Yes. That's how they keep bankers from being shot in the streets. And it wasn't just JP, other big banks were involved as well. Think of it as hush money to the public.
So these days I am disgusted to hear commercials on the radio for refis, the HARP program (new and improved!) where even if you are upside down in your home you can still pull more equity! And ads for adjustable rate mortgages! Is our collective memory really that short? Well, apparently it is. These are the kinds of practices that got us in to the mess to begin with, and evidently people just don't learn.
But see, after the meltdown there is an added clause in new mortgages and refis, it is a personal indemnity clause. See, back when the real estate market was relatively safe, the agreement went like this: You make the house payments, and you get to live there. If you stopped making the payments, the bank took it back. There was even Private Mortgage Insurance if you owed more than 80% of the home value. This insurance was not for YOU, it was for the bank. It was there so if the bank took your house back and was not able to recover the amount owed the insurance company would cover the difference. An interesting aside on that, when you paid your home down to 80% of value you could request the PMI removal. By law the lender was not required to release it until you got below 78%.
But what happened when the bubble burst is that even with the PMI banks were losing money, except in the case of massive foreclosures. Once the lenders lost a predetermined aggregate amount the federal government covered them dollar for dollar. You see what JPMorgan (and others) did? They took federal money to buy bad loans (acquiring other smaller banks with lots of bad paper, which in effect they bought at a huge discount) and then foreclosed anything they could (using the lax rules provided by the federal government which turned it's back on things like robosigning until there was enough public outcry, in which case they ordered some of the money be given back. My cut was 4 1/3% of my actual loss) until they reached that threshold and then started cashing in on the loaned amounts at the value of the homes before the crash. So the banks didn't have to ride it to the ground, WE did. The tax payers. And the government got their money back because after the foreclosures, they held the titles via FM, which they then resold. Slick, huh?
So now the government hold a controlling interest of home titles and mortgages. The fed is holding the interest rates artificially low. The lenders are offering the same bad deals for refis (with the exception of that personal indemnity clause). government spending is up, and the fed is still buying bonds with newly "printed" money, which means they are flooding the market with money that has no backing. Eventually the fed will not be able to hold down the pressure anymore, and interest rates will jump up leading to another round of foreclosures. Here we go again. Except this time, whatever the difference in what you owe and what the bank dumps the house for will still be your responsibility. See, the risk used to be shared between the bank and the homeowner (not quite fairly, since the homeowner was paying to insure the top 20% for the bank anyway), but now there is basically no risk to the lender. So long do you think it will be (given the "recovery" in housing) before they do it all again? I'm thinking just long enough that the average plebe forgets how this went down the last time and accepts it again. Cogs in a wheel people. We're not Citizens anymore, we are Consumers. And we will be allowed to have our toys as long as we are willing to accept our roles as money mills for the government and the banks which of course are To Big To Fail.