Homeowner Struggles Continue as Wall Street Profits Soar
JP Morgan profits, CEO pay at record high as homeowners continue to struggle
In a quarterly earnings report on Friday, Wall Street giant JP Morgan Chase announced it smashed previous records by posting $5.3 billion in profits for the third quarter—up 36 percent from the same period last year.
Talking about the enormous profit-surge, Chief Executive Jamie Dimon said the housing market 'had turned the corner' and seemed to downplay recent investigations into fraud surrounding trading practices at the bank.
But, as Firedoglake's David Dayen points out, the idea that the mortgage crisis has ended for millions of American homeowners depends on one's perspective:
So yes, for BANKS, housing has turned the corner. The refinance boom has inflated profits, and all of the artificial constructs on housing have stabilized prices – the 14 million vacant homes, many of them off the market; the scooping up of foreclosed properties by institutional investors paying cash, which is setting a market floor; the preferences on short sales over foreclosures and the facilitation of those short sales into the hands of investors. The foreclosure rate decline is an artifact of short sales, where the borrower still loses their home, and the lack of due process in non-judicial states, with the euphemism of “working through the backlog” used in place of “allowing illegal actions to continue.”
In short, writes Dayen, "Banks have gotten well; the homeowner has not."
To date, no Wall Street bank or high level executives have been held to acccount for the wreckless practices that cause the financial crisis in 2008. Still, speaking at a Council on Foreign Relations event in Washington this week, Dimon derided the US government's recent (and to many observers mild) pursuit of Wall Street crimes and malpractice.
Last week, the New York state attorney general filed a lawsuit against Bear Stearns & Co, now under the umbrella of JP Morgan Chase for defrauding investors who bought sour mortgage-backed securities leading up to the mortgage crisis.
He later added, "Only when I come to Washington do people act like making a mistake should never happen,” referring to criticisms following the bank's $5 billion dollar loss in the more recent London Whale debacle.
"I'm a big boy. I'll survive," he said. "But I think the government should think twice before they punish business every single time things go wrong," Dimon said referring to the suit.
In a seemingly related side note, a new analysis released Tuesday from the New York State Comptroller, pay for Wall Street bankers has recently returned to record levels.
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