FORTUNE — News that JPMorgan Chase would pay a $13 billion fine, the largest government penalty levied on a single company, initially led to calls that CEO Jamie Dimon should step down.
That’s not going to happen. Board members have rallied around Dimon. What’s more, it’s unlikely that Dimon had any direct involvement in the troubled mortgage deals. In fact, he warned his executives about the dangers of subprime loans.
But what about the investment bankers who were involved in underwriting and selling the dubious mortgage deals that led to the massive penalty? They appear to be doing just fine as well. Indeed, until last month, three of the top bankers responsible for the deals still worked at JPMorgan (JPM). One appears to have received a promotion.
David Duzyk, who was in charge of the division that put together the questionable mortgage deals, still oversees that area of the bank. And not just mortgages. Duzyk is responsible for the bankers who package all types of consumer lending products — including credit cards and auto loans — into bonds and sell those bonds to investors. In May, trade publication Asset-Backed Alert named Duzyk one of the world’s top professionals in the area. Last week, in announcing the settlement with JPMorgan, Attorney General Eric Holder seemed to have a different view. “Without a doubt,” Holder said in a statement, “the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown.”
According to the government, JPMorgan bankers regularly included loans in deals that did not meet the bank’s underwriting guidelines and were “not otherwise appropriate for securitization.” Louis Schioppo appears to have held the watchdog role of risk manager for JPMorgan’s “securitization group,” which underwrote mortgage and other consumer loan deals. His official title was CFO of the group.
But the fact that so many inappropriate loans ended up in deals he was supposed to police doesn’t appear to have sullied Schioppo’s record. Schioppo’s duties were expanded to all of investment banking in 2010, according to his public LinkedIn page. Last year, Schioppo was named CFO of the division that monitors risk for the entire bank. Another JPMorgan banker named in the suit, Brian Bernard, also survived the bad deals. He left the bank just last month.
Duzyk, Schioppo, and Bernard could not be reached for comment.
The Justice Department’s settlement with JPMorgan does not name any individuals. But an earlier suit, which is part of the settlement deal, filed by the Federal Housing Financial Agency on behalf of Fannie Mae and Freddie Mac (which lost money on the mortgage deals) does include individuals who worked and signed off on the deals. Both Duzyk and Schioppo, along with others, were named in the FHFA suit.
On a conference call with investors last week, Marianne Lake, JPMorgan’s CFO, said that while the government’s investigation of individuals continues, she doesn’t believe the firm engaged in any criminal conduct. According to a JPMorgan spokesperson, “None of the individuals in the FHFA document were alleged to have knowingly engaged in wrongful conduct or fraud. In fact, there was no conduct alleged at all other than signing the registration statement.”
JPMorgan has said that 80% of the misconduct covered by the settlement occurred at Bear Stearns and Washington Mutual, both of which JPMorgan acquired in 2008. Dealmakers at those two banks appear to have landed on their feet as well.
Jeffrey Verschleiser, who helped manage Bear Stearns’s mortgage division and was also named in the FHFA suit, is now a partner at Goldman Sachs (GS) and the global head of the bank’s mortgage trading division. Jeffrey Mayer, who was also named in the FHFA suit and was the co-head of Bear’s bond business, is now the head of Deutsche Bank’s (DB) U.S. corporate banking and securities operation. Michael Nierenberg, who co-ran mortgage trading at Bear with Verschleiser and is named in the FHFA suit, until recently was the head of mortgage products at Bank of America (BAC). Earlier this month, Nierenberg landed a job with giant hedge fund Fortress.
Verschleiser and Mayer could not be reached for comment. In asking about the suit, Nierenberg said he was named along with “about 100 other bankers, right?” He declined to comment further.
Most of the Washington Mutual bankers who worked on mortgage deals included in the government settlement appear to have left banking. Craig Davis, who was the president of WaMu’s home loan division and is named in the suit, is a board member at Ellie Mae, a company that provides software to the mortgage industry. Last year, he was paid $124,640 for that role. Davis could not be reached for comment.
Two other JPMorgan bankers who were named in the suit have left the firm. William King was Duzyk’s boss and, according to a 2008 Fortune article, got a call from Dimon while on vacation in Rwanda in late 2006 warning him to watch out for subprime. He is now the chief investment officer of mortgage finance firm Carrington Holding. King could not be reached for comment.
Christine Cole, Duzyk’s other boss, left JPMorgan shortly after the financial crisis to be the head of strategy for the Academy for Urban School Leadership in Chicago. A spokeswoman for the non-profit said Cole had recently retired. After being contacted by Fortune, the non-profit removed Cole from a list of leaders on its website.
The FHFA suit says nothing about the exact role Duzyk or any of the others had in the dubious deals. A source at JPMorgan says Duzyk wasn’t directly involved in the deals but was responsible for them. According to the statement of facts in the Justice Department’s settlement, there does appear to be some JPMorgan employees who raised concerns about the loans in the deals. The biggest complaint appears to have come from an unnamed female employee. But after a review, according to the settlement, top JPMorgan bankers in “due diligence, trading, and sales” all signed off on the deals.
Many bankers did deals in the run-up to the financial crisis that included ill-advised loans that resulted in losses. Still, few besides Duzyk are in the same jobs that they held before the financial crisis.
What’s clear is that, over the years, Duzyk has made a lot of money for JPMorgan. The bank was a laggard when Duzyk was hired by JPMorgan in 2005 to take over its mortgage and consumer lending investment banking division. JPMorgan now regularly tops Wall Street rankings in that area.
A check of Duzyk’s records on the Financial Industry Regulation Authority’s website doesn’t show that he is the subject of any government investigations. He is listed as a defendant in two pending civil suits related to past mortgage deals.
“There has to be accountability for both the banks and the individuals who were putting together these deals,” says Dennis Kelleher, who runs Better Markets, which has argued for increased regulations of banks and Wall Street. Kelleher has criticized the JPMorgan settlement for, among other things, providing relatively few details about the behavior for which JPMorgan is paying the massive fine. “Without full disclosure of the crimes or individual accountability, settlements like these continue to reward and incentivize illegal conduct.”