Barney Frank—Democratic congressman, co-author of the Dodd-Frank Wall Street Reform and Consumer Protection Act and champion of financial reform—thinks the government is being too hard on the banks.
On Monday, Frank defended JPMorgan Chase & Co. in a statement, saying that the government shouldn’t try to punish the country’s largest bank for the alleged misdeeds of a bank it acquired during the financial crisis.
On Oct. 1, N.Y. Attorney General Eric Schneiderman filed a lawsuit against JPMorgan, accusing Bear Stearns, which JPMorgan absorbed in 2008, of defrauding investors with mortgage-backed securities that it did not inspect for quality.
However, because JPMorgan acquired Bear Stearns at the urging of the federal government, Frank says he feels it’s unfair to now punish the bank for Bear Stearns’ misbehavior.
"The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished," Frank said in his statement.
Earlier this month, JPMorgan CEO Jamie Dimon called the lawsuit unfair, saying his company is still paying the price for doing the Federal Reserve a “favor” by absorbing Bear Stearns.
Former N.Y. Attorney General Eliot Spitzer is on Schneiderman’s side. "It is a necessary action to bring accountability for the mortgage meltdown and the financial collapse,” Spitzer said in a statement. “Widespread misconduct should not disappear simply because one bank has been acquired by another."
Read more at Thomson Reuters.
For more InsideCounsel coverage of lawsuits related to the financial crisis, see below:
Bank of America pays $2.43 billion in shareholder suit settlement
Lehman Brothers to pay another $10.5 billion to creditors
Citigroup will pay $590 million in settlement related to financial crisis
