On Sunday, media outlets reported that after weeks of discussions and negotiations, JPMorgan Chase agreed to pay $13 billion to settle civil charges leveled by the Department of Justice. The legal battles emerged from practices the company conducted in misrepresenting assets that it sold. Those same assets, sold by banks all over the world, would be the underlying cause of the housing bubble and the subsequent recession.

That’s bad stuff. I want to go on the record stating that, so nobody will jump to rash conclusions regarding other parts of this column. So, for the record, I think packaging a bunch of high-risk assets, saying that by nature of having lots of high-risk assets they become low-risk and selling them off knowing that investors were poorly informed, if not lied to, is wrong. And when you do something very wrong, and it has serious consequences, you should be held accountable.

Having said that, this settlement is insane, and it serves as a strong indicator that the relationship between Wall Street and Capitol Hill is flawed.

JPMorgan is receiving a penalty wholly disproportionate to its crimes, particularly given the history of the events before and after the start of the market’s collapse. The bank is handing over a wad of cash the size of Iceland’s GDP, making it the largest settlement in the DoJ’s history. Yet JPMorgan itself had very little involvement in the sub-prime, mortgage-backed securities market. Of all the assets subject to these lawsuits, only 30 percent were actually created by JPMorgan. The remaining 70 percent were actually concocted by two institutions JPMorgan bought in 2008.

Of course, that in itself doesn’t mean much without the proper historical context. Many people today would mark the start of the recession with the meltdown of Bear Stearns, one of the leaders in the troubled mortgage market. In March, 2008, the company was facing billions in losses on defaulted mortgages and no liquidity. This was seen as a catastrophe — the kind of event that could lead to a financial meltdown. In an attempt to prevent this, the Treasury Department and the Federal Reserve asked JPMorgan’s CEO, Jamie Dimon, to buy the troubled bank at a colossal discount. A few months later, the government brokered a similar deal, only this time it was Washington Mutual that needed to be rescued.

These are the two banks that created and misrepresented the majority of the assets in this case. These are the banks on whose behalf JPMorgan must now pay $13 billion. What this means is that although one government agency had to beg JPMorgan to buy out some rivals, another was getting ready to sue the pants off of them.

Many people are quick to say that it’s still fair. When someone buys something, they buy its good things and its bad ones. A stockholder owns a company’s assets as well as its liabilities. Besides, JPMorgan made billions of those acquisitions since, so they have no right to play financial martyr. However, at the time, everyone thought the sky was falling. Multiple other banks turned down the chance to buy WaMu; if it was such a steal why would anyone ever say no?

The underlying problem here is not whether or not JPMorgan is being vilified, or punished unfairly, or whether they were saviors or tycoons who made a bad purchase. The real issue is that the relationship between banks and the government has soured. Bankers like to look at all forms of regulation as the enemy, and, as a result, bureaucrats like to speak of CEOs as if they’re better suited for the Gilded Age. Somewhere in the mayhem, everyone seems to have forgotten that the government benefits greatly from bank activity, and on the same note, bankers benefit just as much from good regulation. After all, even though banks may have misrepresented their assets, nobody was telling them they couldn’t do so. And because nobody did that, investors got burned beyond their wildest dreams (as did everyone else).

Of course the disconnect is more nuanced than as described. Plenty of the financial instruments being traded are too sophisticated for a lot of the traders to understand, let alone regulators who are distanced from them. The sophistication of these assets makes it incredibly challenging to regulate them, but that’s not an excuse for the state of affairs we’re in today.

As cliche as it sounds, the solution is not more or less regulation, but better regulation. Bankers and government officials need to work closer together to develop regulation that actually works. The vitriol between the two needs to dissipate and be replaced with cooperation. That way, not only will banks not face such unfair punishments, but the underlying problems that led to those cases might be avoided entirely.

Yoni Muller is a Weinberg junior. He can be reached at [email protected]. If you want to respond publicly to this column, send a Letter to the Editor to [email protected].