‘There are more big paydays to come.”
These words come from New York Attorney General Eric Schneiderman this week as he celebrates the shakedown of a successful American financial institution.
By shakedown, we mean the $13 billion JP Morgan Chase agreed to pay in a deal with the Justice Department to settle claims stemming from the sale of mortgage-backed securities. Under the terms of this agreement, JP Morgan will pay $613 million into the coffers of New York state, the bulk of which will be spent as Schneiderman directs on programs to help homeowners.
On top of this, JP Morgan will also shell out $387 million to low-income homeowners hit by Superstorm Sandy. The state’s legal reasoning is apparently that our banks must also be held liable for the weather.
We note that just a day after Schneiderman hailed the looting of JP Morgan, he announced a $20,000 settlement with an owner of four gas stations in Westchester accused of gouging customers after Sandy. Apparently the attorney general is not a man who sees the irony: If it’s dishonest for a gas station to take advantage of people hit by a natural disaster, is it any less dishonest to get money from a bank by putting the gun of litigation to its head and shouting “settle”?
What worries us is that JP Morgan seems to be the beginning of a new era of plunder-by-attorney general. The operative phrases here are Schneiderman’s references to “more big paydays to come” and “more banks to follow.” Sadly this promise is one we expect Schneiderman to keep.