FleeceBook: Meet JP Morgan's Matt Zames

Tyler Durden's picture

Previously, in our first two editions of FleeceBook, we focused on "public servants" working for either the Bank of International Settlements, or the Bank of England (doing all they can to generate returns for private shareholders, especially those of financial firms). Today, for a change, we shift to the private sector, and specifically a bank situated at the nexus of public and private finance: JP Morgan, which courtesy of its monopolist position at the apex of the Shadow Banking's critical Tri-Party Repo system (consisting of The New York Fed, The Bank of New York, and JP Morgan, of course) has an unparalleled reach (and domination - much to Lehman Brother's humiliation) into not only traditional bank funding conduits, but "shadow" as well. And of all this bank's employees, by far the most interesting, unassuming and "underappreciated" is neither its CEO Jamie Dimon, nor the head of JPM's global commodities group (and individual responsible for conceiving of the Credit Default Swap product) Blythe Masters, but one Matt Zames.

It is our humble opinion that Matt is one of the most interesting people not only at JPMorgan but in all of modern finance, courtesy of his dominant role at the Treasury Borrowing Advisory Committee (of which he is Chairman, profiled here: The Supercommittee That Really Runs America"), a group of Wall Street individuals best known for telling the current (and future) Treasury Secretary what to do, and thus effectively represent the handful of people, all of which are employed by various financial firms, that decides the fate of US public spending (and deficit creation, which incidentally must always go on - i.e., no spending cuts... ever, because if there were no deficits to be monetized the Fed would no longer create excess reserves, which are now the lifeblood of bank profitability in the New Normal as explained previously).

But perhaps just as important, Matt Zames is now the head of JPM's infamous Chief Investment Office. As also explained previously, courtesy of the London Whale massive prop trading faux pas in early 2012, we have the CIO to thank for providing us the insight into just how banks funds their massive, Volcker-rule skirting prop trading operations (which incidentally are far more pervasive than the recent Bloomberg's expose on a certain group at Goldman, which has openly been involved in prop trading since its inception), namely via excess deposits over loans. We are certain that it is not only JPM, but every other commercial US bank (see Wells Fargo's record delta reported earlier today), that takes advantage of what is now a cumulative $2 trillion imbalance of excess deposits, driven by the Fed's excess reserves, to do just what JPM did and reinvest deposits, no longer firewalled from trading activities, in risky assets, such as buying stocks and selling CDS. But mostly buying stocks. As a "hedge" of course. 

In other words, it is Mr. Zames whose dual role of continuing to be on the TBAC on one hand, and indirectly determining how many excess reserves will be created by the Fed as a result of excess Treasury monetization - an issue he has direct input on in his capacity as quasi public servant, to then flip, and on the other hand, use said reserves, transformed via repo or (ab)used directly, as prop trading dry powder in his private sector capacity as CIO head, and proceed to invest as he sees fit. All of this, of course, will be done with absolute stealth: after all has JPM released anything more than broad strokes details of what precisely went so wrong at the JPM CIO aside from a $200 billion notional CDS position going horribly wrong? Because, naturally, the regulators are complicit on this scheme too.

It is precisely his role at the proverbial core of the US ponzi scheme, where he takes public funds, indirectly, with one hand, and proceeds to invest it for private benefit, with the other, that is what makes Mr. Zames quite so fascinating.

Among the other things that make Mr. Zames quite fascinating, is that he used to be a trader for none other than the first hedge fund to feel the unwrath of the Federal Reserve, and receive a bailout: Long-Term Capital Management (the same LTCM, its management team, and of course its legal team, that ushered in the parasitic and destructive era of Too Big To Fail... but that is a story for another day). It is somewhat ironic that Mr. Zames had to go from the original hedge fund blow up, to head another (one located deep in the bowels of JP Morgan) that blew up just before his arrival.

But fear not: Mr. Zames is quite qualified for all of the above - after all he graduated from MIT. Sadly, Matt is not on the "MIT engineers" list of central bankers (profiled previously) who meet secretly at the BIS every now and then and decide the fate of public funding in the "free world."  At least not yet. Or at least, not that we know of.

Yet, that Zames does all of the above with virtually no public exposure is most fascinating.

Which is why we are happy to make him the third honorary inductee into the Zero Hedge FleeceBook half of fame.

More on Mr. Zames courtesy of Bloomberg's Max Abelson:

Zames Rises From JPMorgan Battlefield to Dimon’s War Council

Twice in the past 100 days, JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon has turned to a 41-year-old former hedge-fund trader to tackle challenges facing the largest U.S. bank.

Matt Zames, named chief investment officer in May to contain trading losses that have cost at least $5.8 billion, became the firm’s co-chief operating officer last week. Zames, who began the year as co-head of the bank’s fixed-income business, now oversees senior executives including Chief Financial Officer Douglas Braunstein, 51, and regulatory affairs head Barry Zubrow, 59.

“He had the guts and the brains,” Dimon said in an interview after announcing the management shakeup on July 27. “Matt is straight, direct, does his work. He’s got that kind of confidence without arrogance.”

Zames shoots sporting clays, described by its national association as “golf with a shotgun.” He studies military history, reading books about World War II and more recent conflicts. A husband and father of three, he leaves his bed in New Jersey at 4:45 a.m., he said in an interview.

“I wake up every morning -- every morning -- excited to actually make this place a better place,” he said. “I am truly humbled and honored to have been given the opportunity.”

Zames will continue to lead the chief investment office while adding oversight of finance, strategy and regulatory affairs, according to a memo sent to employees last week. The additional duties place him among senior executives who might one day succeed Dimon. Zames will serve as co-COO alongside Frank Bisignano, 52, whose responsibilities include technology and security.

Two JPMorgan executives who weren’t authorized to speak on the matter said Zames is particularly interested in trying to help shape regulatory policies so they’ll be better for the New York-based bank and the broader economy.

He and Dimon, 56, were both involved in an earlier multibillion-dollar trading crisis. After graduating from the Massachusetts Institute of Technology’s Sloan School of Management in 1993 and spending some months at Goldman Sachs Group Inc. (GS), Zames became a trader for Long-Term Capital Management LP.

The hedge fund was bailed out in 1998 after Russia’s debt default led to $4 billion of losses in what was then one of the largest collapses in U.S. investment history. The Federal Reserve Bank of New York organized support from banks including the firm Dimon was leading, Salomon Smith Barney. Zames said he “definitely” remembers meeting Dimon then, though his boss doesn’t. “No,” Dimon said when asked about the encounter.

Even so, Long-Term Capital veterans recall Zames as one of the firm’s most-trusted young traders.

Zames was trusted and mentored by senior colleagues, according to Rickards and Long-Term partner Eric Rosenfeld.

He’s a mathematician and he’s a poet: He understands the math, but he understands qualitatively what’s going on,” said Rosenfeld, who now teaches fixed-income at Sloan. Zames is one of the people on Wall Street who “live and breathe the trades they’re doing,” he said.

The trading that Zames has overseen at JPMorgan has made the firm billions of dollars. Fixed-income trading revenue last year was $14.8 billion excluding accounting adjustments, more than any other global bank. JPMorgan posted the only increase in debt trading among the largest firms that year, while Bank of America Corp. (BAC) and Goldman Sachs slid more than 30 percent.

In last week’s interview, Dimon praised Zames’ handling of the crisis and recounted their meeting in May to discuss the situation. Dimon had called Zames into work on a Saturday, and the two were standing in a hallway when the CEO asked him to take over the money-losing unit. Zames’ promotion came fewer than three months later.

“When you have a talent like that, you got to give him a challenge,” Dimon said.


While Dimon said in last week’s interview that he hopes to keep leading JPMorgan for “many, many more years,” Zames’ promotion fueled speculation that the former trader is now a potential successor...

* * *

Read more here

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
LongSoupLine's picture

Just yet another layer in an increasingly infinite stinking fucking pile of global financial shit.

fuck you JPM, fucking wastes of fucking humanity.

whstlblwr's picture

Looks like a good guy for once. Never mind, read the mathematician poet line and thought not bad, before reading the article.

Robot Traders Mom's picture



He fucks taxpayers to 'pay tribute' to the Fed. Scumbag.

TwoShortPlanks's picture

Hey ZH, what about a 52 card deck with the top 52 bankers's picture and bio on the back?

Dimon, Blankfein, Bernanke and Geithner being the Jokers of course.

I'll buy a dozen packs, at least.

whstlblwr's picture

Actually this guy looks like SUPER-Jew. He trains with guns, he gives to charity, I bet he would throw high quality cardboard in the dumpster just to be nice for @francis_sawyer

Sofa King's picture

I was wondering what had become of MC Search from 3rd Base.



Short Memories's picture

What a fucking waste.

If he's such a fucking genius then why not do something for mankind and not just a scourge of the earth like JP

In fact, if he's suck a fucking genius, he should realised he's fucking the planet for his own greed and self gratification and greed.

Fuck you Matt! You suck! No one suffers just so that my kids can eat, can you say that?


inevitablecollapse's picture

one look at that guy and i can tell he's an asshole

Divided States of America's picture

This crony a Jew too? He sure looks like one

James_Cole's picture

"The trading that Zames has overseen at JPMorgan has made the firm billions of dollars. Fixed-income trading revenue last year was $14.8 billion excluding accounting adjustments"

He's a bad guy blah blah blah, all the same that's very impressive performance.

francis_sawyer's picture

All the cat food eating grannies out there bow to his mastery of the universe at their expense...

Stackers's picture

So if this is the Masters of the Universe series I nominate this guy to be Stinkor master of all that smells



nope-1004's picture

Usain Bolt robbing a bank, stealing millions of taxpayer dollars and outrunning police in record time, is equally "impressive".  Actually, more impressive, because Bolt has skill and can run, this guy is just a crony dude milking the system off of inside information.

There is no skill in being a successful insider.


Totentänzerlied's picture

Depends, do you consider having the moral fiber of a sea slug (no offense to sea slugs) a skill?

Ned Zeppelin's picture

There is no skill in being a successful insider.

SOOOO well said.

rawsienna's picture

Actually quite talented and risk adverse from what I have heard -conflict of interests aside

gckings19's picture

how can you be risk averse and make that muchmoney.  who are you trying to kid?  its not possible....without the inside info i guess.

Blankenstein's picture

Risk averse because he has stacked the deck and knows what the cards are.  Also, risk averse because if he does make the wrong bet, the government will be there to bail him out.  Easy to be "risk averse" when you are a deck-stacking insider. 

hooligan2009's picture

yes, but I think you have made brazillions of pixie dust money if you got to see all the trades that were going to be put on at tax payers risk BEFORE they are put on, and BEFORE you ring your buddies to tell them what you have done and why you did it

gckings19's picture

yeah....impressive....lets see, he gets to make the rules and policy, then trade on that knowledge.   wow, that must be difficult.

Bay of Pigs's picture

You aren't the same James Cole from Mish's board are you?

I don't remember you as being this misinformed and stupid.

Blano's picture

Ok there was 14.8 billion in revenue, but was there any profit??

Shit I can generate 14 billion in revenue, making a buck is another matter.  But then again, in Bailout Nation I guess profit is just an interesting sidenote.

caimen garou's picture

no, he is a asshalf it take two of him to make a asshole

BrigstockBoy's picture

He's a poet, eh?

Roses are red
Violets are blue
Matt is a piece of shit
Jamie Dimon is too

A L I E N's picture

lol, thanks for the friday humor!

BattlegroundEurope2011's picture

Now this is just a guess.  May be a long shot but...









Is he Jewish?


hooligan2009's picture

you get that from the Daily Show about AIG being sued by....?

WTFx10's picture

How come all the anti-anti-semites don't post a list of all the goyim that control banking, industry,hollywood and media?

Where is that goyim list? How many dual citizenship non jewish people in Israelis Government?


whstlblwr's picture

Hey small dick, why don't you post a list of what really matters. Post a list of who controls oil, and military. Our MASTERS! Nice try STOOGES.

Parrotile's picture

Your MASTERS? Who might they be?

Presidents new and old, Congress??

Seems that they all have the same ideas doesn't it? Slight variations on a central theme.

Wonder just who provides their obviously very consistent "guidance"?

Wonder just who THEIR MASTERS are (hint - "Old" money, "Family" money - "Intergenerational Wealth Accumulation" money.)

Modern puppets, like modern technology, have become very impressive, and the ill informed might almost argue a degree of autonomy, but never forget that the puppet is ultimately controlled by the puppeteer - and even an autonomous puppet will have  a convenient "On-Off" swich held by the covertly ultimately powerful.

Think about it . . . .

SamAdams's picture

Just another tool of the real power brokers, i.e. the private investment banks that control the BIS. 

Cognitive Dissonance's picture

It seems to me that the way to identify sociopathic banksters is by their male pattern baldness.

<Ummmm.....wait a minute, that could include me as well.> :>)

piceridu's picture

Think about how many lives would be spared worldwide if someone nuked Massachusetts Institute of Technology’s Sloan School of Management 

Cognitive Dissonance's picture

Nah. That would just piss off the surviving alumni. Then we'd really be in big trouble.

Glass Seagull's picture


Lives in a locked trunk in Jamie Dimon's basement.

koncaswatch's picture

Great series Tylers.

I'm informed, repulsed and angered all at once... long live crony capitalism!

disabledvet's picture

"Like a Sherrif in Ye Olde West he arrived. He had a past...but this did not concern him. He had a job to do. The town needed him. 'there's always another who says they can draw faster' the townspeople complained. But he was quiet...and they felt assured." (cue Ye Olde West music here.)

CharliePrince's picture

live and breathe the trades they’re doing


so they were all huffing @ LTCM

sgt_doom's picture

That LTCM thingy, it's been a while, but wasn't that an end run to takeover Bank of America?

BofA's unsecured loan on the Russian Bonds blows up, so NationsBank, ganging up with Goldman Sachs and Mellon Bank, do a deal and pick up BofA, right?

Not sure of the details, but that's sort of the way I recall it?


Titus Flavius Caesar Vespasianus Augustus's picture

It takes a tough man to recognize a tender ponzi.


Keep fucking those chickens, Matty boy.

From the comments:


I think you are absolutely correct:

“There’s another possibility here, which is that Zames had received additional information – beyond what he’d read in Barron’s – that convinced him that Madoff was a Ponzi. But, as a cautious and sophisticated person, he knew that it was unwise to reveal his sources. So he played it close to the vest and simply mentioned the one piece of evidence that was already in the public domain. This seems to me like an entirely plausible scenario; if true, then Picard’s case against JP Morgan could turn out to be stronger than it may look now.”

I believe his secret sources were wealthy friends in the Jewish community,…that networking is how Madoff got his clients. Zames may have heard personal stories about the great returns on investments from Madoff. Some of these investors might have been JPM clients and Zames did not want to rock the boat by revealing anything obviously embarrassing to his friends or JPM. Mentioning the Barrons article was merely a safe, publicly available source



I think that Madoff is in jail because he stole from the tribe. 


Pretty fucked up how verboden it is to note the disproportionate amount of Jews at top posts in these banks and the federal agencies which are supposed to regulate them.  It begins to look deliberate, but it doesn't help that genuine antisemites are the only ones chattering about it.  I just want to be able to state the fucking obvious - it's insider trading, based on who learned what from whom at the synagogue.


Pretty easy to maintain a headlock on power when you preferentially hire from within your own group, and you can rest easy that no major paper or news source will talk about it.


Pretty sweet deal.   Affirmative action is only for the poors, working in their blue collar jobs...

Blazed's picture

What is a "genuine anti-semite"? To be anti-semitic means to be against semitism, simply being against any preferential treatment and special privilege for semites. Or since 85% of Jews are Ashkenazi, with varying amounts of European/Asiatic/Semitic admixture, and they have virtually genocided actual semitic people in Palestine, are they the actual anti-semites? Of course in reality Jews use the term to fend off ANY CRITIQUE of their destructive behaviors and/or political/social activism, simply observe the ADL, JDL, SPLC, AIPAC, etc.

WTFx10's picture

But the anti-anti-semites don't want hear that shit. Its just a fluke that they all Jewish, it must be muslims?

Its not the Banksters fault they are all Jewish, Its not the media propaganda whores fault they are Jewish. Its not Hollywoods fault they are all Jewish. Its not the fault of the wealthiest individuals on the planet that they are all Jewish Its just a coincidence that one jew in American government is replaced by another especially when it has to do with economics. Treasury Secretary? Its not the Jews fault that our foreign policy is what ever Israel says it is. It's not the fault of the Jews. Its the Organized Criminal gangsters fault who happen to be Jewish. Not all Itailians are in the Mafia but that doesn't stop people associating the mafia with itailians.

If the non criminal Jews care so much about the rape,theft and murder of the rest of the planet maybe they should be the ones complaining instead of us goyim?