Is Chase inept or malicious?

With many of the stories we get about the way Chase bank treats its customers, it is a toss-up as to whether Chase does the things it does because they don’t have a clue or whether they really have a master plan that is all about sucking the most money out of their customers in whatever way possible, ethical or not.  If they really do have a master plan, disguising it in a veil of ineptitude is a stroke of genius.

This recent story about the deal Chase struck with Fannie Mae & Freddie Mac in early 2009 related to their purchase of WaMu mortgages has me leaning towards the master plan theory.  Here is an excerpt from the story:

Yet J.P. Morgan seems better-positioned than rivals for repurchases. That could have a lot to do with a deal it forged with government-backed mortgage buyers last year. In September 2008, J.P. Morgan bought certain assets and liabilities of failed Washington Mutual Bank. Then, in the first quarter of 2009, J.P. Morgan cut a deal with the government agencies that “resolved certain current and future” repurchase claims stemming from WaMu mortgages. It isn’t clear how many loans were involved and what the settlement cost. In 2010, a J.P. Morgan filing merely said a $714 million hit in the 2009 first quarter was “primarily related” to the deal.

But it looks like money well spent. The WaMu repurchase exposure could have been particularly nasty. The bank wrote about $490 billion of mortgages from 2005 through the middle of 2008, and appeared to sell well over half of them. What is more, WaMu specialized in option-adjustable-rate mortgages, which showed high losses and appear to be more vulnerable to repurchase demands.

In this case they clearly showed that they are thinking things through ahead of time, which would seem to indicate that the way they treat their customers, from delayed loan modifications to lowered credit lines and increased minimum payments is more of a plan than anything else.

But that is just my theory.

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