At the Top, Everybody Knows Everybody

from huffpost

Posted: 10/29/2013 4:11 pm

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On 19 October 2013, Kent Cooper at Roll Call published "Mary Matalin Contributes to Ted Cruz Campaign," reporting that Ms. Matalin donated $1,000 to the Ted Cruz for Senate Campaign Committee, on August 8th. "This was the same week that Sen. Cruz was at Matalin's house in New Orleans."

That's also the house of Matalin's husband, James Carville, who was Bill Clinton's top political strategist, and who was also one of Hillary Clinton's top strategists, as well as her chief spokesperson during her 2008 Democratic primary campaign against Barack Obama. Among the other donors who were listed for Cruz during his latest financial report, the largest individual donation was "$5,000 from Alvin Dworman." The largest PAC donation was "$5,000 from American Legacy PAC." At opensecrets.org, the top sources of contributions to Mr. Cruz's political career were listed as the Club For Growth, and Senate Conservatives Fund, which together donated over a million dollars; no other entity donated even $100,000. However, as Open Secrets also explained, the #5 contributor, Goldman Sachs, also managed his money and provided his health care, and his wife is a vice president of GS. Moreover, the #17 contributor, Berkshire Hathaway (headed by a "Democrat," Warren Buffett), hired Baker Botts as their law firm, and BB was the #8 donor. So, Cruz, who led the government-shutdown and the push for a default, had bipartisan support.

Who is Alvin Dworman? He is shown as having made in 2012 many multi-thousand-dollar donations to "Josh Mandel Senate Victory Committee," Mr. Mandel being the Koch-backed Republican candidate for U.S. Senate from Ohio, running against the incumbent Democratic U.S. Senator, Ohio's Sherrod Brown, who is perhaps the most progressive member of the U.S. Senate, and who is certainly the most powerful progressive Senator, because he heads the Senate Banking Committee. Dworman also made many multi-thousand-dollar donations to the "Scott Brown for US Senate Committee," because that Republican incumbent U.S. Senator from Massachusetts was running against Democratic challenger Elizabeth Warren, who is the fastest-rising progressive in U.S. politics and even a presidential threat to the Republican Party and to Wall Street in general. Dworman also donated many times to Romney for President Inc., and made a single $25,000 donation to Romney Victory Inc. on 31 July 2012.

Dworman is the man who is widely alleged to have run Superior Bank FSB [Federal Savings Bank] when it failed and a settlement was reached with the FDIC entailing "$460 million and other consideration," so as to be able to pay the first $100,000 of each depositor's money; anything above that was not covered. As The New York Times reportedon 7 August 2001, "Mr. Dworman operated the Illinois bank from New York." However, the bank was co-owned by Dworman along with Jay Pritzker. "Mr. Pritzker and Mr. Dworman each put up half the money to buy the institution they renamed Superior in 1989 for $42 million, as part of the federal government's bailout of failed savings and loans." So: it failed yet again, this time under Dworman's management. But this wasn't the pair's first bank-mess. "In the mid-1980's, Jay Pritzker invested with Mr. Dworman in River Bank, a Manhattan savings and loan that banking regulators later threatened to seize because of what they termed mismanagement." Jay's neice, Penny Pritzker, was a board member of Superior Bank, and a member of its Audit Committee, when the bank collapsed. Also, according to the Wall Street Journal, "Ms. Pritzker served as Superior chairman [from 1991] until 1994. During that period, Superior 'embarked on a business strategy of significant growth into subprime mortgages,' which were then packaged into securities and sold to investors." So, although Dworman ran the bank, Penny Pritzker oversaw his operation of it, and the two of them agreed on what type of bank it should be, and what business model it should pursue: soliciting sub-prime mortgages from unwitting poor people to be then packaged and sold off to unwitting rich people.

On 19 May 2013, Daily Kos headlined "Penny Pritzker as an Example of the Criminality of Our Elites," and "NBBooks" reported there that, "President Obama is nominating his top fund raiser, Penny Pritzker, to be Secretary of Commerce. Incredibly - perhaps I should write, sadly - the announcement is causing hardly a stir among the liberal and progressive blogosphere. At the very least, Greg Palast's May 4, 2013 post at Smirking Chimp, 'Billionaire Bankster Breaks into Obama's Cabinet,' should be going viral." NBBooks quoted extensively from "Gus Russo's 2006 tome Supermob: How Sidney Korshak and His Criminal Associates Became America's Hidden Power Brokers." The gist of this was that Jay Pritzker got the money from the Mafia to buy Hyatt. As NBBooks summarized: "The origins of the Pritzker family fortune was [sic: 'were'] her grandfather's mob connections when he was a tax attorney for a lot of people in 'The Outfit,' the Chicago mob, beginning under Al Capone, and continuing through the 1980s. This connection to organized crime was reportedly what financed the creation of Hyatt Hotels by Penny's father." Supposedly, one Frank Buccieri happened to be the president of a company called "Frontier Finance," loan-sharks. However, Buccieri only provided the "juice": He murdered the people who couldn't pay back their loans. Jay Pritzker, the mob's tax-attorney, "controlled Frontier Finance." And, supposedly, this was how he and his friend Alvin Dworman came to buy a failed S&L and rename it Superior Bank FSB, and how Penny and Alvin ended up running it as the prototype for the type of operations that JPMorgan Chase, Bank of America, CitiGroup, Wells Fargo, and Goldman Sachs, later copied.

Subsequently, on 21 February 2011, the San Francisco Bay Citizen headlined "City Is Now Offering Social Media Giant a Tax Freeze to Move into Historic SF Mart Building," and reported that, "Alvin Dworman, the owner of a Market Street building proposed as the new headquarters for Twitter, gave sharply discounted office space in the same building to former Mayor Gavin Newsom's campaign for lieutenant governor." This wasn't Dworman's only involvement with Democrats (besides Penny Pritzker); city-data.com reports his "1989 / 1990Contributions Part 8" as including "$1000 to CRANSTON FOR SENATE '92 INC," where others donating the same amount to Alan Cranston's campaign included Robert E. Rubin, Roger C. Altman, and David Rockefeller - other banksters.

At the top, it's like an extended family, like any criminal organization actually, riven by disagreements, but united in their greed and psychopathy. It's a sort of club, but not all members of it are always friends of each other: they squabble with one-another. However, they are united in their joint effort to undermine democracy and to replace it with their own plutocratic if not kleptocratic rule.

So, that's how Senator Cruz's biggest individual contributor (and a major contributor to the Presidential campaign of Mitt Romney) was a family friend and business-partner of President Obama's U.S. Secretary of Commerce.

Senator Cruz's financial backers can virtually all be traced back to a network that was created by the Koch brothers. The two top contributors to Senator Cruz - the Club for Growth and the Senate Conservatives Fund - were both started by people who had been hired and promoted by the "charitable," "nonprofit" tax-exempt firms that had been founded, and that are controlled, by David and Charles Koch: two people who have turned lobbying and propaganda into tax-write-offs, so that you end up paying the taxes that they don't, for a government that does their bidding, even when (as with the shutdown) the opinion polls show that the public don't want the government to do that.

Welcome to post-Citizens-United U.S.A. The Republican Supreme Court has given the Kochs what they wanted; and now we are living with it - a government by a tiny elite, in which everybody knows everybody, delivering yet more privileges to themselves, while they strip the rights of everybody else, and call this the U.S.A. that the nation's Founders wanted, when those Founders actually went to war against and defeated Britain's aristocrats in a Revolution that has now been turned on its head.

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Investigative historian Eric Zuesse is the author, most recently, of They're Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST'S VENTRILOQUISTS: The Event that Created Christianity.

The lies that will kill America

from salon.com

Pundits run to the defense of a massive bank and other tales of the lapdog media

BY BILL MOYERS AND MICHAEL WINSHIP

 
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TOPICS: JPMORGAN, JPMORGAN CHASE, JAMIE DIMON, MEDIA, SEAN HANNITY, BILLMOYERS.COM, NEWS, POLITICS NEWS

JPMorgan CEO Jamie Dimon (Wikimedia)

This piece originally appeared on BillMoyers.com.

Here in Manhattan the other day, you couldn’t miss it — the big bold headline across the front page of the tabloid New York Post,  screaming one of those sick, slick lies that are a trademark of Rupert Murdoch’s right wing media empire. There was Uncle Sam, brandishing a revolver and wearing a burglar’s mask. “UNCLE SCAM,” the headline shouted. “U.S. robs bank of $13 billion.”

Say what?  Pure whitewash, and Murdoch’s minions know it. That $13 billion dollars is the settlement JPMorgan Chase, the country’s biggest bank, is negotiating with the government to settle its own rip-off of American homeowners and investors — those shady practices that five years ago helped trigger the financial meltdown, including manipulating mortgages and sending millions of Americans into bankruptcy or foreclosure.  If anybody’s been robbed it’s not JPMorgan Chase, which can absorb the loss and probably take a tax write-off for at least part of it. No, it’s the American public. In addition to financial heartache we still have been denied the satisfaction of seeing jail time for any of the banksters who put our feet in cement and pushed us off the cliff.

This isn’t the only scandal JPMorgan Chase is juggling. A $6 billion settlement with institutional investors is in the works and criminal charges may still be filed in California.  The bank is under investigation on so many fronts it’s hard to keep them sorted out – everything from deceptive sales in its credit card unit to Bernie Madoff’s Ponzi scheme to the criminal manipulation of energy markets and bribing Chinese officials by offering jobs to their kids.

Nor is JPMorgan Chase the only culprit under scrutiny.  Bank of America was found guilty just this week of civil fraud, and a gaggle of other banks is being investigated by the government for mortgage fraud.  No wonder the camp followers at Fox News, the Wall Street Journal, CNBC and other cheerleaders have ganged up to whitewash the banks.  If justice is somehow served, this could be the biggest egg yet across the smug face of unfettered, unchecked, unaccountable capitalism.

One face in particular: Jamie Dimon, the chairman and CEO of JPMorgan Chase. One of Murdoch’s Fox Business News hosts, Charlie Gasparino, claims the Feds are on a witch hunt against Dimon for criticizing President Obama, whose administration, we are told, “is brutally determined and efficient when it comes to squashing those who oppose their policies.”  But hold on: Dimon is a Democrat, said to be Obama’s favorite banker, with so much entree he’s been doing his own negotiating with the attorney general of the United States.

Western Credit-Rating Fraud Exposed — Again

from wallstreetsectorselector.com

SPECIAL GUEST QUARTERS | JEFF NIELSON | OCTOBER 21, 2013 12:42 PM

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The “good news” is that the latest Act of “The U.S. Debt-Ceiling Farce” has mercifully ended, and the curtain has come down on this puppet-theater.

The bad news is that it ended (absurdly) with a mere three-month reprieve – before we get literally an instant replay of this contrived posturing and puffery.

Apart from the outrageous irresponsibility of the U.S.’s elected representatives staging these contrived “crises” (instead of doing their jobs); these quasi “shutdowns” of the U.S. government do serious short-term harm to the already-crippled U.S. economy – meaning medium- and long-term economic consequences from this staged theater. Yet as the dust settles from the latest Act; we see essentially zero reaction in the international financial community (with one, small exception).

The world’s largest economy, sitting with the largest debts and largest deficits in the History of the World openly “debates” whether or not to continue paying its bills, it ends up (supposedly) only hours away from official debt-default, and there is no reaction? Having regularly used words such as “drones” and “parrots” to characterize the ever-vigilant minions of the Western, Corporate Media; this one event alone provides absolute vindication.

During the worst days of the “Euro Debt-Crisis” (so far); European governments received regular downgrades to their sovereign debt on only the flimsiest of pretexts, sometimes due to nothing more than the (fraudulent) manipulation of credit-default swap rates on that debt (i.e. the multi-trillion dollar bets made that these governments will default on that debt).

The “insurance market” (credit default swaps) for the debt of many European debtors is greater than the actual debts themselves. The Tail does “wag the Dog” in our crime-ridden financial markets. And by fraudulently manipulating credit-default swap rates; Western banksters can (and do) manufacture downgrades on Euro economies (or vice versa) – and by doing so, they can drive interest rates to literally any number they desire…but they don’t do this in the USA.

With the U.S. government a mere hours away from debt-default, and sitting with (in actual fact) more than $200 trillion in debts/obligations; the U.S.’s Teflon, “AAA” credit rating remains intact. An economy which the Chairman of the Federal Reserve has now acknowledged is a Ponzi-scheme, retains a carved-in-stone “AAA” credit rating.

The obvious question is: would/will the U.S. economy be “downgraded” at all after it defaults on its astronomical debts and liabilities?

For those comatose members of the general public who still snicker whenever they see/hear the word “conspiracy”; spend just two minutes observing the Ultimate Accomplices of financial crime: the Western credit-rating agencies. Right up until (literally) the day after the made-in-Wall-Street U.S. housing (NYSEARCA:XHB) bubble imploded; these credit rating Accomplices were rubber-stamping virtually all of the Bankster’s “securitized” mortgage-fraud products “AAA”.

This was ratings fraud: ratings agencies selling these (bogus) “AAA” ratings to Wall Street – which those Banksters then used to lure-in chumps for $trillions in securities fraud. And there wasn’t even any attempt made to hide the fraud. The ratings agencies openly acknowledged that they allowed their “clients” (the Wall Street Banksters) to tell them how to rate their fraud-products.

Not only did these (so-called) “credit rating” agencies not even employ enough staff to thoroughly/properly examine all the “products” on which they issued ratings; they openly acknowledged that they didn’t even understand some of the more convoluted Wall Street scams – and so they simply accepted the Bankster’s own explanations, essentially allowing them to “rate” their own fraud-products.

One obvious question arises: how do companies selling phony ratings on fraudulent financial products even remain in business? The answer to that question comes in the disingenuous legal defense which has been (successfully) used by these Accomplices when they have been sued over their bogus “ratings”: the small-print disclaimer at the bottom of all these constantly-hyped “credit ratings” dispensed by these companies.

It turns out that the credit ratings of the world’s most prestigious credit rating agencies are purely for entertainment purposes – and (supposedly) they aren’t intended to actually be used in conducting business (i.e. buying and selling the financial products these companies rate).

Investors (i.e Chumps) think they are obtaining some sort of “financial warranty” with these credit ratings, when (according to the ratings agencies themselves) their credit ratings have no more significance than attaching a Happy-Face “sticker”. Let me summarize the scam operated by the One Bank with its credit-ratings tentacle by providing a generic illustration of this scam in action:

THIS IS THE MOST-IMPORTANT RATING IN THE WORLD [credit rating]…

[fine print at the bottom:] Just kidding!

So (when it wants to) the One Bank uses these credit ratings as pretexts (or cover) for whatever market-manipulation it chooses to perpetrate – generally markets highly sensitive to interest rates; since those numbers can be fixed precisely through these bogus ratings. The rest of the time; these “credit ratings” are treated as what they really are: garbage.

Even the Corporate Media inadvertently blurted out the dirty-little-secret of these credit ratings agencies. For the last forty years; the credit ratings of Western credit ratings agencies have been totally irrelevant with respect to sovereign debt markets:

…Bond investors needn’t worry that a rating cut will hurt returns. About half the time, government bond yields move in the opposite direction suggested by new ratings, according to data compiled by Bloomberg on 314 upgrades, downgrades, and outlook changes going back to 1974. [emphasis mine]

Let me restate this to properly explain its importance. For the past forty years; there has been virtually zero correlation between Western credit ratings and the direction of interest rates derived from those ratings. They are treated as totally irrelevant junk, by companies which explicitly state that no one should ever rely upon their ratings, and by the marketplace as a whole.

Yet the same Corporate Media which compiled this data seemed to experience amnesia when discussing these very same credit ratings during the “Euro Debt Crisis” (and Wall Street’s economic terrorism that accompanied it). When the One Bank wanted to drive Greece into bankruptcy, and several other European nations to near-bankruptcy; the process was simple and repetitive.

First the credit-ratings tentacle would issue a “downgrade” on the debt of a particular Euro nation; parroted by a Corporate Media which treated (and continues to treat) these ratings as the Final Word on everything.

Then the Big Bank tentacle would use that downgrade as an excuse to manipulate credit-default swap rates much, much higher on this Euro debt. Then the Bond-Trading tentacle would use the (phony) credit rating and the (manipulated) credit-default swap rate as “justification” for demanding much higher rates of interest – via the bond-auction process.

When you are a financial entity which (by itself) controls 40% of the global economy – and thusall of the “moving parts” in this scam – perpetrating economic terrorism of this nature is Child’s Play.

This brings us to the U.S. Debt-Ceiling Farce, and the fraud-by-omission of these credit ratings agencies; the refusal to downgrade the U.S. after the non-deal which just took place. Only a totally Machiavellian propaganda machine could characterize the U.S.’s Political Puppets agreeing to disagree as a “deal”.

Because they couldn’t agree on anything; the two platoons of Puppets just postponed their squabbling for three months. And in order to do so; they simply (but only temporarily) erased the totally arbitrary/totally unnecessary “debt ceiling”. Yet here is how one of the One Bank’s credit ratings mouthpieces characterized this same Farce, in refusing to alter its phony (and irrelevant) “AAA” credit rating on U.S. sovereign debt:

Moody’s Investors Service struck a “glass half full” view of the U.S. political showdown, saying the last-minute deal to avert a debt-ceiling collision signals politicians will ensure the government meets its obligations to creditors…

In fact; this is exactly the opposite of what we see before us. The Hatfields and McCoys were nowhere close to agreeing on anything, but unlike previous Acts of “The Farce”; they only postponed the next Act by three months, instead of the usual 12 to 24 months.

In no possible world could this be interpreted as politicians acting in a responsible manner toward the U.S.’s multi-trillion dollar creditors. Rather; it shows an obvious intention to stage the next exercise in brinksmanship as soon as possible. And if the Puppets weren’t intending to take breaks to stuff themselves silly with turkey twice in the interim; the next “showdown” would have likely come even sooner.

Responsible debtors do not ever play “Russian Roulette” with their creditors when it comes to choosing to default on debt. None but the most-irresponsible of Debtors would ever schedule such games of Russian Roulette. And now with the Puppets scheduling their Roulette even more frequently; we have a nonsensical (and irrelevant) ratings agencies applauding their responsibility.

But there was one (as yet) quiet voice which did not sing along with the Western media’s fantasy-chorus. The discussion of the significance of that Dissenting Voice will take place in a sequel to this commentary.

Contributed by Jeff Nielson, Bullion Bulls Canada

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U.S. Deal With JPMorgan Spurred by a Phone Call

from nytimes

BY BEN PROTESS AND JESSICA SILVER-GREENBERG

Justin Sullivan/Getty ImagesDuring talks over a tentative $13 billion settlement, Attorney General Eric H. Holder Jr. refused to offer JPMorgan Chase a so-called nonprosecution agreement that would halt an inquiry in California.

At a museum on Fifth Avenue, in a sparkling reception hall overlooking Central Park, Jamie Dimon convened his top executives and their spouses last month for the Wall Street equivalent of a pep rally.

“I’m proud of the company,” Mr. Dimon, the chief executive of JPMorgan Chase, said at the party, held at the Museum of the City of New York, a mansion with a marble staircase and French doors. According to people who attended, Mr. Dimon said, “We will get through all of this,” referring to the legal and regulatory woes dogging the nation’s biggest bank.

The next week, Mr. Dimon aimed to put one of those woes behind him.

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On Sept. 24, four hours before the Justice Department was planning to hold a news conference to announce civil charges against the bank over its sale of troubled mortgage investments, Mr. Dimon personally called one of Attorney General Eric H. Holder Jr.’s top lieutenants to reopen settlement talks, people briefed on the talks said. The rare outreach from a Wall Street C.E.O. scuttled the news conference and set in motion weeks of negotiations that have culminated in a tentative $13 billion deal, according to the people briefed on the talks.

An account of the negotiations, based on interviews with these people, pulls back a curtain on the private wrangling to illuminate how the bank and the government managed to negotiate what would be a record deal. It also sheds new light on the hands-on role that Mr. Dimon and Mr. Holder played in the talks. And it highlights how Mr. Dimon has so far maintained the support of the bank’s board when other Wall Street chiefs were derailed by the financial crisis.

Much of the deal came down to dollars and cents. Mr. Dimon, the people said, signaled during that Sept. 24 call that he was willing to increase JPMorgan’s offer to settle an array of state and federal investigations into the bank’s sale of troubled mortgage securities before the financial crisis. The government, these people said, had already balked at the bank’s two initial offers: $1 billion and $3 billion.

And so that same week, Mr. Dimon traveled to the Justice Department in Washington for a meeting with Mr. Holder that underscored how expensive the healing process had become. At the meeting, the people briefed on the talks said, JPMorgan executives raised the offer to $11 billion, $4 billion of which would serve as relief to struggling homeowners.

But Mr. Holder wanted more money to resolve the civil cases, the people said. And despite the bank’s requests, he refused to provide JPMorgan a so-called nonprosecution agreement that would halt an investigation from prosecutors in California, who were scrutinizing the bank’s mortgage securities. Instead, the people said, he informed Mr. Dimon that the Justice Department wanted JPMorgan to plead guilty to a criminal charge in that case, an unusual show of force against a Wall Street bank.

While they were unable to strike a deal that day, Mr. Dimon and Mr. Holder kept in close touch, talking five times in the last two weeks. Late Friday, on the last of those calls, they finally reached the tentative deal: $13 billion and no promise of dropping the criminal investigation.

The deal, which could still fall apart over issues like how much wrongdoing the bank would admit, would be a record accord for the Justice Department. A single corporation has never before paid this much to settle.

The deal might also embolden the Justice Department and set a precedent for the agency’s investigations of Wall Street. Using the JPMorgan case as a template, and relying on a law that extends the legal deadline for filing certain financial fraud cases to 10 years from five, the Justice Department is planning to take action against other big banks suspected of selling troubled mortgage securities.

For JPMorgan, once known as Washington’s favorite bank, the deal would be a stunning reversal of fortune.

Complicating matters for the bank, Mr. Dimon is inextricably linked to the settlement. With the government, he assumed the role of chief negotiator. And at the bank, as illustrated at the museum gathering last month, he remains its chief cheerleader.

Mike Segar/ReutersThe bank’s headquarters in Manhattan.

He has embraced the dual roles, and the mantle of peacemaker, as the bank faces scrutiny from across the government. At least seven federal agencies, several state regulators and two foreign countries are investigating the bank. The multifront campaign includes everything from a $6 billion trading loss in London last year to the hiring of well-connected employees in China.

The mortgage case presented the greatest test. Not only are several state and federal agencies involved, but the cases stem from a politically charged issue at the center of the financial crisis: the mortgage bubble.

When credit flowed freely in the run-up to the crisis, banks routinely bundled subprime and other risky loans into securities that they sold to investors. When homeowners fell into foreclosure and the investments soured, it caused billions of dollars in losses for the investors. In turn, government authorities began to question whether the banks properly warned of the risks.

Banks have countered that the risks were fully disclosed and that the investors, including pension funds and other institutions, were sophisticated entities.

Some defense lawyers also question whether the government is going too far. A $13 billion penalty would be more than half of JPMorgan’s profit last year. And some of the mortgage securities in question are not JPMorgan’s. Rather, the bank inherited the liabilities when it bought Bear Stearns and Washington Mutual in 2008, at the height of the financial crisis.

Even now, a significant obstacle stands in the way of a deal: whether JPMorgan will admit to all of the improper actions cited by the Justice Department. Banks are typically loath to acknowledge wrongdoing, fearing it could expose them to shareholder lawsuits.

A spokesman for JPMorgan declined to comment. A Justice Department spokeswoman did not return a request for comment.

The Justice Department’s negotiations with JPMorgan began in earnest this summer. In July, prosecutors from the civil division of the United States attorney’s office in Sacramento made a presentation to JPMorgan that outlined the case against the bank.

Tony West, the associate attorney general, then had a meeting with the bank in his conference room at the Justice Department in Washington. It was at that meeting in July that the talks broadened to include other mortgage-related cases.

In addition to the civil and criminal cases in Sacramento, which focused on the bank’s own mortgage securities, other cases zeroed in on securities sold by Bear Stearns and Washington Mutual. The Justice Department’s civil division had an inquiry into Bear Stearns, prosecutors in Pennsylvania were scrutinizing deals from Washington Mutual and New York’s attorney general had already filed a lawsuit involving Bear Stearns.

Then, about the time of another meeting in early August, JPMorgan asked to include a lawsuit from the Federal Housing Finance Agency. The agency, which sued JPMorgan over loans the bank and Bear Stearns had sold to Fannie Mae andFreddie Mac, would go on to make up a big part of the $13 billion pact.

But at that point, one person briefed on the talks said, the bank was offering only $1 billion to settle. Another person said the $1 billion offer was not meant to include the F.H.F.A. case.

Either way, by mid-August, settlement talks had stalled somewhat. They were far apart on the monetary penalty, and JPMorgan continued to push for the Sacramento prosecutors to drop the criminal inquiry, a request the government resisted.

The criminal case was still at an early stage. But the prosecutors in Sacramento had all but finished their civil lawsuit against the bank. And so they informed the bank that a lawsuit was coming on Sept. 24.

In the lead-up to that deadline, JPMorgan’s lawyers raised the offer to $3 billion. They conveyed it to Mr. West, who became the central negotiator for the government. But Mr. Holder rejected the offer, telling colleagues it was still too low.

In the days that followed, the Justice Department quietly planned the news conference to announce the civil case.

Benjamin B. Wagner, the United States attorney in Sacramento whose investigation into the bank’s mortgage practices led to the charges, boarded a plane to Washington so he could attend a news conference the next day. And during a 45-minute meeting at the Justice Department, Mr. Holder gathered with top aides in his fifth-floor conference room to prepare for the news conference.

But at 8 a.m. on Sept. 24, just four hours before the scheduled news conference, Mr. West received a call from an unexpected source: Mr. Dimon.

“I think we should meet in person,” Mr. Dimon said, one person briefed on the call said.

The meeting took place in Mr. Holder’s conference room two days later. Mr. Dimon’s entourage included his general counsel, Stephen Cutler, and his outside counsel, H. Rodgin Cohen of Sullivan & Cromwell.

Progress was made. The bank had agreed to enhance the offer to $11 billion, including the $4 billion for homeowners. And both sides discussed how to deploy the relief, including through reductions in mortgage balances. But a deal had yet to emerge. The Justice Department still wanted more money. And it informed the bank that to resolve the criminal investigation in Sacramento, it should be pleading guilty to a criminal charge. The bank balked.

For days, little happened. The government shutdown complicated the talks, as many of the civil prosecutors in Sacramento were furloughed.

But Mr. Dimon kept negotiating. He had the first of five calls with Mr. Holder in early October. After the bank’s board met last week, Mr. Dimon again contacted Mr. Holder.

It was not until Friday that JPMorgan backed down from its demand that the criminal case go away. Rather than resolve that case now, JPMorgan decided to let it play out. One person close to the bank noted that bank lawyers were skeptical it would actually produce charges. If criminal charges arise, it could mean additional fines and a deal that requires an independent monitor to keep an eye on the bank.

On a final call that Friday night — Mr. Cutler, Mr. West, Mr. Holder and Mr. Dimon all joined the call — the C.E.O. asked, “What will it take to get this done?”

Mr. Holder informed him that the government would not accept less than $13 billion. And with that, they had a tentative deal.

Mr. Holder and Mr. Dimon left Mr. Cutler and Mr. West to hash out the nuances.

Tags

Banking and Financial Institutions, Bear Stearns Cos, Dimon, James, Federal Housing Finance Agency, Holder, Eric H Jr, JPMorgan Chase & Company, Justice Department, Mortgage-Backed Securities,Securities and Commodities Violations, Subprime Mortgage Crisis, Suits and Litigation (Civil),Washington Mutual Inc

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