Stop freaking out about the $13 billion JPMorgan settlement

Workmen raise the JP Morgan Chase Inc. flag outside company headquarters in New York.
Peter Foley | Bloomberg | Getty Images

The size of the reported $13 billion settlement between the Justice Department and JPMorgan Chase commands awe and attention. It's also garnering a lot of criticism.

The New York Post portrays it as a kind of bank robbery. The Wall Street Journal describes it as the government "confiscating" half of JPMorgan's annual earnings to "appease…left-wing populist allies" of the Obama administration.

We still do not know all the details of the tentative settlement or the evidence the government has against the bank. But the initial outburst of horror at the $13 billion figure is very likely unwarranted and appears to be based on a fundamental misunderstanding of how damages should be assessed in cases of financial wrongdoing.