First we learned last fall that the Justice Department had fined JPMorgan Chase shareholders $13 billion – that’s the largest fine in history – mainly for its sale of fraudulent residential mortgages, which helped wipe out the savings of millions of pensioners and was a major cause of the Great Recession.

Then, a few months later, we learned that those very same shareholders had awarded JPMC president Jamie Dimon, who himself had engineered the catastrophic sale, a 73 percent salary increase – bumping up his annual compensation to more than $20 million.

What the heck were they thinking? One board member explained that, “[w]hile [public] perception of the increase could be off-putting, board members feared not to grant it would alienate the chief executive.” Others presumably sided with Warren Buffet, who explained that multi-billion dollar fines were simply the “cost of doing business” for big banks. And still others evidently shrugged off the fine entirely, pointing out that it was, unlike that parking ticket you got last week, actually tax deductible – a windfall that, according to experts, reduced what JPMC had to pay to about $9 billion. Any way you cut it, the Justice Department’s fine appears to have bounced off JPMC’s thick hide without leaving too much of a mark: last year, the world’s biggest bank pulled in an $18 billion in profit (that’s after subtracting all of its legal fees and fines).

All of those rationalizations aside, the main reason shareholders were so quick to forgive and even to reward Dimon is probably simple: he’s making them money. Lots and lots of money. Thanks to JPMC’s takeover of other banks. Dimon has promised shareholders to fight, tooth and nail, any suggestions that the takeovers be undone – that banks deemed “too big to fail” be broken apart.

Financial reformers, some of whom are now or were formerly in the Federal Reserve, even Alan Greenspan, have made a popular case recently that breaking up these massive conglomerations made up of formerly independent banks is the only safe thing to do. They argue, logically enough, that if we break up banks too big to fail we won’t have banks too big to fail that we’ll have to bail out when we encounter another financial meltdown- and encounter another we shall, they assure. Better simply to break up the big banks now, they argue, than try to prop them up with myriad Dodd-Frank Act Regulations – yet to be written – stacked on top of regulations of proven failure.

Over a hundred federal regulators work inside JPMC offices attempting to enforce the existing regulations. Forgetting those working outside, will JPMC’s offices have space for the new Dodd-Frank regulators? Do bankers take the new Dodd-Frank Act seriously in the first place? JPMC incurred its notorious $6.2 billion loss from the London Whale scandal involving credit default swaps — the same thing that brought on the meltdown – after passage of the act.

JPMC shareholders don’t like the break-up idea at all mostly because behemoth banks like JPMC are essentially allowed to play for both teams. As investment banks, they get to invest for themselves and their clients, and as commercial banks, they get to play with billions of dollars of customer deposits. And here’s the thing: when you play for both teams, you never lose.

Consider JPMC’s role in the continuing Bernie Madoff saga. In its role as an investment bank, JPMC purchased Madoff securities for itself and for its individual clients. In its role as a commercial bank, JPMC also held Madoff’s deposits. Because of that latter role, JPMC was able to learn of Madoff’s imminent demise in 2008, but failed to alert its own investment clients that the scheme was collapsing. After all, the calculus was simple: the more shares of a stock placed on the market, the cheaper its price. And since the bank had invested millions more in the Ponzi scheme for its clients than for itself, it had an interest in keeping its client from selling their own Madoff investments too soon, lest the price for its own investment fall too quickly.

The result? The bank’s clients, who had actually paid it fees for getting them into Madoff, didn’t know to sell in time, losing their entire Madoff investment. JPMC, however, did sell its own $250 million investment in time to salvage practically all of it. It was a dirty trick, but a lucrative one. (Part of that $13 billion fine includes an amount for JPMC’s failure to sound the alert, levied under the Bank Secrecy Act.)

JPMC’s sale of the fraudulent mortgages, which contributed to the Great Recession, plays basically the same way: JPMC knew to sell the bad mortgages due to knowledge gained from its combined commercial-investor functions. When it began to learn of the precariousness of the residential mortgages it created for its commercial clients, it knew to unload them quickly to unwitting investors.

That the bank plays both sides isn’t really surprising to anyone, least of all the bankers themselves. After all, Chase Manhattan was no stranger to the uses of inside knowledge even before the bank itself took over JP Morgan to create JPMC. During a virulent wave of corporate takeovers some years ago, Chase Manhattan lent massive sums, even unsecured, to takeover artists specifically in return for the artists’ informing the bank of their takeover targets. Chase Manhattan could then purchase stock of those targets before announcement of the takeover plans caused their stock to rise in value.

That skullduggery, i. e., taking advantage of other investors unaware of the impending rise, finally prompted the Justice Department to bring suit to enforce antitrust laws against giant corporate acquirers and halt mega-takeovers. But enforcement would wreck the U.S. economy, the acquirers replied. We are so dependent on acquiring other corporations, a restraint on our takeovers will cause our stock to fall drastically, they said. And we are already so gigantic, that fall will devastate the entire market, they went on, even specifying the price to which their stock would collapse. Swallowing that bigness-above-law argument, the attorney general actually gave up the lawsuit. But the acquirers’ stock fell to that dire level, nevertheless. Yet, the U.S. economy survived, we know. The acquirers were free to proceed. Even freer. With the scrapping of the Glass-Steagall Act in the 1990s, Chase Manhattan was free to acquire JP Morgan and turn itself into JPMC.

Since the 1930s, the Glass-Steagall Act had outlawed the combining of investment and commercial banking functions precisely to prevent the advantage JPMC gained over its investment clients. Had Chase Manhattan and JP Morgan remained independent, JPMC wouldn’t have had the advantage it had, and wouldn’t have been too big to fail (too big to take bankruptcy). But now that the two are combined, the banks are playing both sides.

Everyone knows the game is rigged, but government regulators are, for the most part, stuck fiddling with the screws. Any attempt to reinstate Glass-Steagall is a political non-starter these days, so the Justice Department is left in the rather unenviable position of simply making the toughest calls when it can. The Justice Department’s historical $13 billion fine was designed according to those officials, as a shot across the bow. Many financial reformers and litigants contend that that $13 billion is nowhere “adequate” — especially since the final deal was arrived at behind closed doors and granted the bank immunity from other lawsuits

Yet some officials argue we should be thankful for any penalty at all. Attorney General Eric Holder, for one, cautions that stringent law enforcement against JPMC and other banks too big to let fail can jeopardize the economy. We’ve heard that before. He voices the exact fear that inspired his predecessor to abandon the suit to halt inordinate takeovers. Yet that fear permitted the creation of JPMC and the fraud that the present attorney general struggles to contain. Evolution of the bigness-above-law doctrine has come full circle.

Jamie Dimon says we must learn to live with megabanks — we only have to invent a “method for their orderly failure” so we don’t have to bail them out again. He envisions Dodd-Frank Act regulations that will devise a scheme for mega-bankrupticies that don’t give us another meltdown. The scheme will succeed, he says, by providing for complete liquidation of a failed megaliths’ shareholders and creditors. But mass shareholder and creditor wipeout hardly lessened the past meltdown. So what is he talking about?

Richard Fisher, President of the Dallas Federal Reserve, recommends the opposite strategy: Let’s be rid of them. “For all its bluster, Dodd-Frank leaves [too big to fail] entrenched,” he says. “The Dallas Fed advocates the ultimate solution for [“too big to fail”] — breaking up the nation’s biggest banks into smaller units.” Separating them back into their pre-acquisition parts will not be easy, he says, “But it’s the least costly alternative, and it trumps the status quo.”

With the two strategies on a collision course, no doubt the forgiving JPMC shareholders — not to be cowed by multibillion-dollar penalties — will back their chief all the way.

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John Winslow is former counsel to the House Judiciary Committee and the author of Conglomerates Unlimited: Failure of Regulation (Indiana University Press).