The Justice Department finalized a record $13-billion settlement with JPMorgan Chase on Tuesday for misrepresenting the quality of mortgages in mortgage-backed securities in the lead-up to the financial crisis.

While the fine marks the largest the DoJ has brought against a single corporation, critics charge that the amount is not as big as it seems, and that the settlement leaves individuals responsible for wrongdoing with pockets stuffed with "ill-gotten profits" and out of jail.

“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability."

However, in the weeks beore the DoJ decision, when news of a $13 billion settlement was being speculated, Rolling Stone's Matt Taibbi wrote that

It sounds like a lot of money, but there are myriad deceptions behind the sensational headline.[...]

[T]he settlement is only $9 billion in cash, with $4 billion earmarked for "mortgage relief." Again, as Better Markets noted, we've seen settlements with orders of mortgage relief before, and banks seem to have many canny ways of getting out of the spirit of these requirements.

In the foreclosure settlement, most of the ordered "relief" eventually came in the form of short sales, with banks letting people sell their underwater houses and move out without paying for the loss in home value. That's better than nothing, but it's something very different than a bank working to help families stay in their homes.

There's also the matter of the remaining $9 billion in fines being tax deductible (meaning we're subsidizing the settlement), and the fact that Chase is reportedly trying to get the FDIC to assume some of Washington Mutual's liability.

[T]he key to this whole thing is that the punishment is just money, and not a crippling amount, and not from any individual's pocket, either.

Echoing some of Taibbi's points is David Callahan, who writes in Demos' Policy Shop blog on Tuesday that the $13 billion figure is unlikely to "Scare Wall Street's Cowboys," and notes that

the people who committed financial crimes at JP Morgan during boom times pulled in huge bonuses thanks to ill-gotten profits -- but no specific individuals at the bank will be asked to pay back a dime of that personal wealth. [...]

[Y]et no actual people will end up with a rap sheet -- or, as is routine, will even be cited by name in the final settlement. [...]

[And] the wrongdoers [like CEO Jamie Dimon] not only keep their money and don't face prison time, they also keep their jobs.

In addition, Naked Capitalism's Yves Smith wrote ahead of the DoJ settlement:

the American public’s instinct, that even a really big-sounding number isn’t adequate given all the damage done in the financial crisis, has been confirmed, at least on a general basis, by one of the most highly respected economists in the world, Andrew Haldane, the executive director of the financial stability at the Bank of England. Haldane ascertained that no fine was big enough because the banks couldn’t begin to pay for the damage they’d done. The alternative, in that case, is prohibition and other forms of aggressive regulation. Needless to say, we haven’t seen anything like that either.

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