I got this e-mail from a law school professor this evening:

wtf is with Eric Holder personally meeting with Jaimie Dimon? Since when do other targets of investigations get such access and solicitude? Do you think any AG would have met with Michael Milken when he was being investigated? Unreal.

It should be no surprise by now to see the degree to which Administration officials toady and scrape to the banks. Oh yes, you’ll witness the occasional stern word in public from Obama and his minions to maintain the appearance that that they operate independently of their financial lords and masters. But Holder has been so absent from any meaningful action that it’s surprising to see him pretend to play a hands-on role. I’d was certain he had forgotten how to practice law, since his main job seemed to be acting as propagandist for Team Obama enforcement theater.

In case you wondered what the indignation was about, here’s a Washington Post recap:

The sage of Wall Street journeyed to Washington on Thursday, but Jamie Dimon’s visit was unlike any the JPMorgan Chase chief has made before. Dimon sought a meeting with Attorney General Eric H. Holder Jr. in an urgent bid to dispose of multiple government investigations into the bank’s conduct leading up to the financial crisis — and avoid criminal charges. The deal that Dimon discussed with Holder would involve paying the government at least $11 billion, the biggest settlement a single company has ever undertaken, according to several people familiar with the negotiations… For Holder, 62, meanwhile, a landmark settlement with JPMorgan could help quiet criticism that the Justice Department has failed to hold Wall Street accountable for sparking the housing market’s crash and the ensuing recession. Holder was criticized by lawmakers and consumer advocates this year for saying that some banks had become too big to prosecute.

“Sage of Wall Street”? Ready the barf bag. The most lofty title Dimon has been given before it “titan” which is acceptable, if cloying, given JP Morgan’s size. But “sage of Wall Street” has heretofore been limited to Warren Buffett, who has not only his investment record but his cagey corn pone to legitimate that label. “Sage” connotes wisdom above all, and Dimon’s conduct during and after the Whale affair was anything but.

But the more disturbing bit is the Administration’s high odds of jumping on what I suspect is a JP Morgan PR line, that touting this settlement as “the largest evah” will give Holder & Co. some sort of newfound credibility. Even the WaPo isn’t buying it:

Even at $11 billion or more, the bank would be paying just a fraction of the damage it wreaked on mortgage investors, government agencies and homeowners. And a deal might ensure that no senior executives go to jail, which some experts say would let Wall Street avoid full responsibility.

Comparing the past settlements to the pending JP Morgan deal is like comparing apples to stinky fruit. The next biggest one was for a single abuse, that of GlaxoSmithKline for selling antidepressants illegally. This settlement, by contrast, even though it involves only one product, covers a swathe of bad conduct across three institutions: Bear, WaMu, and JP Morgan. And it also includes the monster Fannie and Freddie putback liability. All the banks that had large subprime businesses are going to stump up large payments to put those claims to bed. By going out early and wrapping other outstanding litigation into the mix, the Morgan bank makes the settlement look more serious than it really is.

In addition, JP Morgan has managed to promulgate the myth it was less deeply involved in the mortgage business because it perceived the risks and stayed away. Not true. For instance, it was rumored in February 2007 that Dimon was sniffing around Bear as a possible acquisition. Several correspondents wrote today of how eager JP Morgan was to increase its participation in the CDO business (mind you, I’ve heard this repeatedly over the years from insiders). From one message:

I had JPM CDO salesmen banging down my door in 2006 and early 2007. They wanted to do more, but didn’t have the staff, assets etc. They didn’t miss out on CDO carnage because of good risk management. They just weren’t that good at it.

So let’s understand what Dimon’s confab with Holder was likely about (the JP Morgan chief also brought his general counsel and bank regulatory uberlawyer Rodg Cohen). The subtext of the article was that Dimon was pressing for a deal to be done quickly. Why the urgency? Well, one has to wonder how much Dimon is effectively appearing in a personal versus an executive capacity. It would be, um, inappropriate to conflate the two discussions, but it’s not hard to imagine that Dimon thought a personal meeting with Holder, showing what an impressive figure he is, could only work in his favor (it isn’t only Dimon who is impressed with his own impressiveness; journalists like Andrew Ross Sorkin and Gillian Tett, who uncharacteristically looks to have been swayed by being embedded at JP Morgan, have also fawned over him). Remember, the CFTC has not settled its Whale charges, and it might unearth some further violations or facts that make JP Morgan top brass look even worse. The DoJ (through its Southern District of New York office) has charged two JP Morgan traders. It isn’t clear whether it will succeed in getting either one extradited, but if it did, you can be sure they prosecutors would be seeing if they could get them to cop a plea bargain to implicate more senior management.

Thus it’s nuts for the DoJ to enter into any settlement that includes JP Morgan executives as individuals until it sees how the pending cases play out. And recall that we’ve already said even before the $920 million settlement that Dimon was a clear-cut case for a criminal Sarbanes Oxley prosecution. The information in the SEC’s order only strengthens our view (mind you, that does not mean we think in a nanosecond that Dimon will be charged criminally. But that threat could be used to force long-overdue corporate governance changes and if more damaging evidence were to surface, a timetable for Dimon’s departure).

But the flip side is that the negotiations supposedly included the question of whether the bank would be charged criminally. That sort of move has not been all that well received, since past criminal settlements have involved only subsidiaries (having a parent or critically important sub admit to criminal conduct would bar quite a few customers from doing business with it, and that’s widely viewed as a nuclear option and thus unusable in practice). And JP Morgan may be playing “don’t throw us in the briar patch,” acting as if it is extremely loath to admit to criminal charges at a subsidiary level when it hopes that that sort of sanction will buy the Administration enough PR points so as to make it less eager to pursue individuals to the maximum extent.

Holder indirectly acknowledged that issue. The Washington Post again:

The discussion centered partly on whether the bank could avoid criminal prosecution if it paid the fine and whether it would have to admit guilt. Asked about the negotiations in an unrelated news conference, Holder acknowledged the meeting but snapped at a reporter who suggested that “prison time” was not part of the talks. “You weren’t in the room when I said I was talking to them,” Holder said.

Mind you, the Financial Times makes the meeting sound more like normal commercial haggling. If so, why did Dimon press to make a personal appearance? From the pink paper:

Mr Dimon’s trip to Washington followed Mr Holder personally rejecting a previous offer to resolve the matters as being too low. Talks were rekindled after the US threatened on Tuesday to sue the bank… JPMorgan is arguing over the extent to which it should be responsible for the actions of Bear Stearns and Washington Mutual, both institutions that the bank bought during the crisis with the encouragement of the government. The bank has said in disclosures to investors that it “believes it has no remaining exposure related to loans” sold to Fannie and Freddie. Mr Dimon has suggested it is not fair to punish the bank for past allegations of the two companies.

Yves again. The only reason one might normally use to legitimate a meeting like this, is if talks between the two sides has become so acrimonious that the principals needed to meet. But that makes no sense with Dimon represented by the best lawyers money can buy, who happen also to be much cooler headed than he is, both in general and by virtue of not having to negotiate for themselves.

So the good news is Jamie is actually breaking a sweat. The bad news is the Administration has signaled how accommodating it is likely to be through the unseemly act of giving him an audience.