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Senators knock federal regulators for letting JPMorgan off the hook

July 31, 2013|By Michael Hiltzik
  • Sen. Elizabeth Warren (D-Mass.) has asked the Federal Energy Regulatory Commission to justify its settlement with JPMorgan -- a $410-million penalty that includes no criminal referrals.
Sen. Elizabeth Warren (D-Mass.) has asked the Federal Energy Regulatory… (Chip Somodevilla / Getty…)

The egregiously light wrist-slap that federal regulators gave to JPMorgan Chase & Co. over its $125-million rip-off of California consumers has drawn the attention of Sen. Elizabeth Warren (D-Mass).

The first-term senator, who has already made a mark in Washington for her no-nonsense questioning of financial regulators, has asked the Federal Energy Regulatory Commission to justify its settlement -- a $410-million penalty that includes no criminal referrals, even though FERC identified three energy traders and a top JPMorgan executive whose fingerprints were all over the scheme.

Warren raised her questions in a letter she issued to FERC Chairman Jon Wellinghoff, co-written with Sen. Ed Markey (D-Mass.).

Warren and Markey raise several issues I've discussed in my columns about JPMorgan's scam and this settlement. They point out that the $410 million is a tiny percentage of JPMorgan's profits. They ask why no action has been taken against the JPMorgan executives who perpetrated the scheme, or who interfered with FERC's investigation. I chronicled the latter behavior in a column last September, and explained the original scam in a column last July.

The senators also note that JPMorgan may have evaded FERC's most stringent enforcement action -- its six-month suspension of JPMorgan's electrical trading rights in California -- via another scam. I reported on that a week ago. 

Their bottom line: "Why was JPMorgan permitted to avoid an admission of guilt in this case?" Good question, and one that points to the real issue: What will it take for regulators to really lower the boom on criminal activity by corporations? Here's a starting point: Imposing financial penalties that have no impact on guilty executives has no deterrent effect. Kudos to Warren and Markey for pointing that out.


Ban JPMorgan from the electricity business

How JPMorgan interfered with federal regulators

Manipulation of California markets gives consumers a jolt

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