This shit is so far from fixed

[Benny Profane]

You see, the problem is the fucking arrogance. He still won't admit he fucked up.

http://dealbook.nytimes.com/2012/05/...ding-group/?hp


JPMorgan Discloses $2 Billion in Trading Losses

By MICHAEL J. DE LA MERCED

JPMorgan Chase disclosed on Thursday that a trading group had suffered “significant” losses in a portfolio of credit investments, with the chief executive, Jamie Dimon, estimating losses at $2 billion in a conference call.

“These were egregious mistakes,” Mr. Dimon said on the call. “They were self-inflicted and this is not how we want to run a business.”

The troubles at the unit, the so-called Chief Investment Office, which makes trades to balance the bank’s assets and liabilities, are expected to weigh on the bank’s broader earnings.

For example, the corporate group, which includes the Chief Investment Office, is now expected to lose $800 million in the second quarter, the company said in a filing. Previously, JPMorgan had estimated that the group would report net income of roughly $200 million.

Ultimately, JPMorgan said, the final tally will depend on the markets and other actions by the bank. Mr. Dimon added that it could “easily get worse.”

Shares of JPMorgan were down 5.5 percent in after-hours trading, dragging down other bank stocks.

The trading group has been a focus in recent weeks as questions surfaced about big bets the JPMorgan unit was reportedly making in credit default swaps. Reports emerged in April about a JPMorgan trader in London whose positions were so big that they were distorting the market.

Mr. Dimon played down the significance. In a conference call on April 13, he called the matter “a complete tempest in a teapot.”

“Every bank has a major portfolio. In those portfolios you make investments that you think are wise to offset your exposures,” Mr. Dimon said in the April call. “At the end of the day, that is our job — is to invest that portfolio wisely, intelligently over a long period of time to earn income and to offset other exposures that we have.”

Now, the portfolio is wreaking havoc at the bank. In its filing on Thursday, JPMorgan pointed specifically to problems with its bets on credit.

The Chief Investment Office “has had significant mark-to-market losses in its synthetic credit portfolio, and this portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” the company said in its regulatory filing.

“We have egg on our face,” Mr. Dimon said on Thursday. “We deserve any criticism we get.”

The losses come amid the continuing debate about financial reform. One new regulation, the Volcker Rule, aims to stop banks from making bets with their own money. Mr. Dimon has been an especially forceful critic of the rule, saying it goes too far.

The JPMorgan problems surfaced in a group that makes proprietary trades. But the unit is supposed to hedge against losses in other parts of the bank, which means it might not run afoul of the Volcker Rule once it is put into effect.

Even so, Mr. Dimon acknowledged the trading losses could add to the debate about financial regulation.

“It’s very unfortunate,” he said. “It plays right into the hands of a bunch of pundits out there, but that’s life.”

“This may not have violated the Volcker Rule, but it violates the Dimon Principle.”

Shortly after the JPMorgan disclosure, Sen. Carl Levin, a Democrat from Michigan, raised concerns about the bank’s activities, highlighting the need for financial reform.

“The enormous loss JPMorgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making,” Sen. Levin said in a statement. “Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards.”

[bushman]

While there is plenty of room for debate on credit markets, adding Carl Levin to the argument voids any credibility to said argument. This is only my view from watching Sen. Carl Levin over the last couple of decades. The man is a hack. Pollyass perhaps?

[Benny Profane]

From the comments:

"Obama's greatest failure was appointing Eric Holder, whose firm represented all of the big financial firms, as Attorney General. Where do you think Holder is going back to practice law after his stint as US AG? Fact--we are at the lowest level of prosecuting financial fraud in the last 20 years, even following the largest amount of financial fraud in the past 80 years. Fact--not a single individual from one of the major banks/firms has been charged, much less prosecuted for any crime relating to the financial collapse. Fact--Bush I's administration prosecuted thousands during the S&L crisis which was small change compared to the 2008 financial fraud.

No excuses can be made for Obama's failure to prosecute the criminals who brought our economy to its knees. Had a Republican turned a blind eye to the financial fraud in the same manner as this Administration is doing, Democrats would be going ballistic."

No, this is beyond that shit in pollyasshat. This effects everyone. It's so fucking bipartisan and ingrained it just can't be argued. I just want to spit.


edit: "Fact--not a single individual from one of the major banks/firms has been charged, much less prosecuted for any crime relating to the financial collapse."
Actually, that's not true. Two traders at Bear were indicted and acquitted of doing something obviously wrong in the middle of that shitstorm. That's it. That's all I can come up with. Two acquittals, or a mistrial, or sumthin'.

[Downbound Train]

Dateline 5/8/12

http://www.tetongravity.com/forums/s...Justice-4-Sale

Justice 4 Sale



http://www.thedailybeast.com/newswee...o-justice.html

Attorney General Eric Holder and the Department of Justice are operating under a “justice for sale” strategy by forgoing criminal prosecution of Wall Street executives at big financial institutions who just so happen to be clients of the white-shoe law firms where Holder and his top DOJ lieutenants worked.

Holder and Obama’s anti-Wall Street “law and order” rhetoric has turned out to be a smokescreen that allows the Obama campaign to talk the talk of the 99% while taking money from Wall Street’s 1%. The result is extortion by proxy. Example....through last fall, Obama had collected more donations from Wall Street than any of the Republican candidates; employees of Bain Capital donated more than twice as much to Obama as they did to Romney, who founded the firm.”

There’s more.


•Obama’s 2009 White House summit with finance titans, in which the president warned that only he was standing "between you and the pitchforks"


•Why, despite widespread outrage, financial-fraud prosecutions by the Department of Justice are at 20-year lows

•Attorney General Eric Holder’s lucrative ties to a top-tier law firm whose marquee clients include some of finance’s worst offenders

•How Obama’s trumpeted “task force” for investigating risky mortgage lenders—announced in this year’s State of the Union speech—is badly understaffed and has yet to produce any discernible progress


Bush 41's feds dealt with the S&L crisis with harsh justice, bringing more than a thousand prosecutions, and securing a 90 percent conviction rate.

Holder has not criminally charged or prosecuted a single top executive from any of the elite financial institutions thought responsible for the financial crash.

[phishstx]

"The Dimon Principle" - that's amazing.

How does a bank like JPM make that kind of mistake on a VaR model? Who forgot to press F9?

[Arty50]

Watch this series:

http://www.pbs.org/wgbh/pages/frontl...r-wall-street/

Bottom line, Obama fucked up. He should have listened to Summers, not Geithner. We needed to put a 1930's style smackdown on the banking industry but we blew it and missed the opportunity. I was originally a fan of his approach since I'm convinced it avoided another depression. However, the result is much worse; and I know readily admit that I was horribly wrong. We're still left with a gamble happy financial sector that will just fuck up everything again. Basically, we just kicked the can down the road. Even worse, Wall Street still has ludicrous amounts money to siphon smart people off from creative industries that they would be much more productive to society in.

[Kim Jong-un]

Rewind, click....*BOOM*

http://www.bloomberg.com/news/2012-0...p-trading.html

[huckbucket]

The stress test was the key!! The stress tests would prove we were sound and regain the confidence of the people. The stress tests were rigged.

Man o' man I've been waiting patiently for another bottom. Looks like it might be around the corner.

[Kevo]

Both parties are owned by wall street and corporate America. It doesn't matter whether Clinton or Bush or Obama or Romney is in the White House.

Nothing will change unless the teeth of the Glass Steagall Act is reinstated and people on Wall Street start getting prosecuted.

[Benny Profane]

Nothing will change unless the teeth of the Glass Steagall Act is reinstated and people on Wall Street start getting prosecuted.

This is the simple truth.

[MTT]

Watch this series:

http://www.pbs.org/wgbh/pages/frontl...r-wall-street/

Bottom line, Obama fucked up. He should have listened to Summers, not Geithner. We needed to put a 1930's style smackdown on the banking industry but we blew it and missed the opportunity. I was originally a fan of his approach since I'm convinced it avoided another depression. However, the result is much worse; and I know readily admit that I was horribly wrong. We're still left with a gamble happy financial sector that will just fuck up everything again. Basically, we just kicked the can down the road. Even worse, Wall Street still has ludicrous amounts money to siphon smart people off from creative industries that they would be much more productive to society in.

And as far as I can tell, the Fed continues to loan billions to the Banks @ near 0 interest that they inturn invest in risky over seas markets for high interest.

They do no bother doing the hard work of attracting investors, and making loans to people or corperations. Its much more profitable to earn by gambling with the Guberment money.

Its visious.

Now the Banks are holding tons of forclosed realestate, and rather than follow the law that demands that they sell within a year.

the guberment is doing everything it can to allow them to hold onto that property. Or not forclose in the short term.

If the guberment stayed out of it!! the banks would have to had started working out deals with home owners 2 years ago. But we now have a president of guberment intervention and its still not healing itself. Its so sad to see this.

[huckbucket]

And as far as I can tell, the Fed continues to loan billions to the Banks @ near 0 interest that they inturn invest in risky over seas markets for high interest.

They do no bother doing the hard work of attracting investors, and making loans to people or corperations. Its much more profitable to earn by gambling with the Guberment money.

Its visious.

Now the Banks are holding tons of forclosed realestate, and rather than follow the law that demands that they sell within a year.

the guberment is doing everything it can to allow them to hold onto that property. Or not forclose in the short term.

If the guberment stayed out of it!! the banks would have to had started working out deals with home owners 2 years ago. But we now have a president of guberment intervention and its still not healing itself. Its so sad to see this.

Wait .... wait ... wait

1. Construction spending is on the rise.
2. Permits for new housing are at a 4 year high
3. Manufacturing is on the rise
4. ... and LEI's are up for 6 straight months!


(ever get the feeling you're being played?)

[retirwntm]

Looks like Jamie is going to use the Avada Kedavra curse on Voldemort in the UK treasury group after this one. Thank your friends at the WSJ for breaking this story, Benny. This has been a huge story for weeks and has been blowing out credit spreads on CDS all through the markets. Finally caught a hanger.

[splat]

Now somebody's gonna ask for hard delivery on a shitload of papered silver or gold they bought and the run will begin...

[retirwntm]

http://mobile.bloomberg.com/news/201...with-bets.html

[Benny Profane]

Wait .... wait ... wait

1. Construction spending is on the rise.
2. Permits for new housing are at a 4 year high
3. Manufacturing is on the rise
4. ... and LEI's are up for 6 straight months!


(ever get the feeling you're being played?)

Over and over again I hear amazement! and wonder! and baffled experts! just stunned, stunned, I tell you, that the individual investor has abandoned the "market" for safe, negative earning "investments". This is why, motherfuckers. What, do you think we're that fucking stupid?

They probably do.

[huckbucket]

They probably do.

I'm sure they do. The average dipshit, if he/she even watches the news, gets it from the big outlets. Only a small percentage bother to look beyond their nose. Having said that, I readily admit that I know fuck all about the markets. Shit, at the height of the bank crisis, even bankers had no idea how their products worked and what the real risks were. But what I do know is that our economy is being propped up by sticks, twigs, hope, and lies. Too many people in power have too much to lose for it to be any other way.

[Cyber Cop]

And as far as I can tell, the Fed continues to loan billions to the Banks @ near 0 interest that they inturn invest in risky over seas markets for high interest.

They do no bother doing the hard work of attracting investors, and making loans to people or corperations. Its much more profitable to earn by gambling with the Guberment money.

Its visious.

Now the Banks are holding tons of forclosed realestate, and rather than follow the law that demands that they sell within a year.

the guberment is doing everything it can to allow them to hold onto that property. Or not forclose in the short term.

If the guberment stayed out of it!! the banks would have to had started working out deals with home owners 2 years ago. But we now have a president of guberment intervention and its still not healing itself. Its so sad to see this.

First off, I watched all four frontline episodes this week. A lot of the material comes from earlier episodes they did over the last 4 years. Glad they did this update because the new info and focus on Obama's reaction to the crisis has helped me gain a better grasp on what is/was happening and what caused this crisis. As the "bulbous quant" says at the end of episode 4 though, there are probably only a handful of people in the world that really understand the whole of the market, so, as most people probably, it is very hard to feel like I know shit about how to fix this.

On that note, I can't fault Obama for following Guitner's advice of do no harm. Seriously, what would the effect have been on the economy and the markets in 2009/2010 if Obama had went after blood from these d-bags with the economy already reeling? The big banks are bigger now because they absorbed the failing institutions during the heart of the crisis. How could they reasonably have expected to break up the "too big to fail" institutions when absolutely no one really knows what is inside the black box? At a gut level I want them punished as much as anyone, but the sad fact is, barring the few cases of true fraud and deception the government might or might not be able to prove, what these people were doing with derivatives was not illegal but rather sanctioned by congress with the efforts at deregulation and the conscious decision by the Clinton administration (Rubin and Greenspan) not to regulate the derivatives market.

Frankly, what I took away from the documentary is that the genie is out of the bottle and putting her back in is not going to be accomplished without serious pain to us all.

[huckbucket]

^^^

Yes, but I can't really get over the fact that we gave these banks all this bailout money with no strings attached. At the very least, you'd think that you would prevent them from trading in the same risky products with the money that is supposed to be used to make them solvent.

[Cyber Cop]

^^^

Yes, but I can't really get over the fact that we gave these banks all this bailout money with no strings attached. At the very least, you'd think that you would prevent them from trading in the same risky products with the money that is supposed to be used to make them solvent.

I agree, and don't get it, but that money seems like a pitance in the grand scheme of things. What did each bank take, something like 20 billion each if I remember right? What I wonder about is the money the fed put out that seems to never be discussed in the big media. The documentary covered it for one minute maybe, but wasn't it like 7 plus trillion that the fed injected into banks around the world??? I've seen that discussed/reported on in a few instances in various other places, but curiously it seems to stay well under the radar. Maybe I'm mistaken, or don't understand what the hell they are talking about.

[retirwntm]

^^^

Yes, but I can't really get over the fact that we gave these banks all this bailout money with no strings attached. At the very least, you'd think that you would prevent them from trading in the same risky products with the money that is supposed to be used to make them solvent.

I worked at Chase about 15 yrs. ago full disclosure. This may sound more the apologist, but JPM is probably the best bank in the world. They do take risk but have always managed it pretty damned well. During the crisis they didn't get or need to be bailed out - in fact they were chosen to rescue others at the behest of the NY Fed. They absolutely took on a huge as in ginormous position in the Markit CDX supposedly north of $100 billion but it's hard to know because it was built out with many counterparties. The trade was supposedly a long short over two time frames and the NPV on it has gone completely away from them since they sold protection on the longer dated 5 year swap and bought on the nearer term structure and spreads have widened a lot this month. This was simply a macro bet gone wrong. By the end of the quarter the PV could swing and this will just be a story.

[splat]

Not to worry....the guberment's here to help THEM:

http://www.huffingtonpost.com/2012/0...n_1335006.html

All told, including dividend, interest and other payments, U.S. banks have repaid the government $211.5 billion under the Capital Purchase Program (CPP), the first phase of the government's Troubled Asset Relief Program (TARP), according to a report Thursday by the Government Accountability Office, a congressional watchdog. That's more than the $204.9 billion the banks initially got under TARP.

$211.5 billion minus $204.9 billion equals profit, right?

But 48 percent of the banks that have repaid the CPP used money they'd gotten from other federal programs, according to the GAO report.

http://www.nytimes.com/2009/08/31/bu...1taxpayer.html

The government has taken profits of about $1.4 billion on its investment in Goldman Sachs, $1.3 billion on Morgan Stanley and $414 million on American Express. The five other banks that repaid the government — Northern Trust, Bank of New York Mellon, State Street, U.S. Bancorp and BB&T — each brought in $100 million to $334 million in profit.

[retirwntm]

This space is reserved for Hugh Conway to tersely comment that I am either a fluffer or journeyman for the evil banks.

[Tippster]

This may sound more the apologist, but JPM is probably the best bank in the world.

From my admitted limited understanding a large part of th problem is that they aren't a true bank at all, and that Investment Banks should be regulated differently, but aren't.

Clearly this is Obama's fault since he knows everything there is to know about banking. Following the advice of the people he hired to run this shit is so quaint - he as a Constitutional Law Professor should know Banking better than the bankers. Morons.

That said I don't see Geithner making it to August, much less November. Then again he has been sending every signal possible that he wants out. Maybe this is why.

[retirwntm]

^^^^ that is an important and fair nuance. JPM is the best of breed in the post Glass-Steagall world.

When it was agreed that G-S be dismantled due to the perception that US banks would not be able to compete with global banks, The Chinese Wall between investment banking and corporate banking fell. Obviously we've all lived through the end result of that dismantling.

But as you mention, JPM pretty much involves itself in every aspect of finance known to man. It's a fucking juggernaut with massive power.