How Is JPMorgan Chase Expanding While It’s Still on Probation for a Felony?

By Pam Martens: March 18, 2019 ~

Jamie Dimon, Chairman and CEO of JPMorgan Chase, Testifying Before Congress

Jamie Dimon, Chairman and CEO of JPMorgan Chase, Testifying Before Congress

On April 19, 2018, JPMorgan Chase announced it would be opening “up to 70 new branches and hiring up to 700 new employees” in northern Virginia, Washington D.C. and Maryland.” In the same announcement, the bank said it currently had “5,130 branches in 23 U.S. states and plans to open up to 400 new branches…”

At the time of that announcement, the bank was under a deferred criminal prosecution agreement with the U.S. Justice Department and on probation – a probation which continues to this day.

Being prosecuted multiple times for felonies by the Justice Department does not appear to have clipped the wings of JPMorgan’s expansion plans under the Trump administration. According to current data from the Federal Deposit Insurance Corporation, JPMorgan Chase’s domestic bank branches have already grown by 8 branches to a total of 5,138 since the end of 2017.

In October of last year, Bloomberg News reporter Michelle Davis broke the story that JPMorgan Chase had secretly been under a Federal leash that prevented it from expanding. Davis wrote: “…Obama administration regulators prevented the bank from opening branches in new states as punishment for violating banking rules, according to people familiar with the matter. JPMorgan’s ambitious plan to expand nationally, announced earlier this year, was made possible by the Trump administration’s rollback of those restraints….”

Under the unwatchful eye of Jamie Dimon, Chairman and CEO of JPMorgan Chase, the Wall Street bank has received an unprecedented three felony counts in the past five years, to which it pleaded guilty. That’s three felonies more than the bank pleaded guilty to in its prior 100 years of existence.

In a rational Federal regulatory system that strives to ensure the safety and soundness of America’s deposit-taking banks, Dimon would have been forced out when the bank admitted guilt to the first two felony counts in 2014 for its dubious role in handling the business bank account of Ponzi-schemer Bernie Madoff. If not then, perhaps the following year when it pleaded guilty to its role in a bank cartel (actually called “The Cartel”) that rigged the foreign currency market. In the Forex matter, the bank admitted guilt to one count and received a deferred prosecution agreement along with other banks involved in the matter. The U.S. Department of Justice announced that agreement on May 20, 2015 but the U.S. District Court did not approve the agreement until January 2017. Thus, the clock did not start ticking on the three-year probation period until then. That means that JPMorgan’s probation period will not end until January 2020 and it has confirmed that fact to be true in  its most recent 10-K filing with the Securities and Exchange Commission. It writes:

“The Firm previously reported settlements with certain government authorities relating to its foreign exchange (‘FX’) sales and trading activities and controls related to those activities. FX-related investigations and inquiries by government authorities, including competition authorities, are ongoing, and the Firm is cooperating with and working to resolve those matters. In May 2015, the Firm pleaded guilty to a single violation of federal antitrust law. In January 2017, the Firm was sentenced, with judgment entered thereafter and a term of probation ending in January 2020.”

There is no guarantee, however, that new cartel charges will not emerge against the bank. In the same 10-K, the bank reports the following:

“Various authorities, including the Department of Justice’s Criminal Division, are conducting investigations relating to trading practices in the precious metals markets and related conduct. The Firm is responding to and cooperating with these investigations.”

President Donald Trump appears to want to be a one-man act when it comes to Federal law and substituting his own demands over those of Federal regulatory bodies. In this particular case, the safety and soundness of nothing less than the U.S. banking system is at risk. Let’s not forget that it was just seven years ago that JPMorgan Chase was caught using depositors’ funds to engage in high-risk derivative trades in London in what became known as the London Whale scandal. The bank lost at least $6.2 billion of depositors’ money in that fiasco.

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