JP Morgan Champion of Deregulation Loses 2 Billion

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JPMorgan Chase & Co Chief Executive Jamie Dimon has parlayed his bank's reputation as a white knight during the financial crisis into a position as the de facto representative fighting against excessive post-crisis regulation.

But the revelation of a shocking trading loss of at least $2 billion from a failed hedging strategy diminishes Dimon's credibility, and is already unleashing calls to get even tougher on big banks.

"The argument that financial institutions do not need the new rules to help them avoid the irresponsible actions that led to the crisis of 2008 is at least $2 billion harder to make today," said Democratic U.S. Representative Barney Frank, who co-authored the 2010 Dodd-Frank financial reform law
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http://www.reuters.com/article/2012/05/11/us-jpmorgan-regulation-idUSBRE84A0WW20120511

2 billion here, 2 billion there - it adds up.
 
Wow. $2 Billion.

That's like .01% of the national debt.

Anyway, isn't taking money away from the rich (i.e.: big banks) a good thing?
 
On the surface, Jamie Dimon survived yesterday’s JPMorganChase [JPM] shareholders’ meeting in Tampa unscathed, following the announcement of the firm’s $2-4 billion trading loss. Dimon’s $23 million pay package was approved and a move to separate the chairman and CEO role was defeated 60-40.

Nevertheless, the damage to the already tattered image of Wall Street was incalculable. The ten conventional defenses of Wall Street, such as “we know what we are doing” and “get rid of excessive regulation” lie in tatters on the ground.
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http://www.forbes.com/sites/stevedenning/2012/05/16/jpmorgan-ten-defenses-of-the-indefensible/

Pretty good article, rips into many of the arguments we tend to hear from the anti-regulation lobby and their useful idiots.
 
I find it hilarious that a lowly teller at a bank could get fired for having a +/- $200 annual accumulated variance and a corporate officer losing $2,000,000,000 under their watch can make $23,000,000.
 
[quote name='dohdough']I find it hilarious that a lowly teller at a bank could get fired for having a +/- $200 annual accumulated variance and a corporate officer losing $2,000,000,000 under their watch can make $23,000,000.[/QUOTE]

I sure hope that some of the traders who profited from this debacle get hit by clawbacks.

I doubt JP Morgan will do it (it probably wouldn't be worth the cost to go after these guys) but someone should.
 
It doesn’t happen often, but sometimes God smiles on us. Last week, he smiled on investigative reporters everywhere, when the lawyers for Goldman, Sachs slipped on one whopper of a legal banana peel, inadvertently delivering some of the bank’s darker secrets into the hands of the public.
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http://www.rollingstone.com/politic...in-naked-short-selling-20120515#ixzz1v4SdAzJx

More in the article.

I know this isn't related to the JP Morgan debacle but I thought it was another interesting example of banks behaving badly.
 
[quote name='camoor']http://www.rollingstone.com/politic...in-naked-short-selling-20120515#ixzz1v4SdAzJx

More in the article.

I know this isn't related to the JP Morgan debacle but I thought it was another interesting example of banks behaving badly.[/QUOTE]
That's some complicated shit that I'm not fully sure I have a grasp on with regards to short selling. I get the concept, but the borrowing part still has me a little confused. Looks like "naked" short selling means that they didn't borrow shit and just sold stock they never had? I'm I wrong in assuming that's illegal?

Btw, I loves me some Taibbi.
 
[quote name='dohdough']That's some complicated shit that I'm not fully sure I have a grasp on with regards to short selling. I get the concept, but the borrowing part still has me a little confused. Looks like "naked" short selling means that they didn't borrow shit and just sold stock they never had? I'm I wrong in assuming that's illegal?

Btw, I loves me some Taibbi.[/QUOTE]

What I got from it is that naked short selling is wallstreet codespeak for betting.

In true short selling you actually need to physically borrow the stock, sell it, and then after a period of time buy it back and return it to the bank. Of course in the real world you just put an order to short in, and the bank does this on your behalf.

Here's the rub: in naked short selling the bank never physically borrows the stock and then buys it back later. They just treat your short order like a bet. It's that simple - it's like horserace betting except instead of horses you're betting on stocks.

That's how they can short over 100% of the shares - it's just gambling so when it comes to taking bets the sky is the limit.
 
If it's as bad as I'm understanding-holy shit. See, using this method, one could basically devalue a stock, and if you're betting it's going to go down in value, well you can see how the power to do that would be helpful. This...this cannot be legal.
 
[quote name='Clak']If it's as bad as I'm understanding-holy shit. See, using this method, one could basically devalue a stock, and if you're betting it's going to go down in value, well you can see how the power to do that would be helpful. This...this cannot be legal.[/QUOTE]

I feel the same way.

That's why I love Taibbi, he breaks it down in a way I can understand.

These wall street guys bank on America's ignorance. Literally. They've managed to pawn off the shitstorm on the taxpayer's backs more then a few times, but one day it's going to catch up with them.
 
LOLZ...I thought "borrowing" was a technical financial term and transaction, not literally borrowing something, but goddamn. How could investment houses NOT know that they were "buying" bullshit?
 
[quote name='dohdough']LOLZ...I thought "borrowing" was a technical financial term and transaction, not literally borrowing something, but goddamn. How could investment houses NOT know that they were "buying" bullshit?[/QUOTE]

Yeah. From the article:

More damning is an email from a Goldman, Sachs hedge fund client, who remarked that when wanting to “short an impossible name and fully expecting not to receive it” he would then be “shocked to learn that [Goldman’s representative] could get it for us.”

Meaning: when an experienced hedge funder wanted to trade a very hard-to-find stock, he was continually surprised to find that Goldman, magically, could locate the stock. Obviously, it is not hard to locate a stock if you’re just saying you located it, without really doing it.
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He knew, he just didn't want to know. Oh it makes me sick
 
At first I thought that the FBI investigation was more procedural because of the money lost. Now combined with the Taibbi piece and the news that the division that lost the money was their insurance dept, it sounds like there's a good possibility that there are some serious compliance issues. Too bad that it'll just be some mid-level fall guy to take all the heat.

Hahaha..I think I'm just going to stick with social issues because learning more about the financial industry just makes my blood pressure go up.
 
Why is it that people who really provide the least to society seem to be the ones getting paid the most? I mean some of these assholes make more than doctors, people who are in a field that provides something beneficial to society. What do these assholes do that's of a real benefit to society as a whole? Do we really need more contrived ways of investing money?
 
[quote name='dohdough']At first I thought that the FBI investigation was more procedural because of the money lost. Now combined with the Taibbi piece and the news that the division that lost the money was their insurance dept, it sounds like there's a good possibility that there are some serious compliance issues. Too bad that it'll just be some mid-level fall guy to take all the heat.

Hahaha..I think I'm just going to stick with social issues because learning more about the financial industry just makes my blood pressure go up.[/QUOTE]

Well I may have confused things - the second article about naked short selling is about Goldman Sachs, they are the worst of the worst (the scum of Wall Street scum)

To my knowledge JP Morgan was not naked short selling, they just got caught in a bad bet of a different stripe. What was surprising about the JP Morgan story was that they were supposed to be the respectable investment bank, and wall street often trotted out JP Morgan CEO Dimon as their champion of anti-regulation. That charade just got a little harder to pull off...
 
I got no problem with the investment houses betting like Vegas idiots. More power to em. They should be required to spinoff their deposit business so they don't bet other peoples' money.

Oh, screwing consumers is where they make all their money and they refuse to stop betting other peoples' money? Of course.

Republicans leading the way on blocking any and all reform on this issue. We hate bailouts so much we're virtually guaranteeing they will need another one.
 
[quote name='camoor']Well I may have confused things - the second article about naked short selling is about Goldman Sachs, they are the worst of the worst (the scum of Wall Street scum)

To my knowledge JP Morgan was not naked short selling, they just got caught in a bad bet of a different stripe. What was surprising about the JP Morgan story was that they were supposed to be the respectable investment bank, and wall street often trotted out JP Morgan CEO Dimon as their champion of anti-regulation. That charade just got a little harder to pull off...[/QUOTE]
Nah, I'm just plain confused as finance was never really a thing I tried to learn too much about as compared to other subjects.

I also just started Dark Souls a couple days ago and I need a distraction from constantly getting killed. It's frickin frustrating.
 
[quote name='speedracer']I got no problem with the investment houses betting like Vegas idiots. More power to em. They should be required to spinoff their deposit business so they don't bet other peoples' money.

Oh, screwing consumers is where they make all their money and they refuse to stop betting other peoples' money? Of course.

Republicans leading the way on blocking any and all reform on this issue. We hate bailouts so much we're virtually guaranteeing they will need another one.[/QUOTE]

I really hope it doesn't get that bad. I really hope the Dems grow some balls and bring back Glass-Steagall (or at least Flock of Seagulls)
 
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