The Department of Justice stresses the word accountability in its Statement of Facts in its settlement with JPM, but Professor Henning is quite right in pointing out the limits of the accountability doctrine. (The True Accountability in the JPMorgan Settlement,) in his NY Times op ed of November 20. We have no quarrel with his debunking of this overused term. Still, many issues remain to be explored concerning the apparent resolution of this case. There is little to be said for either JPMs prior conduct or the Punishment Program in which the DoJ is now engaged. There is even less to be praised regarding the monitors of such a large publicly held giant such as JPM.

We have expended many electrons commenting on grandiosity of the JPM affair. Grandiose was JPM in its initial dismissal of the London Whale, but at least that brought an admission albeit belatedly, from Jamie Dimon that his initial tempest in a teapot characterization was wildly incorrect. Grandiose were the threats of the Department of Justice that they would criminally indict JPM if they didnt get with the DoJs Punishment Program and sign on the dotted line admitting to crimes. And, finally, no less is the grandiose amount of $13 billion that JPM will be fined for its sorry conduct including the mortgage paper pawned off to (unknowing) investors such as Fannie and Freddie.

That said, what about the accountability of the monitors of JPM, monitors who are supposedly acting in the interest of shareholders. We already know the shareholders are the real victims. It is their equity that is being disbursed. Where is the Board of Directors in this story And where are the auditors or the outside general counsels who are charged with many of the compliance aspects of underwriting Where is the risk management that shareholders should rightfully expect from both management and directors

We have already been treated to the famed testimony of the CIO and other senior officers of JPM who were misinformed, and somehow let the London Whale escape through their nets of risk management procedures. What about the mortgage underwriting by JPM itself and even more the purchase of assets from mortgage underwriters who were well known to be engaged in shoddy underwriting practices, to wit Bear Stearns and Washington Mutual Bear Stearns was publicly in trouble as early as 2007 with the closure of their two ill-famed hedge funds heavily overloaded with CDOs composed of these very same shoddy mortgages. Washington Mutual might have been slightly more opaque but its main line of businessmortgage underwritingwas well understood by the financial community.

JPM leapt at the opportunity to grab Bear Stearns, subsidized as it were, by the $29 billion non-recourse loan provided by the Fed. Taking over Washington Mutual after it was already in receivership by the FDIC was even more grandiose and required even more accountability. Where was the board when these two acquisitions were being proposed by JPM management Had they not heard anything about questionable mortgages, shoddy underwriting, and overvalued credit ratings If not, they should have. Otherwise, what were they doing on the board of the largest bank in the US

The public may be conned by the announced success of the DoJ in loading blame on the bankers and making them accountable for the disaster of 2007-2009, but thoughtful people in the finance business know better. In our book Disorganized Crimes, we try to pinpoint the problem of accountability. It lies at the source of nearly all cases of corporate mismanagement, of corporate governance gone astray. The DoJ is not exactly humble in its supposed triumph, but as the legal office of the Governments collection of security regulators, it should be. Where were the regulators in the run-up of the mortgage crisis The Statement of Facts seems to portray mortgage finance specialists such as Fannie and Freddie as down and outers victimized by quick-talking loan salesmen. Whos kidding who Fannie and Freddy were supposed to have real expertise in this area. If they choose to guarantee shoddy mortgages, they were either totally asleep in their chosen field, or simply willing to gamble, as were their fully private sector counterparts, on shoddy credit ratings.

Its all about accountability. When are the prosecutors going to get around to Fannie and Freddie We all know the answer: never. They are now the favored children of the Obama administrationwho is collecting vast dividends that will pay back nearly all the funds advanced by the Government prior to their conservatorship. One mans meat is anothers poison!

In short, when we raise the accountability cry, lets not leave out the Government. The judgment against JPM is a fig leaf covering government regulator disregard of the mortgage underwriting problem in the years prior to 2008. Government also needs to be accountable. Unfortunately, we will have to wait at least until 2014 or perhaps 2016 for that. It will take a true optimist to believe that our Government will be held to the same standards that they assert in their vendetta against publicly held financial entities.