Four years ago, JPMorgan Chase reached a then-record settlement with the Department of Justice after, among other things, the bank received a copy of a U.S. attorney’s draft complaint documenting its alleged role in underwriting fraudulent securities in the years leading up to the 2008 financial crisis. Following the bank’s $13 billion financial agreement, the draft complaint was never filed. Then the bank paid another settlement to prevent a separate legal case from potentially unearthing it. The contents of the draft complaint have long been a financial-crisis mystery, a Great White Whale of a document. At least until now.
In November 2013, JPMorgan Chase, the nation’s largest bank, agreed to pay a then-record $13 billion fine to federal and state authorities in order to settle claims that it had misled investors in the years leading up to the financial crisis. JPMorgan Chase’s settlement raised many eyebrows on Wall Street. The huge settlement appeared inconsistent with the oft-repeated narrative of the bank’s heroism during the crisis. JPMorgan Chase and its C.E.O., Jamie Dimon, after all, were appropriately lauded for swooping in to save both Bear Stearns and Washington Mutual, acts of financial patriotism that certainly helped prevent the U.S. economy from further doubling over upon itself.
But people wondered why one of Wall Street’s ostensible white knights would pay $13 billion—$9 billion of its shareholders’ cash, plus another $4 billion in mortgage relief—in a government case. During a conference call on the morning that the settlement was announced, Mike Mayo, a veteran Wall Street analyst, asked Dimon and bank C.F.O. Marianne Lake the question that appeared to be on the minds of everyone in the financial-services industry: “How is it that JPMorgan got front and center with this issue? That it’s the Department of Justice working out an agreement with JPMorgan when JPMorgan performed so well during the crisis, yet here’s the one bank that’s paying a $13 billion fine?” Without missing a beat, Dimon retorted, “Mike, you’ve got to ask them, O.K.?” In other words, Dimon seemed to be saying to Mayo, as he later put it in Davos, that the whole thing was “unfair.”