The ongoing Kabuki theater between Big Government and Big Finance took a new turn on Saturday, when it was announced that JPMorgan Chase & Co, one of the top 10 banks in the world, has struck a preliminary $13 billion deal with the US Justice Department.

The deal will quietly mothball Federal investigations into hyper-destructive mortgage loans the bank sold to investors throughout the Bush regime, culminating in the 2008 financial crisis. To keep the chattering classes busy, the deal will not explicitly let the bank off the hook from criminal liability related to its mortgage finance operations that were re-packaged into AAA rated bonds before sale to investors.

While the overall inflationary monetary system under the monopoly of Federal Reserve remains unscathed, in order to soothe the public at large, the bank will continue to cooperate in criminal investigations of some JP Morgan employees who were involved in the mortgage operations. http://www.youtube.com/watch?v=iR-gJ5N014o

Authorities at JP Morgan and Justice Department did not respond to Reuters request for comments, but some sources say that the details behind the agreement are still being hashed out away from full public view or the glare of 24/7 C-SPAN cameras.

The $13 billion settlement is peanuts for the 800-lb gorilla of global finance, which sits on a cool $2.4 Trillion in worldwide assets, larger than the economies of all but the top 7 countries globally.

The settlement will make many of JP Morgan’s legal troubles go away, even as the bank disclosed this month that it had set aside $23 billion in reserves for the deal with Washington DC and other legal expenses to be paid to expensive DC lawyers to patch up further scrutiny over its conduct before and after the 2008 financial implosion.

Attorney General Eric Holder and JP Morgan Chief Executive Jamie Dimon enjoyed phone conversations on Friday evening to finalize the broad outlines of the deal. Long trumpeted by the media as one of the most well run banks, JP Morgan is no longer able to hide the skeletons in its cupboard while maintaining an image of world esteem.

With foreign governments and financial giants relentlessly infiltrating the highly unstable American banking system, the Justice Department was threatening to sue the bank over complex mortgage backed securities it sold to questionable investors, leading to more than doubling of home prices until the September 2008 crash.

Some of the criminal liabilities are carry overs from the now defunct Washington Mutual (WaMu) and investment bank Bear Stearns, which were absorbed by JP Morgan with Federal Reserve’s backing behind the scenes. Together, Bear Stearns and JP Morgan were able to extract more than $1.2 Trillion from tax-payers as unemployment soared and millions of Americans lost their life-time savings.

[image from youtube and government accountability office]