Mirabile Dictu! JP Morgan Finally on Regulatory Hot Seat for Widespread Control Failures and Alleged Lying by Blythe Masters Under Oath. It’s been far too long in coming, but Jamie Dimon may finally be getting his comeuppance.
A New York Times report reveals the Morgan bank is in the crosshairs of multiple regulators for poor controls and dishonest dealings with the authorities: Government investigators have found that JPMorgan Chase devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” and that one of its most senior executives gave “false and misleading statements” under oath…In a meeting last month at the bank’s Park Avenue headquarters, the comptroller’s office delivered an unusually stark message to Jamie Dimon, the chief executive and chairman: the nation’s biggest bank was quickly losing credibility in Washington.
Fraud settlements with SEC. JPMorgan & Libor rigging. How Wall Street Scams Counties Into Bankruptcy. Lord knows we’ve had more than enough scandals ginned up by Wall Street over the years, and the message that banking executives proclaim after each is: “Don’t worry, we’ve learned that lesson, and it will never happen again.”
Which is how we got to the recent spectacle of Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., testifying twice before Congress that although the bank’s chief investment office was taking huge proprietary risks with some $350 billion of its depositors' money -- and lost $3 billion (and counting) by making a bunch of risky bets on an obscure, thinly traded derivatives contract -- everything is now fine and dandy because the unjustifiable gambling has been stopped dead in its tracks.
We are told repeatedly that when Wall Street’s deeply flawed incentive system leads to one bad outcome after another, year after year, it will never happen again. Yet it does. Minor Penalties.
Michael Crimmins: Why Hasn’t Jamie Dimon Been Fired by His Board Yet? By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks. Who Wants Big Banks. By James Kwak Thirty years ago, Merton Miller, one of the giants of modern finance, was at a banking conference when a banker said he couldn’t raise more capital by selling stock because that would be too expensive: his stock was selling for only 50 percent of book value.
Merton responded, “Book values have nothing to do with the cost of equity capital. "Too Big to Fail"
Occupy the SEC Urges the SEC to Investigate JP Morgan Over Likely (As in Bloomin’ Obvious) Sarbanes Oxley Violations #OWS. We’ve written at length how the Obama Administration claim that it couldn’t prosecute bank CEOs and senior executives because they didn’t do anything illegal is utter hogwash.
Sarbanes Oxley, passed in the wake of Enron, was designed to prevent CEOs and other top executives from escaping liability by claiming they were clueless face men. And it provides for a clear path to criminal prosecutions. But the way Sarbanes Oxley was defanged is by making it an exercise in form over substance. Public firms engage in compliance theater while the SEC sits on its hands as far as enforcement is concerned (Note that the SEC did fail on its lone effort to use Sarbox against a CEO in the case of Richard Schrusy and Healthsouth. But that case was tried before a jury in Birmingham, Alabama, and I will spare readers the long form account as to why you can’t generalize from these results).
Regression to the Mean, JPMorgan Edition. By James Kwak I haven’t been writing about the JPMorgan debacle because, well, everyone else is writing about it.
One theme that has stuck out for me, however, has been everyone’s reflexive surprise that this could happen at JPMorgan, supposedly the best and most competent of the big banks. For example, Lisa Pollock of Alphaville, who has provided some of the most detailed analyses of what happened, asked, “could this really happen under CEO Jamie Dimon’s watch?” JP Morgan Chase. J.P. Morgan. The Shadow Banking System. Financial sector reguatory reform? Derivatives - The Unregulated Global Casino for Banks.
Note the little man standing in front of white house.
The little worm next to lastfootball field is a truck with $2 billion dollars. There is no government in the world that has this kind of money. This is roughly 3 times the entire world economy. The unregulated market presents a massive financial risk. Cognitive Regulatory Capture. What went wrong with finance? JPMorgan: If This Is a Financial Fortress, Run For the Bunkers. June 6, 2012 | Like this article?
Join our email list: Stay up to date with the latest headlines via email. The U.S. Senate Banking Committee spent over two hours on Wednesday proving to the American people that any shred of confidence they might still have in our financial markets is misplaced. Where the OCC should have looked.
JPMorgan made some $5bn on Friday using accounting magic called DVA. With all the talk about JPMorgan's losses out of the CIO's office, nobody is discussing the money the firm made on Friday due to the accounting magic called DVA.
After all, CIO's positions were (at least in principle) meant to act as an offset to this earnings volatility. As an example the chart below shows the price action for JPM's newly minted bond (issued just last month). It's a 4% coupon bond maturing in 20 years. With roughly $12bn of this bond outstanding, JPMorgan will record a gain of some $350MM based on Friday's price move just for this bond. It's important to note that this bond represents only a fraction of the $2.3 trillion balance sheet funding. SoberLook.com.
JPMorgan - lobbying.