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Senate report: JPMorgan lied, misled public

Fri, 15 Mar 2013 13:11:00 +0000

For those who thought that the financial crisis marked a watershed for Wall Street malfeasance, the latest damning Senate report on the JPMorgan Chase "London Whale" trading debacle will set you straight.

The investigation into how a bet by a trader -- known as the 'London Whale' for his position so large it could rock the market -- led to losses of $6.2.bn paints found widespread misconduct. According to the Senate report released Thursday, the bank attempted to limit losses using secretive trades and creative bookkeeping. As the Guardian's Heidi Moore noted, one regulator called JPMorgan's efforts to stem losses and keep the public in the dark "make believe voodoo magic."

According to the report, the bank had promised regulators it would reduce the size of its bets, but instead, as Moore noted "created a portfolio of trades that metastasized from $4bn to $51bn in only three years, followed by a three-month 'trading spree' that took it to $157bn."

The Senate report notes:

The 6 most appalling statements of America’s biggest CEOs

Tue, 05 Mar 2013 18:10:00 +0000

The sh*t CEOs say! When the chiefs of giant corporations are not blaming others for their mismanagement and unscrupulous behavior, they’re explaining why their distorted worldviews are best for the 99 percent. They do this, of course, at a time of declining national median income and huge paydays for executives.

Recently, there has been an uptick of particularly stupid remarks coming from the mouths of America’s CEOs. Here are a few of the most out-of-touch and out-of-line oracles, a mix of recent gaffes and classic blunders.

1. “That's why I'm richer than you.”

JPMorgan honcho Jamie Dimon has taken time out of his regularly scheduled program of mismanaging a systemically dangerous bank to divulge why he's richer than the rest of us. Last week, Mike Mayo, who is both an analyst at CLSA and a critic of too-big-to-fail banks, was on an investor conference call -- a forum in which executives typically offer BS about their company’s performance. Mayo wasn’t having it. He asked pointedly if customers might take their money to better-capitalized banks than JPMorgan. (Check out the video.)

Banks wrongfully foreclosed on 700 military members

Mon, 04 Mar 2013 16:25:00 +0000

As part of a multibillion-dollar settlement deal over foreclosure abuses during the housing crisis, it has been discovered that over 700 members of the military were wrongfully evicted from their homes by major banks.

Federal regulators, tasked with determining how to payout the $8.5 billion settlement to victims of Wall Street abuses, demanded that Bank of America, Citigroup, JPMorgan Chase and Wells Fargo identify the borrowers who were evicted in violations of federal law. As the New York Times noted, the findings provide "the first detailed glimpse into the extent of wrongful foreclosures amid the collapse of the housing market."

The banks had long maintained that, although they had relied on faulty documents to push through foreclosures, they rarely forced people out of their homes by mistake. The discovery that over 700 active duty military members -- protected by federal law -- nonetheless faced foreclosure serves as star riposte to such claims.

As the Times noted:

Bankrupting America, one overdraw at a time

Fri, 01 Mar 2013 15:01:00 +0000

Are too-big-to-fail banks organized criminal conspiracies? And if so, shouldn't we seize their assets, just like we do to drug cartels?

Let's examine their sorry record of deceit and deception that has surfaced in just the past two months:

Loan Sharking

You want to get really, really pissed off? Then read "Major Banks Aid in Payday Loans Banned by States" by Jessica Silver-Greenberg in the New York Times(2/23/13). In sickening detail, she describes how the largest banks in the United States are facilitating modern loansharking by working with Internet payday loan companies to escape anti-loansharking state laws. These payday firms extract enormous interest rates that often run over 500 percent a year. (Fifteen states prohibit payday loans entirely, and all states have usury limits ranging from 8 to 24 percent. See the list.)

Debt “fixers’” 6 biggest lies

Tue, 04 Dec 2012 14:40:00 +0000

New York magazine calls it a “Mass Movement for Millionaires.” The New York Times' Paul Krugman sums up the idea: “Hey, sacrifice is for the little people.”

The Campaign to Fix the Debt is a huge, and growing, coalition of powerful CEOs, politicians and policy makers on a mission to lower taxes for the rich and cut Social Security, Medicare and Medicaid under the cover of concern about the national debt. The group was spawned in July 2012 by Erskine Bowles and Alan Simpson, architects of a misguided deficit reduction scheme in Washington back in 2010. By now, the "fixers" have collected a war chest of $43 million. Private equity billionaire Peter G. Peterson, longtime enemy of the social safety net, is a major supporter.

9 greediest CEOs

Tue, 27 Nov 2012 19:44:00 +0000

  A gang of brazen CEOs has joined forces to promote economically disastrous and socially irresponsible austerity policies. Many of those same CEOs were bailed out by the American taxpayer after a Wall Street-driven financial crash. Instead of a thank-you, they are showing their appreciation in the form of a coordinated effort to rob Americans of hard-earned retirements, decent medical care and relief for the poorest.

Using the excuse of a phony, manufactured crisis known as the “fiscal cliff” – which isn’t a crisis at all, as economist James K. Galbraith has succinctly explained -- they are gearing up to pull the wool over the public's eyes by cutting Social Security, Medicare and Medicaid. The CEOs are part of the Fix the Debt campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to unleash tens of millions pushing for a deficit reduction deal that favors the rich in the lame-duck session and beyond.

Hurricane Sandy: Income inequality writ large

Thu, 01 Nov 2012 14:44:00 +0000

After an explosion at a power station cut off power to Lower Manhattan, photos showed a stark divide in Manhattan between lit-up uptown and downtown blanketed in darkness. The image was gripping, but when the inevitable posts went up declaring that "New York is now divided," I had to laugh. Because it's not the divisions we can see after a storm, but rather the city's giant unseen fissure which makes events like Sandy so threatening.

Witness this piece from Gothamist, in which a citizen sleuth checked out what was happening in parts of Downtown where the poorest residents live and wrote in with his findings:

NYPD block off whole JPMorgan building to arrest three teens

Wed, 24 Oct 2012 17:24:00 +0000

The entire 60 floors of JPMorgan Chase's downtown New York office building were temporarily blocked off Wednesday so that three high-schoolers could be arrested, according to a news release from anti-corruption activists.

The students were staging a sit-in protest at the bank headquarters, "demanding full disclosure of the bank’s anonymous political expenditures," reported an announcement from 99Rise, the anti-corruption group of which the three young people are members. "The students, who delivered a petition to the bank over three weeks ago articulating their demand, refused to leave the bank’s premises until the requested information was handed over to the public. The bank instead chose to shut down the entire 60 floor building have them arrested," the release read. A live Twitter feed from the group reporting on the small sit-in noted that police set up barricades around the building, closing entrances to the public.

99 Rise describes itself as "a new anti-corruption movement to get Big Money out of American politics." The three students have reportedly been taken to a police station in the Bronx.

JPMorgan posts record earnings

Fri, 12 Oct 2012 20:56:00 +0000

JP Morgan Chase, the U.S.'s biggest bank by assets, reported a record quarterly profit Friday.

The bank said it made $5.3bn in earnings for common shareholders, a widely used measurement, from July through September, up 36% from the same period a year ago.

Earnings for common shareholders includes expenses for making payments to preferred shareholders. Without those expenses, net income would have been even higher, at $5.7bn.

Either way, the bank blew away analysts' expectations. Earnings were $1.40 per share, far exceeding the $1.21 predicted by analysts polled by FactSet, a provider of financial data.

Revenue rose 6% to $25.1bn, beating expectations of $24.4bn. Earnings were helped because the bank set aside less money for bad loans. It set aside $1.8bn for potential loan losses, down 26% from $2.4bn a year ago.

Revenue from mortgage loans shot up 29%. Low interest rates, as well as a government program called Home Affordable Refinance Programs, encouraged homeowners to refinance.

In a statement, CEO Jamie Dimon said he believed the housing market "has turned a corner."

He noted, however, that the bank was still seeing a high level of souring mortgage loans and said he expects high default-related expenses "for a while longer." And he noted the homeowners still struggling under mortgages they can't afford, saying the bank was working to modify such loans.

The bank gave few details on the surprise $6bn trading loss that dominated its previous earnings report. It did mention that a credit portfolio moved to the investment bank from the chief investment office, which was responsible for bad trade, "experienced a modest loss."

JPMorgan's investment banking unit earned more in fees for underwriting stock offerings and debt offerings, which could signal that wary companies and investors are more willing to get back into the market.

Debit card revenue fell, which the bank blamed on new rules crimping the fees that banks charge stores whenever customers pay via debit card.

JPMorgan stock was up 58 cents at $42.68 in premarket trading. The stock was as low as $31 in early June, after the bank announced a surprise trading loss that ballooned to $6bn.

Jamie Dimon’s hissy-fit

Tue, 09 Oct 2012 19:00:00 +0000

Wall Street's reality-distortion field is nothing if not internally consistent. Earlier today, I discussed Goldman Sach's feelings about being left out of the regulatory process:

From the Wall Street Journal:

Resentments against the White House began, said senior Goldman executives, because the firm thought it would be consulted when the Obama administration began crafting regulations in response to the financial crisis. They weren't.

After publishing that post, I finally found the time to read William Cohan and Bethany Mclean's epic profile of JPMorgan Chase CEO Jamie Dimon. The language describing his bruised ego is spookily similar:

At President Obama’s inauguration, Dimon said to Obama and to Treasury Secretary Tim Geithner, “Tell me what you need. I’ll send people down here. I’ll do anything,” says one D.C. hand. “Jamie walked into 2009 with the view that he was on the team.” He wasn’t.

Romney stocks for sale!

Thu, 02 Aug 2012 16:23:00 +0000

Shares of presidential candidate Mitt Romney debuted today on the New York Stock Exchange. The stock, trading under the ticker symbol USA, surged nearly 30 percent before selling off and ending the day at $31.20, slightly above its offering price of $31.00. The campaign raised approximately three billion dollars with the offering.

The IPO of Mr. Romney was underwritten by a number of investment banks including, but not limited to: Goldman Sachs, JP Morgan, Credit Suisse, Citibank, Bank of America, Deutsche Banks, Barclays Capital, Morgan Stanley, Nomura Securities, Allen & Company, UBS, Wells Fargo, Cantor Fitzgerald and Bain Capital. Trading activity indicates that all of the banks sold their Romney shares at today’s peak, while simultaneously telling their clients to buy. “Each of the banks probably pocketed close to a billion dollars,” said one veteran Wall Street trader. “I doubt the SEC will investigate because it will just make Obama look anti-business.”

Smith and Wesson, which manufacturers pistols, rifles and semi-automatic machine guns--many of which are popular with street gangs and terrorists--recently purchased millions of pre-IPO shares of Mitt Romney after the candidate, in response to the tragedy in Aurora, Colorado, said that "changing the gun laws won’t make all bad things go away.” Smith and Wesson now owns 18 percent of Mr. Romney.

Barclays head forced out, JPMorgan head remains

Tue, 03 Jul 2012 16:34:00 +0000

Thrilling news, accountability fans! Barclays Bank head Bob Diamond has announced his resignation as chief executive and director of the U.K.-based megabank, a week after the bank was fined 59.5 million pounds for attempting to manipulate the Libor rate. Just yesterday, Diamond had promised his staff that he'd stay on, in order to guide the bank through the parliamentary inquiries and Justice Department investigations that are still to come. Then his mind got changed for him.

According to BBC business editor Robert Peston, Diamond's departure was "encouraged" by Sir Mervyn King, governor of the Bank of England, who telephoned Barclays chairman Marcus Agius (who announced his intention to fall on his sword and resign yesterday) personally. This doesn't make the Barclays board look very smart.

Bankers constantly lying, defrauding; most still not in jail

Mon, 02 Jul 2012 11:45:00 +0000

Has there ever been a better time to be a disastrously inept banker? Well, probably -- over the course of human civilization it's almost always been a pretty good time to be a banker -- but today's finance titans seem uniquely immune to punishment of any sort.

Remember how JPMorgan Chase accidentally lost $2 billion in a "hedge"-slash-huge stupid bet placed by a guy in the Chief Investment Office? Funny story, it will actually end up being closer to $6 billion, or maybe like $9 billion -- who can be sure, math is pretty complicated, it's all imaginary money anyway -- as the bank attempts to extricate itself from the insanely complex losing trade made by the office that is supposed to manage the bank's risk.