pennsylvania, is now known today as a successful self made billionaire. One who pioneered a new and efficient way to handle mortgage debt through developing and building the company Ocwen Financial. Through the progression of his financial success things came to a halt when it was discovered that he was deceiving many of the homeowners who entrusted their livelihood to the company. With the determination of New York Superintendent of Financial Services, Benjamin Lawsky, William Erbey’s long legacy regarding the homeowners he took advantage of and manipulated is finally coming to an end.

Banks have been at the forefront of the financial system for as long as they have existed and have captured the attention of stakeholders on both controversial grounds as well as being undisputed with regards to the many helpful services they provide. JP Morgan & Chase is one such bank, surrounded by hostile news articles and excessive scrutiny but rightfully so as it has of recent been the topic of much controversy as turning a blind eye to the moral codes established by the Securities and Exchange Commission (SEC) and assisting Ponzi Scheme masterminds in swindling unsuspecting investors.

As a topic for this research paper, I decided to analyze the ethics behind the recent mortgage crisis in the United States. Banks were approving people for loans very easily, to people they knew would not be able to pay them back. Thus, many people were buying homes, missing payments, getting foreclosed on, and ruining what credit they had. Throughout this paper I intend to show how the practices that the banks were using were unethical. I will show who stakeholders were, and analyze them through Utilitarian and Kantian standpoints.

This relates to economics because it deals with banks and money. This big bailout created a big

Between 1999 to 2004, more than two dozens of US states ranging from North Carolina to South Carolina, California to New York passed various forms of anti-predatory lending laws stipulating a lower interest rate threshold requiring credit disclosure (Starkman, 2014:202) in an effort to respond ferociously to lawless lending practices at Wall Street and hold Wall Street originators of MBS to account. Critical, hardest-hitting investigative stories were prevalent during this time. When the US Federal Trade Commission (FTC) conducted cases against the most notorious names in the subprime lending industry, i.e. Citigroup, JP Morgan, Delta Funding Corp., etc., many business newspapers also considered abusive lending their central beat and published a wide range of delicately-told stories going into the dubious and execrable practice of Wall Street banks in impressive depth (“Easy Money: Subprime Lenders Make Killings Catering to Poorer Americans. Now Wall Street Is Getting in on the Act”, BusinessWeek, 4/24/00; “Along with a Lender, Is Citigroup Buying Trouble?”, NYT, 23/10/00; “Fed Assesses Citi Group Unit’s $70m in Loan Abuse”, NYT, 5/28/04; etc.) . These articles put individual banks engaging in the foray of subprime lending under the spotlight with real information about secret sources of money and the compensation culture that

J.P. Morgan Private Bank was one of the most successful banking services globally. It offered high-end financial products and services with professional risk management team. In financial crisis, the Private Bank successfully survived with relatively great performance. This paper would exposit the key to their success of risk management by answering six questions.