At the end of a conference call on the night of Oct. 18, JPMorgan Chase’s chief executive and the attorney general left their top lieutenants to hash out the details of a tentative $13 billion settlement. The talks, led Tony West, the associate attorney general at the Justice Department, and Stephen M. Cutler, JPMorgan’s general counsel, could still fall apart over how much wrongdoing the bank will admit on its questionable mortgage practices.
In a sign of the reach of Washington’s revolving door, two of the central players in the biggest settlement of the financial crisis were once on opposite sides of the negotiating table.
Investment banks may be unpopular now, but the associate attorney general at the Justice Department was once a defense lawyer for an even less sympathetic client: an American fighter for the Taliban. And while financial regulators today may feel outgunned by Wall Street, JPMorgan’s general counsel was previously the former top law enforcement official for the Securities and Exchange Commission before the agency gained new regulatory powers from the Dodd-Frank overhaul.
Mr. West first joined the Justice Department in 1993. He later became an assistant U.S. attorney in the Northern District of California. After two unsuccessful political campaigns, Mr. West became a partner in the law firm of Morrison & Foerster in San Francisco in 2001. His clients included John Walker Lindh, who pleaded guilty to fighting for the Taliban in Afghanistan. While that case was thought to have signaled an end to his political ambitions, Mr. West returned to the Justice Dept. in 2009. His sister-in-law is Kamala Harris, California’s attorney general.
Before joining the securities agency, Mr. Cutler was a partner in the law firm of Wilmer, Cutler & Pickering in Washington. As the enforcement director for the S.E.C. from 2001 to 2005, he prosecuted a wave of corporate scandals and his caseload included a then-record $750 million penalty against WorldCom.
JPMorgan was also one of Mr. Cutler’s targets. After more than a year of investigations, the bank, together with Citigroup, paid almost $300 million to settle accusations that they aided the Enron fraud. “You can’t turn a blind eye to the consequences of your actions,†Mr. Cutler said in 2003. “Financial institutions may not look the other way when their clients use them to manipulate financial results.†Unlike today’s $13 billion mortgage deal, the banks did not admit or deny wrongdoing.
A look back on our reporting of the past week’s highs and lows in finance.
FRIDAY, OCT. 25
Twitter Comes to Wall Street | Twitter’s roadshow may not begin until Monday, but its executives are already making the rounds in New York. DealBook »
THURSDAY, OCT. 24
Twitter Sets I.P.O. Price at $17 to $20 a Share | The price range was below what some analysts had expected. Including options and restricted stock units, the social media darling would be valued at more than $12 billion. DealBook »
Icahn Amps Up Pressure on Apple, but His Stake Limits His Leverage | The investor’s campaign for the company to return more money to shareholders might be falling on deaf ears. DealBook »
Fed Proposes a Rule to Help Big Banks Stay Liquid in Times of Crisis | The requirement, scheduled to come into full effect at the start of 2017, could dent the profits of banks, particularly Wall Street firms. DealBook »
Focused Effort to Narrow Gender Gap on Corporate Boards | A program at George Washington University School of Business is helping prepare women to be considered for board seats, while training them to step into those posts. DealBook »
DuPont to Split Into 2 as It Plans to Spin Off a Major Segment | The industrial conglomerate’s chief executive, Ellen Kullman, denied that Nelson Peltz had influenced her decision to evaluate the future of its performance chemicals unit. DealBook »
Credit Suisse to Streamline and Shrink | The Swis bank grappled with stricter regulatory requirements and a challenging fixed-income market. DealBook »
WEDNESDAY, OCT. 23
JPMorgan Faces Possible Penalty in Madoff Case | Prosecutors are said to be considering possible criminal penalties against JPMorgan over its dealings with Bernard L. Madoff, suspecting it turned a blind eye to his Ponzi scheme. DealBook »
Jury Finds Bank of America Liable | A jury found Bank of America liable for selling defective mortgages, in a case involving Countrywide. DealBook »
The Trade: Moot Effort at Reputation Repair | Since the financial crisis, Lloyd C. Blankfein has striven to build his name back up, but Goldman’s good name has collapsed, writes Jesse Eisinger. DealBook »
TUESDAY, OCT. 22
Pensions’ ‘Extra’ Payouts | The Detroit bankruptcy case highlights the costs of the practice â€" also used in New York City, Phoenix and San Jose, Calif. â€" of making extra payments to retirees. DealBook »
SAC Capital Retrenches as Inquiry Takes a Toll | The hedge fund had 950 on staff at the end of September. That number is expected to decline after year-end bonuses. DealBook »
Judge Tells Goldman to Pay Legal Bills of Ex-Programmer | The decision wades into a hot-button issue as more and more Wall Street employees find themselves ensnared in lawsuits and investigations. DealBook »
Impasse May Slice Into Profits on Wall St. | The comptroller for New York State warned in a report that political gridlock in Washington could put pressure on earnings. DealBook »
Deal Professor: A Chance to End a Billion-Dollar Tax Break for Private Equity | A court case involving Sun Capital Partners has upended the entire treatment of carried interest, writes Steven M. Davidoff. DealBook »
MONDAY, OCT. 21
News Analysis: Considering the Fairness of JPMorgan’s Deal | As details emerge, Wall Street’s fears of a largely punitive settlement may not add up. DealBook »
DealBook Column: Economic Theory, Via YouTube and Cartoon | Ray Dalio, the founder of Bridgewater Associates, has quietly begun teaching his investment secrets on YouTube, writes Andrew Ross Sorkin. DealBook »
Longtime Executive at Goldman Is Departing | J. Michael Evans, once seen as a possible candidate to succeed Lloyd C. Blankfein as chief executive, is leaving the Wall Street firm. DealBook »
SUNDAY, OCT. 20
U.S. Deal With JPMorgan Followed a Crucial Call | Hours before the Justice Department was to announce civil charges, Jamie Dimon called one of attorney general’s lieutenants to reopen talks. DealBook »
Despite Legal Tempests, Dimon Appears Solid as Ever Atop JPMorgan | Putting the bank’s legal problems aside is seen as a victory for Jamie Dimon, even though those problems arose on his watch. DealBook »
Wealth Fund Cautions Against Costs Exacted By High-Speed Trading | For larger investors, the benefits of the technological changes are not nearly as clear, according to Norway’s sovereign wealth fund. DealBook »
SATURDAY, OCT. 19
Tentative Deal Hands JPMorgan Record Penalty | The $13 billion deal would resolve an array of state and federal investigations into the bank’s sale of troubled mortgage investments. DealBook »
WEEK IN VERSE
‘Shakedown’ | Larry Kudlow said JPMorgan’s $13 billion settlement was a “shakedown.†YouTube »
‘The Hustle’ | Countrywide’s mortgage-writing program was known as the “hustle.†YouTube »
