On Wednesday, America’s biggest bank by assets, J.P. Morgan, revealed that it is under federal criminal and civil investigation for actions involving mortgage-backed securities.
In May, the Department of Justice (DOJ) informed J.P. Morgan that its civil division had preliminarily concluded that it violated “certain federal securities laws” related to mortgages it sold from 2005 to 2007.
The criminal probe may represent a potential shift for the DOJ. Attorney General Eric Holder has come under sharp criticism from the political left and right for his failure to criminally charge any top executive of any financial institutions in the wake of the financial collapse.
Law professors John Yoo of the University of California at Berkeley and Robert Delahunty of the University of St. Thomas in Minneapolis recently blasted Holder for going soft on those who have given to President Barack Obama or Democrats.
“Holder’s prosecutorial practices evidence a pattern of leniency toward high-ranking corporate officers in a position to make substantial campaign contributions or with close ties to the Democratic Party,” wrote Yoo and Delahunty. “This is despite the fact that millions of Americans lost their homes, and investors incurred hundreds of billions of dollars in losses, because of alleged high-level wrongdoing by banks and lenders.”
Whether the DOJ will press criminal charges against J.P. Morgan remains to be seen. Obama has between $500,000 and $1 million with J.P. Morgan in a private client asset management account. Furthermore, in 2008, the bank’s employees donated $808,799 to Barack Obama.
J.P. Morgan CEO Jamie Dimon has visited the Obama White House at least 18 times.