This is not the first time California Senator and Presidential contender, Kamala Harris, has taken off the gloves with JPMorgan Chase CEO, Jamie Dimon.
In her January, 2019 book, “The Truths We Hold: An American Journey” Harris writes as California Attorney General, she fought Dimon—CEO of the biggest bank in the country– and his team of subprime mortgage bond salesmen, whose greed contributed the 2008 Great Recession by preying on Americans with low FICO scores–including immigrants—by selling them multiple homes at teaser rates that began to spike as the housing bubble burst and housing prices tanked.
Standard & Poor’s and Moody’s fraudulently rated the subprime mortgage bonds as “Triple A” investments, while the bonds were nothing more than “B minus-rated” junk.
When the bad loans came due in larger and larger numbers before the housing bubble burst and the global economy crashed in 2008, entire swaths of Middle America–especially in Nevada, California and Florida–looked like ghost towns as homeowners abandoned their homes, due to escalating mortgage interest rates that climbed after the initial teaser rates expired.
“You’re Stealing Money from My Shareholders”
Harris describes her role as California’s Attorney General in the multistate mortgage settlement she arranged with JPMorgan in her book, which was published in January, 2019.
She tells the story of Wall Street powerhouse, Jamie Dimon, screaming at her while Harris sued JPMorgan and other banks following the recession.
“You’re stealing money from my shareholders, Dimon screamed,” to which Harris replied, “My shareholders are the people of California. Come down here and see how you robbed them.”
Crumbs on the Table
The Wall Street Journal reports “under the initial settlement offer, California would have received between $2 billion and $4 billion, which Harris calls “crumbs on the table’ that would have failed to properly compensate homeowners.”
The agreement involved 49 states and the District of Columbia and five major banks including, JPMorgan Chase, Wells Fargo and others,” The Journal reports.
“She pulled her state out of the settlement negotiations, a decision that prompted then California Gov. Jerry Brown to tell her: “I hope you know what you’re doing.”
“Two weeks later, the five banks relented and eventually agreed to a settlement that year, which ultimately provided about $25 billion in gross relief to homeowners. California’s share of the deal reached $20 billion in aid to the homeowners, a significant increase over the original settlement offer,” the Journal concludes.
“It was a tremendous victory for the people of California,” Harris writes.
Harris Challenges Dimon’s New Arbitration Clause
In June, Harris sent Dimon a letter, co-written with Richard Blumenthal, (D-Conn), head of the Judiciary Committee, accusing him of re-instating forced arbitration practices on its credit card holders, giving them no recourse but to submit to J.P Morgan/Chase’s company-paid stacked deck of arbitrators or drop their suits, with the exception of small claims court lawsuits.
The Senators asked for a response by Friday, June 28.
The JPMorgan arbitration contract not only applies to current disputes, but to all accounts, including past accounts, The New York Times reports.
Arbitration Ban Hurt Wells Fargo Customers
The new arbitration agreement JP Morgan customers received in the mail recently also bans class action suits, which have proven crucial for consumers in winning convictions against nefarious banking activities.
For example, in 2012, JPMorgan agreed to pay $110 million to settle a class-action lawsuit for charging customers overdraft fees they should not have incurred, Bloomberg reports,
“It was among more than dozen big banks sued by their customers for reordering debits from the accounts to maximize the possibility that the accounts would become overdrawn, which would generate more fees,” Bloomberg reports.
Meanwhile, Wells Fargo’s arbitration clause barred its customers from banding together to sue the bank after employees were accused of opening millions of accounts without clients’ permission, Bloomberg notes.
California’s Katie Porter: Opt Out
Representative Katie Porter (D-Calif.,) the House Financial Services Committee member, who in the midterms won Republican Dana Rohrabacher’s seat in the famously conservative bastion of Orange County, tweeted a warning to Chase cardholders, urging them to opt out of the predatory agreement.
To opt out, they must send a letter via snail mail by August 31.
The opt-out should not be misconstrued as an act of generosity on Jamie Dimon’s part.
In fact, the clause is required by law.
Arbitration Ended During Antitrust Suit
Dimon’s decision to reinstate forced arbitration is especially distasteful to older customers.
JP Morgan/Chase and other banks agreed to end the practice in 2009, following an antitrust lawsuit charging banks with colluding to write arbitration laws into their contracts.
However, this ruling expired three and a half years later.
Now, Dimon wants to re-introduce the same anti-consumer practice, which JPMorgan’s spokeswoman, Patricia Wexler, said in an email, “is already being practiced by several banks.”
Pence Vote Overrides Arbitration Ban
Although the Obama-era Consumer Financial Protection Bureau, under Chairman Richard Cordray, published a rule barring mandatory arbitration, the Republican-led Senate in January, 2019–with Vice President Mike Pence breaking the 50-50 tie vote– killed a bill preventing banks from using forced arbitration clauses, overruling Cordray’s directive.
“Republican Vice President Mike Pence appeared on the Senate floor to cast the tie-breaking vote, and approved the most significant roll-back of Obama-era financial policy since President Donald Trump took office, vowing to loosen the leash on Wall Street,” The Insurance Journal reports.
Harris Holds Banks Accountable
“The banks are waging a full-scale battle to repeal the Obama-era Wall Street reforms that have helped hold them in check,” Harris writes in her book.
“Where they have failed to repeal them, they have done everything they can to get around them.”
She notes that Congress voted in 2018 to roll back some of the Dodd-Frank provisions related to midsize banks, calling it “more than unacceptable. It’s outrageous.”
Harris writes, “If we agree that we are tired of banks getting away with such reckless behavior, if we agree that we can’t let the banks drag us into another recession, if we agree that homeowners deserve to be treated with dignity and respect, not as lines on a balance sheet to be packaged and sold, then there’s only one way to achieve the change we seek: with our voices and our votes.”