The $13 billion JPMorgan Chase agreed to pay for misleading investors who bought its toxic mortgage backed securities hits the financial behemoth where it hurts: the bottom line.
What U.S. Justice Department officials said is the largest civil settlement with a single entity in American history totals more than half of the $21.3-billion profit JPMorgan made in 2012. That's an expense that shouldn't be dismissed as just the cost of doing business.
Hopefully the historic payout will mark a lasting departure from the federal government's past practice of imposing inconsequential fines that amounted to little more than walking-around money for deep-pocket corporate offenders. Penalties need to sting enough to deter the sort of wild risk-taking that contributed to the 2008 financial collapse and plunged the nation and the world into punishing recession.
It's also important that the deal negotiated by federal and state officials doesn't shield the bank or individuals from potential criminal prosecution. New York Attorney General Eric T. Schneiderman, the most insistent voice for stern action, and whose refusal to agree to an earlier deal opened the way for this one, deserves a share of the credit.
The $13-billion settlement includes $9 billion to resolve federal and state civil claims and to compensate investors. The remaining $4 billion will help people harmed by the economic meltdown, for instance, by funding principal reductions, loan modifications and new mortgages for low- and moderate-income families. About $1 billion of the money will come to New York State, where some will be used to make loans at below market interest rates to victims of superstorm Sandy.
JPMorgan Chase isn't the only bank suspected of knowingly bundling bad mortgages into shaky securities. Government officials should hold others that did so accountable. A record payout from the nation's largest bank is a decent start.