London Whale Trade Explodes-JPM Loss~$9Billion

U

UT1986

500+ Posts
Wow, I'm shocked. I guess the financial trading experts aren't the smartest guys in the room after all.

"Recall, as we indicated, that JP Morgan can and apparently has been playing accounting games with this portfolio. The CIO’s positions get special accounting treatment. Because this book is supposedly a liquidity buffer, and not a profit-making vehicle, banks get to treat these investments as “available for sale,” which means they can trade in and out of them (like a trading book) but account for them on a “hold to maturity basis” which means they don’t have to recognize gains or losses until they actually sell them. This is the perfect place to house an income smoothing operation, provided you can generate hidden gains that you then take when needed by selling the positions. It appears that the CIO had enough in the way of gains to allow for it to cover the CIO’s losses now, and Dimon decided to raid this piggy bank to allow him to close out that position and try to put the CIO mess behind him. And sadly, given the way the House and Senate hearings failed to probe the questionable accounting and only one mentioned the questionable Sarbanes Oxley certification, the odds are high (as they always were) that Dimon will be able to carry on as before."
The Link
 
Sucks for JPM if it gets to that magnitude. I'm not sure anyone can demonstrate how such a loss would result in a "bailout." everyone looks for the headline that negatively impacts the bank / energy company / large corporation. Nobody does any modicum of research of JPM's quarterly net profit run rate, how well capitalized and well-run they are (like, best of world's money center banks), and nobody remembers how they fared in the '08 crisis. Lazy journalism and most people eat it up without any real thought.
 
I didn't mean to imply JPM will need a bailout due to this particular loss, but my point was that the U.S. government will ensure JPM's survival no matter what combination of stupid investment decisions are made by the bank's traders and executives.
 
Jamie Dimon is a very sharp man except for being a big Dem supporter. It will be interesting to see if the populist attacks by Pres. Obama against JPM and Jamie Dimon will effect Dimon's support. Personally, I would like to see Dimon run our country rather than the current pres.
 
Mus, you are obsessed with populist garbage and your leader is Matt Taibbi. Do you REALLY think Dimon had anything to do with whatever happened in Alabama? Your posting these days is eerily reminiscient of A'sD. That should make you very proud.

And if you think Obama is to Hitler what Dimon would be to Stalin, you're crazy and we're wasting time attempting to have a discussion with you.
 
The Hitler/Stalin quote was an overemphasis of the fact that people generally are willing to settle for the lesser of two evils. Dimon doesn't give a **** about America, but merely his own bottom line.

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Rex and others that believe that everything is A Ok with JPM, Jamie Dimon, other I-banks that are TBTF that operate just like JPM, and our current financial system are either hiding their heads in the sand or are living in a dream if you don't believe these guys aren't scamming the system with full complicit knowledge from the Fed and the US Govt.

The fact that there have been virtually no prosecutions or jail time for the control fraud has confounded William Black and confirms that the financial institutions along with the Fed run this country with little to no meddling from the US Govt. US govt., (Black was the former bank regulator for prosecuting over a thousand white collar criminals during the Savings and Loan crises). He can't believe that, with the exception of a handful of scapegoats, there haven't been massive prosecution of felonious criminal acts that went on prior and following 2008.

Musburger is 100% correct about his assertions stated above. Just because you choose to ignore or disbelieve it, or dismiss "poor or lame" reporting of the facts Rex, doesn't mean it isn't so or that Musbuger is some lunatic fringe conspiracy theorist. There have been several credible authors outside and even inside the MSM financial press that have pointed to the jurry rigging and market manipulation by the financial elite. These aren't some freaking stories about Billy Bob living in hicktown, USA and telling the press that they saw a UFO.
 
Q: How do I know that Dimon cares more about the bottom line than the country?
A: Because JPMorgan had surrogates bribe council members to accept the slimy deals which bankrupted the city of Birmingham.
A: Because JPMorgan held (and still holds much of), the funds stolen out of customer accounts at MF Global

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There is no doubt Dimon is charismatic. He looks good in a suit, speaks well, and is extremely knowledgeable. So was Bill Clinton for that matter. I wouldn't trust either one any farther than I could throw them.

Being up for Treasury Secretary doesn't win any brownie points. Jon Corzine was also considered as a replacement for Geithner. Want to defend him? Lots of people say he's a great guy too.

In the past decade, the list of Treasury Secretaries include Robert Ruben, Larry Summers, and Hank Paulson. I'd like to see all three of them in the Federal Pen.

Ruben worked for Goldman, later was named Secretary of the Treasury under Clinton, and then went on to make hundreds of millions of dollars running Citigroup during the early run up in the housing boom. Ruben, along with Summers, Phil Gramm, and others managed to remove Glass-Steagall regulatory law that was put in during the Great Depression. As much as anything, this got us in the place we are now; trillion dollar deficits, high unemployment, and zero percent interest rate policy as far out as you can see in an effort to heal the banking system.

Summers, along with the others mentioned, has worked as a consultant to the big banks and earned millions in the process. Basically, he carried their water for them in terms of policy. After losing millions of dollars of Harvard's endowment, Obama kept him on as a policy adviser.
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Paulson made hundreds of millions of dollars working at Goldman. When he took the Treasury position during the Bush administration, he was able to cash out of his positions at Goldman without paying taxes (perfectly legal loophole). Was he serving his country or protecting his income? Who knows? At any rate, I'd rate him as the worst Secretary of the Treasury out of the whole bunch and that's saying something.

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In related news, "Barclays Plc Chief Executive Bob Diamond quit on Tuesday under fire from politicians and regulators, the highest-profile casualty of an interest rate-rigging scandal spanning more than a dozen big banks across the world."

Barclays CEO Diamond quits over rate rigging

It would seem that at least British bank CEOs are held accountable for improprieties that occur on their watch.
 
Well Rex, that's quite a long rant. I'll respond to some of it.

First Paulson. Like the others (Sommers, Geenspan, Benanke, etc.) he never saw it - the housing bust - coming. Or so we are to believe. Even as it unfolded, we were told everything would be contained. As far as letting Lehman fail, its no secret there was no love lost between Paulson and Dick Fuld. Many accounts have Paulson excluding Lehman from meetings as the crises unfolded.

I don't know why you question my statement about trillion dollar deficits. Its a fact. We've had what now, four in a row? Surely you don't deny we've run trillion dollar deficits since the housing debacle unfolded. If you do deny this, there's really no point in responding to you.

And no, I don't believe that a gold standard will solve anything. It's too late for that. A gold standard at this point would simply force the US to default on everything all at once I suppose. Our problem in my opinion, is that the US and the world for that matter, run on a debt based monetary system. Because debt must be paid back with interest, and because the total debt consistently expands at a faster rate than does growth, the system is doomed to either fail, or default some of the debt. Default is unacceptable, hence more debt is piled on which stifles the economy's attempt to grow.

How is JPMorgan like a mob? Mobs fix prices and interest rates, and use their "power" to eliminate competition. The typical mob uses guns. The large banks use their connections with the Fed and the government to accomplish the same thing. The Citi/Travelers merger would be one example. They merged illegally and then the law was changed retroactively to make it legal. Zero Interest rate policy, something available to primary dealers if I'm not mistaken, give an incredible advantage to the big banks. They can borrow billions of dollars for practically nothing, and then use that money to buy US Treasuries, or even park the funds at the fed and receive interest above what they pay to borrow. Wish I could do that.

It seems that the LIBOR scandal - thus far just Barclays has been implicated - has much in common with the municipal bond scandal. In both cases, the primary element was illegally fixing interest rates in order to generate profits at the expense of the public and the of law. In the case of LIBOR, Barclays is now claiming that the British regulators actually gave them the green light. If true, this shows just how compromised the financial system has become. Barclays also claims that several banks were involved. I have no reason to believe that would not be the case.

I'll not research Summers/Harvard. You can do your own Google search. Type in Larry Summers Harvard endowment and let us know what you find. Then ask yourself if that's the kind of person you'd like running the US Treasury and consulting on economic policy for the country. Also, tell me why the removal of Glass-Steagall was a positive development, or why easing collateral criteria (this is Europe, but I'm sure Dimon would like the same easing of standards) are desirable from the viewpoint of the general public.
 
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