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Did JPM's CIO Intentionally Start The Margin Call Avalanche That Crushed Lehman?
It is conventional wisdom that in the days leading to Lehman's bankruptcy filing on the night of September 15, 2008, sheer panic and utter confusion ruled ever back- and middle-office, over concerns that a counterparty, any counterparty, but especially Lehman, would end up being "not money good", and the result was that trigger-happy margin clerks had the potential to make or break a company, by demanding just enough variation margin that would send the notice recipient promptly into bankruptcy. It is also conventional wisdom, that it was precisely several such margin calls mostly out of JPMorgan that precipitated the Chapter 7 filing by Lehman brothers, as the firm was finally unable to mask the fact that it was terminally overlevered, and even more terminally illiquid. It is certainly conventional wisdom, that Lehman was certainly massively overlevered, holding billions of overmarked CMBS on its balance sheet, and was doing everything in its power to hold on to precious liquidity, taking every opportunity to window dress its balance sheet as far better than it truly was (Repo 105 at the end of every quarter promptly comes to mind), over fears of avoiding precisely such a margin call onslaught, where the first margin call would cascade into many, likely lethal, margin calls.
Which is why, over four years after the filing of Lehman's bankruptcy and the fight for who was responsible for what in the Lehman Chapter 7 saga still waging, most actively between the Lehman creditor estate and tri-party repo stalwart JP Morgan, we were not surprised to learn that the Lehman estate had attempted to force yet another sworn testimony from a (former) employee of JP Morgan, in hopes of catching the firm as engaging in a malicious act of defrauding Lehman of precious liquidity in its final hours, or said in layman's terms, forcing it to liquidate.
What did catch our attention was that Lehman named the infamous JPM Chief Investment Office, and specifically its very infamous trader Bruno Iksil, accountable along with others for the London Whale fiasco, as the person responsible for an initial margin call to the tune of $273.3 million, made the same day "that JPMorgan made its first of two demands that week each for $5 billion of extra cash collateral that it had no right to obtain and that drained Lehman of $8.6 billion" (as per the Lehman filing). One could make the argument that this initial margin call was the straw that broke the camel's back, as in the avalanche of money requests, every dollar flowing out of Lehman may have been the one that pushed it under.
If, of course, the Lehman estate claim was credible.
At this point, virtually everyone in the media said "no way" and moved on: this has to be just another desperate attempt by the Lehman unsecureds to force a settlement from JPM, and a few more cent recovery on the bonds. After all, how on earth can someone hold now former JPM employee Bruno Iksil accountable for what he did nearly 5 years ago (however still within the statute of limitations). We, too, almost ignored the story as just too incredible to be true.
Almost.
And then we decided to do some digging.
What we found was stunning, and frankly shocking, because it appears that the Lehman estate was absolutely correct.
In other words, a chronological forensic analysis of the events surrounding the margin call in question confirm, beyond a shadow of a doubt that the margin call issued by JP Morgan's CIO unit was absolutely unwarranted.
But it gets worse - because the mistake that led to the issuance of what may have been the defining margin call that was the beginning of the end of Lehman, was so ridiculously naive, and idiotic, that we have a hard time believing it was made in good faith, even if it JPMorgan tries to put the blame on some 19 year old NYU intern as being responsible. In fact, we have an easier time believing that the margin call was purposeful, malicious and made with full intent to destroy Lehman, which in turn would mean that, despite the repeated mockery of even the sophisticated media, Lehman may well have been the mark of a JPM-spearheaded campaign to force the bank to shutter as margin call after margin call led it to lose all liquidity.
So what exactly happened? Here are the events as seen by the Lehman side:
On September 9, 2008, the same day that JPMorgan made its initial demand for $5 billion of additional collateral and extracted new one-sided legal agreements from Lehman, JPMorgan also insisted that Lehman post $273.3 million before close of business as derivatives variation margin. The $273.3 million derivative margin demand was primarily attributable to three disputed trades which Mr. Iksil managed or discussed with Lehman. Lehman was certain that JPMorgan's marks were erroneous and that in fact Lehman owed no additional margin. All three CDS referenced a well known and liquid index for which readily-available third party valuations corroborated Lehman’s marks, not JPMorgan’s, which were off by $273.3 million. Nevertheless, Lehman bowed to pressure from JPMorgan executives, including Investment Bank Chief Risk Officer John Hogan, to accept JPMorgan's marks and immediately post the requisite collateral. Accordingly Lehman sent the $273.3 million demanded. That JPMorgan was able to force Lehman’s compliance is particularly telling considering JPMorgan’s marks were so clearly wrong.
The trades primary responsible for the $273.3 million derivatives margin dispute were 3 CDS index tranche trades booked through JPMorgan’s CIO, two of which were managed by Mr. Iksil. Lehman had repeatedly asked Mr. Iksil to correct the mark on the third large disputed trade throughout August and early September without success. Contemporaneous emails attached here reflect how JPMorgan’s mismarks grew into a multi-month ordeal due to the inaction and unresponsiveness of JPMorgan, and of Mr. Iksil in particular.
On September 10, 2008, Lehman’s relationship, operations, and trading personnel mobilized to resolve the mismarks of Mr. Iksil’s trades and secure the return of the nearly 300 million dollars in excess collateral they had been pressured to post to JPMorgan the day before.
Late in the morning on September 10, Lehman reached out once again to Mr. Iksil to request that he correct his marks. This time, Mr. Iksil immediately referred Lehman to a JPMorgan colleague who conceded within minutes that Lehman's marks were correct and an error on JPMorgan's side had caused the problem. Less than an hour later JPMorgan agreed in full to Lehman's September 10 collateral call, which included JPMorgan returning the entire $273.3 million Lehman had delivered to JPMorgan the day before.
That JPMorgan would run roughshod over Lehman’s objections and insist on getting collateral immediately based on marks that were so quickly seen to be erroneous provide a window into JPMorgan’s mindset and operating procedures the week prior to LBHI’s bankruptcy: Get cash now, ask questions later. JPMorgan has taken the position in this litigation that JPMorgan was solicitous of Lehman’s welfare and demanded collateral only after carefully calculating the amount required. Yet, JPMorgan failed to correct its marks despite weeks of requests to do so and allowed a valuation dispute to fester for nearly a month. And on September 9, 2008, although even the most minimal diligence would have revealed JPMorgan was in the wrong, JPMorgan demanded that Lehman accept JPMorgan’s marks and post $273.3 million in disputed collateral overnight. That demand came on the very same day that JPMorgan made its first of two demands that week each for $5 billion of extra cash collateral that it had no right to obtain and that drained Lehman of $8.6 billion.
What, specifically, were the CDX trades in question? They were all three different CDX HY8 5 year 0-10 tranche index trades, which Lehman had bought from Bruno Iksil. Here they are, from one of the exhibit emails, also showing the massive MTM diveregence between the JPM and Lehman marks.
Although perhaps the best way to show this is from this table which summarizes the email from Lehman's CDX trader (24 year old) Zahid Hassan who shows the drastic change in MTM between Lehman and JPM on the CDX tranches:
Basically, what any credit trader can figure out happened here after looking at the table above for more than 5 seconds, and looking at the variation in Leh vs JPM marks, is that whereas Lehman was marking its HY8 exposure correctly, and in line with where MarkIt and other pricing databases would have it, what JPM did was take the upfront priced index and price at 1 par minus price! In other words, where Lehman had it priced at 83.05%, what JPM wanted to do was express a price of 1-19.42%, or 81.58; instead the JPM front, middle and back office chain of command made a mistake so rookie it is impossible it was an error, and it appears to have been maliciously intended to force a liquidity event. Because what drove this massive margin call on this very liquid (at the time) index is because JPM had it suddenly repriced in MTM from 83 to 19 when what JPM really wanted was to reprice it from 83 to 81!
In other words, literally overnight, instead of pricing Lehman's paid upfront collateral at Price, JPM decided, for whatever reason, to revalue it at 1-Price!
The result, had JPM correctly calculated the MTM, would have been a variation margin call of just $6 million: some $257 million less than what JPM demanded from the cash-strapped company!
While we do not know if the $257 million extra in cash that Lehman would have retained on its books would have avoided the subsequent $10 billion in JPM margin calls, or if it would have avoided the firm's bankruptcy as the final outcome, we know we are, and Lehman, are right in alleging that it was JPM's fault in completely screwing up the calculation that led to the massive margin call. Here is the Bloomberg Chat transcript (Lehman Exhibit M) between Lehman (again very, very young CDX trader) Zahid Hassan, and Bruno Iksil first, and then Iksil's supervisor in London, Luis Buraya:
The chat above took place at 11:40 am on Wednesday, September 10: two days before the weekend which was Lehman's last. What we learn from the transcript is threefold: first Lehman was incorrectly margined to the tune of $263 million. JPMorgan admits as much; second, by the time JPM admitted it was wrong, the margin request had already been satisfied, and margin clerks in other divisions were scrambling to come up with other comparably fictitious variation margin demands, such as those which saw JPM demanding extracting nearly $10 billion in liquidity from Lehman in the next 48 hours which culminated with Lehman's Chapter 7. FInally, the "guy" responsible was not "collateral" but CIO, meaning the division that was supposed to hedge, but did anything but when it blew up after attempting to corner the HY9 market last year, had other less noble uses too: to destroy the competition by commencing an avalanche of unjustified margin calls!
Lehman's filing summarizes it as much in the following:
The $273.3 million collateral dispute is highly relevant to this litigation over JPMorgan’s improper cash collateral demands that same week, which deprived Lehman of desperately needed liquidity and precipitated Lehman’s exigent bankruptcy filing. First, the backdrop to the dispute illustrates that there was a well developed market-standard practice for the calculation and exchange of collateral in support of derivatives transactions, which is specified in the ISDA Master Agreement and Credit Support Annex (“CSA”) executed between the parties and involves daily exchange of collateral based on the current net mark-to-market value of the positions. The daily collateral calls under the CSAs which were made and met throughout the week, and the procedures by which the $273.3 million dispute was ultimately resolved, indicate that during the week of September 8 – 12 JPMorgan adhered to the CSA framework for the collateralization of counterparty derivatives exposure to Lehman. Even the $273.3 demand, an example as unreasonable as they come, was tied to the marks (albeit incorrect) on particular trades and posted and returned via the CSA framework. JPMorgan’s demand for $5 billion on September 9, which JPMorgan claims it made in significant part to collateralize its purported derivatives exposure to Lehman, was entirely outside the ISDA/CSA framework and represented a dramatic departure from commercial practice for collateralization of derivatives exposure. Second, the episode shows that during the week of September 8 – 12 JPMorgan was willing to override standard commercial procedure by insisting that any collateral disputes be immediately resolved in its favor. Third, it illustrates Lehman’s complete vulnerability to JPMorgan’s bullying behavior. Just as with the $8.6 billion, Lehman lacked any choice other than to capitulate to demands it knew were baseless, in light of JPMorgan’s power to deal Lehman a death blow by ceasing to trade or clear. Finally, it shows that JPMorgan’s exposure calculation methods were highly suspect – a point with obvious relevance to this litigation over two demands for collateral in round $5 billion increments, unaccompanied by any calculation or documentation of exposure.
To conclude: a variation margin call, which we now know beyond a reasonable doubt, was erroneous and had no basis in reality, launched by JPM's CIO is what started the cash outflow from Lehman, and was followed by two other comparable $5 billion margin calls, which may well have had the same totally erroneous justification to them. But Lehman had no choice: even then saying no to the uber-behemoth and tri-party repo guardian JPM was tantamount to suicide anyway.
Any by the close of trading on Friday everyone else on Wall Street was doing what JPM did: demanding hundreds of millions and billions in margin from Lehman, at which point seeking the culprit for what 48 short hours later would be the biggest bankruptcy in history, was a moot point.
By then the game was over, and JPM's CIO had won, courtesy of a ruse so pathetic it was either outright idiotic, or conceived with the most despicable of destructive intentions. And then we remember that it is the same uber-sophisticated CIO unit that for years was misreporting its VaR because of a simple excel transposition error which nobody had bothered to check!
So we wonder: should we attribute to malice and Jamie Dimon's bloodthirst what sheer, brutal JPMorganite incompetence can explain far more simply? But then we also wonder: is it also purely a coincidence that JPM's largest gold vault in the world is located inches away from the gold vault of the New York Fed...
And everything is once again crystal clear.
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Of course it is all intentional and malicious. Does corruption and criminality have any other methodologies by which to opperate?
What is cascading down the hill like a runaway snow ball now is the awareness of what is going on, and what seems to be a growing panic that is overtaking a lot of people. Right minded decisions are not made from a place of fear. What must be done now is to plan on what to do after some sort of triggering event possibly happens to maybe start the avalanche of sell offs in a last desperate dash to grasp what little value one can get out of the crashing market. Gold may be worth a bazillion dollars an ounce some day, but by then the dollar will be dead and what ever gold is reset at, it will be done in the chinese yuan, the new world's reserve currency after the world war on the USA.
The global economic crisis is staged:http://poorrichards-blog.blogspot.com/2013/03/the-global-economic-crisis...
this article is zh pure gold.....it doesn't matter whether the error was malicious or ignorant - it was criminal to the core.....this article also vindicates jim willie's report of at least a year ago that jpmorgan did a hit job on lehman - gangster style drive by.....
but no - it was no accident....accidents do not happen at that level of that magnitude....those believing it so are foolish and have absolutely no idea about management and control of organizations - especially where millions and billions are involved. as a former project manager, i have been scrutinized over a few hours of reported work which was at best a rounding error - i can assure you that this was malice aforethought.
either way jpm was guilty of a crime. anyone who buys the "oops my bad" excuse has a criminal mind or one which is abjectly irresponsible. it's all part of the plausible deniability ruse.
ZH one should look at the parallel failure of Washington Mutual Inc., and review JPM's hand in it demise. It all started in the spring of 2008 after JPM took over BEAR (whom was runnning the hedge / swap book for WMI. JPM formed a group called Project West to attempt to acquire WMI(it was WMB they really wanted) in the Spring of 2008. They made a run at WMI, whom rebuffed them; then JPM used the Project West division to undermine WMI / WMB's creditability on the street and with the ratings agencies. They went so far as to present to the ratings agencies false info in order to have WMI / WMB debt downgraded. In early September 2008 they were instrumental in causing a run on WMB, and due to the confidential information they received when they were invited to bid on the company, and the informatin their derivatives desk had due to the acquistiion of BEAR in the spring of 2008, they were able to submit a bid to the FDIC at probably $.20 on the dollar for WMB on September 25th, stripping WMI of its corpus, whom filed for BK the very nest day. This is only the tip of the iceberg. Kirsten Grind in her book The Rise and Fall of WAMU details with clarity what occurred. So basically JPM was a major factor in the fall of 2008.
Financial terrorism, inside job. Easier to cripple the financial system if you're working from within. Remember GS had their proprietary trading software stolen from an insider? This list goes on and on and somehow to me these anomalies just don't pass the sniff test.
Maybe these firms just hire fantastically smart but reckless men with huge egos, or maybe they have their own personal agenda, or maybe they're hired guns. Of course we'll never know for certain about the last one because Obama wiped out terrorism with the death of Bin Laden, surely! (sarc)
Thanks Tyler for the great work, again!
t
If this case is in the Federal court in NY then nothing will happen to JPM. The courts in NY are bought and paid for by the big banks.
The kig of the moneychangers Judge Rakoff, Southern District Federal Court will never convict any member of his Temple.
they all go free except for those that confess.
Poor Bernie, he could still be out on appeal or , maybe, not even charged w/ a crime if he would have kept his mouth shut.
"What we found was stunning, and frankly shocking ..."
These days, I am convinced that the events around 2008 were deliberately designed, with malice aforethought, to happen. Furthermore, I regard them as consistent with the view that the seminal events on 9/11/2001 were an inside job, false flag attack.
That is, I think the international banksters are collectively a group of trillionaire mass murderers, who are working towards consolidating their ability to make the world's money supply out of nothing, as debts. Therefore, I am no longer surprised to have it be apparently confirmed that yet another aspect of these events was malicious.
My basic view is that there is a COMBINED MONEY/MURDER SYSTEM, operated by the best organized gang of criminals, that have covertly been able to take over the government. Therefore, I think it is practically impossible to imagine the magnitudes of evil which were behind what has been happening. Furthermore, as the transnational banksters attempt to consolidate their global hegemony, there is nothing off the table, as far as their options, including starting more genocidal wars, along with imposing democidal martial law.
Wiping out their competition is practically nothing compared to them gambling with the risk of wiping out most of the human species.
I cannot help but agree, though before 9/11 I would have thought myself delusional for entertaining such conclusions.
I am pleased that you have put things in the way I do, e.g. you have not cited an "Illuminati", nor "Reptilian Shape Shifters", nor any other attribution for the psychopaths who invariably rise, like scum, to the top of the cess-pit of all that can go wrong with our species.
I used to think that psychopaths could be explained and understood via normal psychological understandings of childhood abuse distorting personalities, but I no longer think this.
My first inkling was many years when studying anthropology, e.g. finding out that normally peaceful tribes in Papua got stirred-up by a misfit (essentially) to go to war against another tribe.
I used to reject the notion of "evil" - basically a person just born at least sociopathic and therefore probably the result of a defect in our species' genetic code.
But how else to explain such historic psychopaths as Alexander the (un)Great, Julius Caesar ...... Richard the Lion Heart ... and more modern "heroes" like Hitler, Stalin, Bush 1&2, Obomber and (post-capitalsm) the banksters of finacialism?
The common threads are zero conscience, a desire to conquer the world and sadistic intent powered by pure self-interest.
My only point of disagreement with you is that these homicidal bastards are actually organized, except loosely and pragmatically - because they are just as willing to kill their own kind, as millions of ordinary people, if each sees some personal advantage.
regarding 'evil' there is a nice theory in a book 'the road less travelled' by m. scott peck. it's similar to yours.You can find summary in wikipedia.
Peck went much further in
'People of the Lie', his next book and it is frightening.
Read it only if you are strong and aware.
People of the Lie is available on amazon.
Further down Jews and Zionists are mentioned.
It is helpful to remember psychopaths don't believe in God, they are god.
+
Bill
History repeating itself? Wasn't JPMorgan margin calls also partially responsible for the 1929 Crash?
Knickerbocker Trust. Almost 100 years to the day.
I realise this thread is stale, but thought it would be interesting to add just a bit more to your post,
just a wiki reference, of couse, but it is an interesting echo of what's still playing out. . .
I discovered something very interesting, the 1871 "Chicago Fire" was not just a fire in Chicago, there were actually around 17 MAJOR fires across the Midwest over a period of days.
This is undoubtedly an "asteroid attack". I just discovered this today, although others have combined The Chicago, the Peshtigo, and Michigan fires. At least I discovered that today after my own research.
Check it out, this is cool, but a little scary.
http://nukeprofessional.blogspot.com/2013/03/meteor-coincidence-methinks-not.html
That was off topic, but the data you presented suggested some very good points. Thx.
Confuse and conquer, eh?
http://en.wikipedia.org/wiki/Great_Fire_of_1910 Better to remember the first Clinton crime spree before bloodclot runs again. Ruby Ridge, Rodger Clinton, Waco, Mena (fire), Vince Foster, the accomplice who unfortunately died in a plane crash after being shot in the head, all the Ark state cops / former Clinton bodyguards executed at Mena, and the young intern who committed suicide by shooting herself in the back of the head with a shotgun. Just for starters. Lady In The Radiator isn't eligible on account of her high risk of stroke. We would be left leaderless and immediately start to recover. They can't allow it.
http://arkancide.com
Disarmament
Open skies
Glass Steagall
Affirmative Discrimination
NAFTA
GATT
FDA - KGB
Clipper
Universal Deathcare
Very suspicious... Didn't the CIO report point to bad marks being a cause of the IG9 trading loss too? Two traders were looking at at $200 million loss, but the marks were adjusted down to a $20 m loss on the day. (I'm doing this from memory, so the numbers aren't right.) but, it's all good... The CIO report said the marks were always within company parameters so no worries.
Stay tuned. The walls are closing in on The Golden Boy.
I especially liked the pompous crack.. Mouth got ahead of him.
Won't be the last time. Brushfires everywhere.
Nice work Tylers
It is time for old money smack down the gangsta banksta JD who has got too big for his britches. Hiding in Switzerland is not enough. Time to punish newbies who have failed, yet dare to take their millions..without earning it. JD is a gangsta banksta.
Enough, already.
And who's gonna have enough balls to take down JPM with fake margin calls?
Sounds like Lehman CEO, didn't go to the right Temple?
There were only Jews pushing other Jews into the gas chambers; there were only Jews putting Jews into the ovens. The Jews will, eventually sell each other out to accomplish their final, total destruction. It will be amusing to watch Jew eat Jew until their are no Jews left.
Despicable.
Correction: zionists.
Most jews, christians, buddhists and even hate filled medieval muslims have done nothing to aid Zionists...and the gangsta bankstas beloved of the House of Saud, main scream media, and DC.
Agreed. There's a world of difference between Jews and Zionist parasites...with apologies to parasites everywhere.
I feel sorry for zionists. They have been ripped off by the likes of JD, and the Morgue.
JD is a gangsta banksta, and so is his last hit: Jon Corzine.
Jail them. Don't pay them...as a warning to the others.
um....
WOW!!
not suprising but ...WOW!
They all dream of doing a Mayor Rothschild burn. I'm just disappointed so few cars exploded and so few tried to fly. New York used to be fun.
What do I see in common here? JPM is controlled by the Rockefellers as before, which means control by the Rothschilds and the banksters. Who owns the Fed? The Fed and the banksters. Was there potentially major incriminating information on JPM that LBHI held,? Perhaps. Did JPM not want this to come out in public, much like Paulson threatened to TBTF in 2008 who did not agree to take TARP funds as a measure of control. Where is the gold? JPM's gold and the Fed's gold proximity is too close to be a coincidence. Who manipulated silver and PMs with their interventions? JPM. Not only has JPM become TBTF, they are the biggest Wall Street bank now, incresaing and concentrating power. This plays right into Rothschild's hands. Rockefeller family is a proxy for Rothschild.
Good reporting by ZH on this one however. It does support further the state of the crooked financial system in the United States , and how useless the DOJ has become. The DOJ and the state AGs are clearly impotent in this, they will not pose a challengs to Rothschild. As we all know, we have a broken judicial system any more in many respects, and rich are powerful do not get punishment for their misdeeds. Rothschild's cartel rules the United States today, as they have for several centuries now. Never underestimate the potential evil these people are capable of to protect and promote their interests, however and whenever it manifests. Starting the worst of the Great Recession would only be the latest in a string of allegations going back to the 17th century, where this cartel is at the epicenter of some of the worst problems ever experienced, including the launching of wars if needed to protect what is theirs.
who in their right mind would fight any wars to protect these people or anything that benefits them?
NOT ME OR MY KIDS
Almost nobody would if they knew the truth, but most people have been conned into supporting this system, and the mases are too naive and busy to see through the bullshit. - they have families to raise, and full-time(now part-time) jobs to tend to.
Sounds like the guys at the top didn't want to do any more of those "Co-chairman" mergers any more. Just torpedo away and buy the opposition at .20 cents on the dollar with no doubt about who is gonna run the show after.
more investigative financial journalism the 'jornolists' will not undertake. The old WSJ would have been all over this and Jon Corzine and more. And I am no RupertM basher/paranoid .....
Say what you want but Dimon lives a great life...better than any of us.
I'm having a great time.
So did Al Capone for a while and so did Ivar Kreuger
He's proven to us that the way succeed in the current system is to be greedy and arrogant as fuck!
Either have a heart, or be rich - pick one!
Now how fucked up is that!?
Man, Tylers .. I miss the Deer in Headlight pic. Can we have that soon? I pray to whoever is listening for the day that this whole shit show blows up and people realize all their entitlements and privileges are gone for good. The day that money is worthless because nobody will accept it and the day that trust and faith in any government or any financial institution is buried 6 feet deep. Then we can rebuild with those who will give a fuck to rebuild reality instead of pretending and living a delusional joke of a life.
The money is not real. There is no real wealth. It is one gigantic shit show built on sinking sand of fractional reserve banking and leverage.
signed.
Walkure, invest your dollars with me, i can assure you a 16,000,000% return.
Rgds,
Rudolf von Havenstein.
I'm not shedding any tears for Lehman. The shark tank is dangerous. If you don't want to get bit then stay out of the shark tank.
It's very important to check the agreements between counter parties..
Now, they state that in the Agreements (whether if it's a CDS, REPO, etc) that one side (usually the side who is providing the liquidity) is the one responsible for the MTM of the securities and the collateral.
So even if you object on the MTM (whether you are Middle office or Backoffice), you can't do anything about it...
Enlightenment please -- why did Lehman have no power whatsoever on JPM's margin call exactly? I thought Lehman was one of the big IBs and could clear their own OTC derivatives trades, no? Couldn't they at least switch to another one, say, Goldman or MS? Would an exchange-based clearing house lessen the risk of such manipulation?
Thanks in advance!
See article : "But Lehman had no choice: even then saying no to the uber-behemoth and tri-party repo guardian JPM was tantamount to suicide anyway."
Basically , JPM's Derivatives book is so large ( 80T+ ), they basically own the US market ... and everyone in it.
Clues:
1929
Hunt Brothers
Lehman
But if you own the market, there's no way you can make money in it. I understand only certain institutions can clear OTC derivatives trades. But I thought Lehman was one of them. Or is it that JPM had monopoly control of the CDX segment?
"But if you own the market, there's no way you can make money in it."
Ever heard of Cash-Flows and staying liquid ?
Check out Adam Hamilton's "The JPM Derivative Monster" from 2001 - ZEALLLC Website
http://www.zealllc.com/2001/monster.htm
It’s Lehman’s fault for sending the money before resolving the dispute.
If they couldn’t resolve the dispute then they should have escalated it up to the next pay grade.
Who would pay a bill that they knew was incorrectly calculated?
Why focus on the JPM incompetence in writing the demand?
The far greater incompetence lies with Lehman’s for meeting it.
If JPM were malicious in writing it then Lehman were suicidal in paying it.
JPM is THE counterparty for all transactions, apparantly; the middle man money changer in every transaction. That's why they never make a loan. they just collect a piece of every transaction.
Lehman, and everyone else, pays because if they don't JPM will stop being their counterparty and you cannot play the game anymore.
Just ask Corzine. JPM took all of IM Global's money in collateral calls and then they accuse Corzine of stealing it when, in fact, JPM has every penny.
If you question JPM you are out of the game.
JPM is the FRBNY's enforcer.
How else do they make their money since they certainly don't make ANY consumer loans?
If you question JPM you are out of the game. That's bullshit.
If JPM eroneously asked me for $250m I would tell them to go fuck themselves.
Nobody can tell me black is white.
If you have no counterparty to perform a REPO then you are out.
You don't seem to understand the game?
If you cannot find a conterparty to your transaction then you are out of business.
If you gave JPM 250 million; just as MFG gave JPM 5billion, they will give it back.
All it takes is one mole to do JPM's bidding and you are bankrupt.
You miss the point that JPM got the money first and then said it was a mistake. Did they give it back?
No! The vultures came in a lotted the rest of the company.
Geithner and Hank Paulson sanctioned the whole deal.
This would be the best thread I have read. I have learned more in the last 40 minutes than I have in the 40 year lie I have lived. Many thanks
I'll take size matters for $40 Alex...
A: "On Wednesday February 13th, Russian gold miner Roman Abramovich's parking spot was 257 feet longer than JP Morgan's football field sized gold vault."
Q: How long is Roman Abramovich's yacht?
http://tradewithdave.com/?p=15529
The lack of a standard quoting convention has always been an issue in the CDS market.
"In other words, literally overnight, instead of pricing Lehman's paid upfront collateral at Price, JPM decided, for whatever reason, to revalue it at 1-Price!"
The high yield names (tranche+index) are typically quoted as clean_price = (100 - quoted_price) / 100.
The investment grade are typically quoted in points upfront.
The Lehman trader seems to be using an atypical quoting convention for this product. For example, if the wrong convention was on the confirm, and someone just typed it in without thinking about it, then the system would (correctly) interpret it as 1-quote.
Is Jamie Dimon a midget?
Photos of him always seem to reveal genetic anomalies. He's got that disproportionate head. And those lips smashed up against his nose all stretched out and together like he sucked on a lemon or something for too long.
See this to explain why http://www.youtube.com/watch?v=TOaxAckFCuQ
You ever seen that movie "Leprechaun"?
Jamie Dimon is too much trouble for the banker Cartel to keep around.
This crap shoot isn't unstable enough. Now the bankers are deliberately upend the system that is barely keeping them afloat. Not only do they not care about the country, they are deliberately attempting critical mass....BOOM.
"That's why I (J. Dimon) am richer than you"
Because JPM is everyones counterparty and if you don't capitulate to JPM outrageous demands they will no longer let you play their game.
I am beginning to wonder if it is JPM who has all the ill gotten booty. Not Corzine or the rest of these poor slobs. JPM decides they don't like you and tell you "pay use 5 billion or we won't be your counterparty any more!....bitch!....?
What choice to they have? It seems JPM is the the counterparty to every transaction. They take a cut of the trillions in transactions everyday. Who need to lend to Joe Sixpack consumer when you just take a slice of the pie when everyone else does?
I seem to remember that it was a JPM margin call for 600m that took out MS Global.
I also seem to remember that the money came from a segregated "customers' account" and
that JPM was informed of said customer money and against all rules, regulations and SEC
sycophancy took the money.
Dimond is a megalomaniac with the gov't in his pocked. "No, that's not a pencil in my
pocket it's the entire congress and executive department, asshole."
He wins, we lose.....