Barney Frank: JPMorgan Doesn’t Deserve To Be Sued
The architect of post-crisis financial reform is siding with an unlikely ally: JPMorgan Chase.
Congressman Barney Frank, the co-architect of the Dodd–Frank Wall StreetReform and Consumer Protection Act (or Dodd-Frank Act), says JPMorgan shouldn’t be prosecuted over its acquisition of Bear Stearns.
Frank, former chair the Financial Services Committee, is referring to the recent lawsuit filed by New York Attorney General Eric Schneiderman. Earlier this month the AG sued JPM for fraudulent conduct he said Bear Stearns engaged in prior to banks purchase of the firm in 2008.
In a statement today cited by MarketWatch, Frank said Schneiderman’s suit fits the description of allowing no good deed to go unpunished. Frank said:
Having been Chairman of the House Financial Services Committee at the time that this occurred, I know that J.P. Morgan Chase acted at the strong request of the Federal Reserve and the Secretary of the Treasury during the Bush administration. The federal officials involved believed that the failure of Bear Stearns would have terribly negative consequences for the economy, and they urged J.P. Morgan Chase to do a good deed by taking over an institution which, I believe, the bank would never have sought to acquire absent that urging. The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished.
According to the report, Frank adds that deals where the government urged buyers to buy broken financial firms should not be prosecuted. That would include Bank of America’s purchase of Merrill Lynch–but not its disastrous Countrywide acquisition.