Fox Business: Breakup Fear Led JPMorgan to Settle Madoff Case

Monday, 06 Jan 2014 05:34 PM

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JPMorgan Chase & Co. is agreeing to pay $2 billion to the federal government over Bernard Madoff's Ponzi scheme because it fears the government will break up the bank if it doesn't, says Fox Business Network reporter Charles Gasparino.

In the highly regulated banking environment, the federal government can put someone out of business through various means, not just with an indictment, Gasparino said Monday on Fox News Channel's "Your World with Neil Cavuto."

Gasparino said sources close to the board told him that members were worried about a breakup in August if it did not act.

"They'll do anything. They'll pay any fine," Gasparino said, hoping for "smooth sailing." But Gasparino doesn't think it'll be that easy for the bank.

"I think it's only smooth sailing when it's a different administration for these guys," he said.

JPMorgan is accused of ignoring signs that Madoff was running a Ponzi scheme that defrauded thousands of investors. Gasparino said the "weird" part of the case is that no "main person" at JPMorgan was charged.

"The reason why they're not is because JPMorgan maybe as an institution didn't do anything worse than what the Securities and Exchange Commission did," he said. The SEC itself had evidence of Madoff's wrongdoing and didn't act on it, he said.

Gasparino is also suspicious of what he calls the "interesting coincidence" that the feds began targeting JPMorgan after its CEO, Jamie Diamond, began attacking the Obama administration on economic and regulatory policy.

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