CHICAGO — The Justice Department’s $13 billion fine announced Tuesday on financial giant J.P. Morgan Chase is the kind of federal control that will continue to shape the way that the U.S. economy operates, according to a panel of top industry experts.
The penalty – the largest fine the company has ever had to pay — indicates a shift in Washington’s attitude toward Wall Street and a new era of government influence over the economy, according to Sallie Krawcheck, co-owner of 85 Broads during a panel discussion Wednesday at the Bloomberg “The Year Ahead: 2014” conference.
The “$13 billion [fine] is a ton of money, even for J.P. Morgan,” said the former Citigroup and Bank of America executive of the government’s largest settlement with a single entity in history. Claims against the bank stem from its packaging and selling of troubled mortgaged-back securities leading up to the financial crisis.
The fine, said moderator Robert Friedman, editor-at-large of Bloomberg News, underscores a harsher government stance on banks, including bigger fines and the need for acknowledgment of wrongdoing since the 2008 financial crisis.
Previously federal officials felt they “can’t punish and save the banks at the same time,” he said. “Now it seems like we’re going the other way.”
David Plouffe, who left the White House earlier this year after serving as a senior adviser to President Barack Obama, said bank regulation will continue to be a prominent political issue through the 2016 elections.
“One thing across the board during [the 2012] elections is that people thought Obama was too easy on the banks,” Plouffe said.
Judd Gregg, CEO of the Securities Industry and Financial Markets Association and former chairman of the Senate Budget Committee, said Washington gridlock on fiscal policy and immigration reform creates roadblocks that have economic and political repercussions.
“All these issues should be doable,” Gregg said. “You can’t do them if you can’t get consensus at the center.”
Government dysfunction has a ripple effect on some of the major drivers of the economy — small businesses, Krawcheck said. Confusion about the health care law and uncertainties resulting from the partial government shutdown have caused many to behave more conservatively, she said.