In another in a long line of weak settlements where the perpetrators of fraud don’t have to technically say whether or not they’ve committed it, the Securities and Exchange Commission reached agreement with JPMorgan Chase and Credit Suisse on a collection of violations related to the handling of mortgage backed securities.

JPMorgan Chase and Credit Suisse agreed to pay $417 million in a settlement with the Securities and Exchange Commission over their handling of subprime mortgages, the agency said Friday.

The banks did not admit or deny guilt. JPMorgan agreed to pay $296.9 million to settle the charges and Credit Suisse agreed to pay $120 million.

Robert Khuzami, the head of enforcement for the SEC, had the gall to call the products sold by these banks “ground zero in the financial crisis,” while enacting a settlement where the parties don’t even have to admit wrongdoing for their crimes that created that crisis.

The really peculiar thing about this is the timing. The JPMorgan Chase settlement deals with mortgage backed securities they acquired from Bear Stearns. These exact same securities are the subject of ongoing actions by the New York Attorney General, Eric Schneiderman, where he alleged deceptive practices. In fact, the case was essentially a securities fraud case that should be handled by the SEC:

This is a pretty straight securities fraud case. Bear Stearns (bought by JPMorgan Chase in 2008) stands accused of creating and selling mortgage backed securities to investors that contained multiple defects, mostly from faulty underwriting that did not follow the prescribed procedures, and deliberately so. Bear forced the underwriters to cut corners by speeding up the volume of loans churning through the system; one underwriter reported being asked to finish 1,594 loans in five days.

Bear made commitments to its investors that they studiously evaluated all the loans they packaged into the pools that made up the mortgage backed securities. However, they did not evaluate the loans sufficiently, and when they did subject them to limited reviews from third-party due diligence specialists, the reviewers turned up multiple problems. Bear did not inform investors of these defects, which were massive: in one study by the FHFA, 523 out of 535 loans studies did not meet the underwriting standards. This all violates the representations and warranties that they made to investors about their responsibility to deliver loans into the MBS that went through rigorous underwriting.

So in one part of New York, you have the Attorney General pursuing a securities fraud case, and in another part, you have the SEC settling for pennies on the dollar. And Khuzami sits on the same financial fraud task force that Schneiderman said was the “aegis” under which he brought the Bear Stearns case! This comes incredibly close to undermining the NY AG’s case. DoJ, incidentally, didn’t bring follow-on charges in the Schneiderman suit, and now that the federal government’s main securities fraud regulator has settled, it’s doubtful they ever will.

This wraps up quite a week for JPMorgan Chase, who earlier was barred from the electricity markets in California for overcharging the state Independent System Operator and lying about it.

They’re such savvy businessmen.