Tempest In A Towering Inferno: JPM's Head CIO Trader: "Things Like This, It's Like The Twin Towers Falling Down"
On April 13, 2012 Jamie Dimon described the situation at the CIO as massively overblown and said it was just "a tempest in a teapot." A few days later, the head CIO trader, Javier Martin-Artajo, when speaking to the former JPM Chief Investment Officer, Ina Drew, had a less sanguine description: "and, and, you know, things like this, it's like the twin towers falling down." (highlighted below) Let's agree to disagree and just compromise on "tempest in a towering inferno." But that's not the point of this post. The point is in the same transcript we learn that it was none other than Ina Drew who told Artejo that "it would be helpful, if appropriate, to get, to start getting a little bit of that mark back" and instructed the Spaniard to go ahead and "tweak" the daily P&L on the CIO portfolio by "an extra basis point." Nothing like your supervisor telling you to fudge marks just to demonstrate that the "curve is starting to trend."
For those confused what this refers to, we suggest rereading "The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps" in which we explained precisely how JPM was fudging the marks on hundreds of billions in securities just to show a smaller top line hit in the days after the London Whale was exposed to the entire world leading to a LTCM-style run on the JPM banks by every hedge fund trader in the world.
Needless to say, if any of the above had been revealed about any other firm, not JPMorgan, they would be barred and precluded from doing any finance-related business in perpetuity.
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Fish rots from the head down.
Looks like we've reached the belly of the beast.
Their head is in their belly? I would have thought it would be elsewhere.
So... Martin-Artajo means the whale was a stand down false flag? ...Or an inside job?
How about this comical exchange?
Mr. Hagan’s email expressed the concern, pervasive at the CIO, that the regulatory capital models overstated the risks in the SCP, that they produced arbitrarily high results, and that the traders knew better. Mr. Hagan sought to engineer a way to get the capital calculations to better reflect the opinion of the traders.
Mr. Bangia:
I think, the, the email that you sent out, I think there is a, just FYI,there is a bit of sensitivity around this topic. So –
Mr. Hagan:
There, there is a lot of sensitivity.
Mr. Bangia:
Exactly, so I think what I would do is not put these things in email.
Mr. Hagan:
That’s exactly what I was told. Javier, Javier is the guy that asked meto send out the email this morning. And then he found out from, from Pete and –yeah, and he found out from some – and Irv that this is …
Mr. Bangia:
Yeah, yeah, I wouldn’t put this you know in ….
Later that day, despite Mr. Bangia’s qualms about sending written communications on optimizing the CRM/IRC split, he nonetheless discussed pursuing the issue with Mr. Hagan
In the good olde days used to be "cookin' da books" was the exception.
The results of this investigation will show the world if fraud is a crime these days.
HAHAHAHAHAHA!
As if there is any doubt that NOTHING will happen, except perhaps some new laws that will be IGNORED!
Who says crime doesn't pay?
A question I would like to see answered is, why did Ina Drew order "phones down" on March 23, 2012?
From page 123 of the SubComm report: "On Friday, March 23, 2012, Ina Drew ordered Mr. Martin and Mr. Iksil to “put phones down” and stop trading credit derivatives related to the SCP book."
Wasn't she concerned that by suspending JPM's trading in the IG9 index the market price would move further away from the CIO positions and lead to greater losses?
I think not.
On May 10, 2012 Zerohedge analyzed the trading in the IG9 credit index and concluded: "Hedge funds began to try to arb this position and got frustrated at the lack of convergence - and this is how we initially got to hear about Bruno Iksil - the London Whale - since those funds suggested someone was 'cornering' the index market in credit."
http://www.zerohedge.com/news/jpm-staring-another-3-billion-loss
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2...
On May 15, 2012 I commented "...how these banks are able to obstruct price discovery on Level 3 assets which allows them to conceal losses. They book gains immediately as they occur, for obvious reasons, but delay reporting losses through the suspension of trading on certain Level 3 assets thereby manipulating price discovery which lets them hold back reporting of losses until they get too big."
http://www.zerohedge.com/news/fbi-opens-inquiry-jpm-loss#comment-2427936
If the CIO through Bruno Iksil had indeed "nearly cornered" the IG9 index, Ina Drew was ordering trading virtually suspended on that index. This would have caused liquidity in the index to dry up, due to JPM being its largest player. As the liquidity diminished, spreads would have widened. Ina Drew knew that if spreads widened it would give her more latitude to deviate further from the customary "mid-market pricing". This would have allowed her even more wiggle room in reporting actual losses and helped her to conceal the depth of the problems the CIO was dealing with.
In essence, Ina Drew ordered "phones down" knowing it would allow her to manipulate price discovery at a greater magnitude, which would allow CIO to continue to conceal massive losses.
Just a thought...
“will show the world if fraud is a crime these days”
-we can expect the same degree of honesty, integrity and fraud resolution as we got with the posting of the assembled graphics file birth document that was originally posted on whitehouse.gov.
A ka-boom moment:
Levin: Was it a coincidence? At the time the losses were piling up. You changed your accounting practices. That was a coincidence?
A: Yes.
Q: Absolutely no intent on the part of the people that were involved to hide losses?
Levin reminds Cavanagh he's under oath. Cavanagh seems a bit concerned, and changes his approach.
A: I clearly know now, having done the review, that the people ultimately were mismarking, were not properly marking their books, from the middle of march to the end of March."
Levin: Their marking was changed in order to reduce the loss on the books?
A: Yes.
Q: That's the reason it was done?
A: Yes.
Q: You were saying before it was a coincidence. Now you're saying it's not a coincidence.
The reaction of the lawyers behind Cavanagh during that exchange is priceless, "oh fuck...."
Cavanagh then says PW was Ok with this accounting practice. If only there was a cam in PW offices.. "oh fuck..."
But answering both questions with a "yes" clearly makes this a positive message, right?
Surely that means there'll be a new high Monday.
Temporarily.
BULLISH!!
This is all well and good, but you will soon hear the chorus of "It's time to move on. We want to move on. It's time to move forward." And that will be largely that, other than some fines being paid.
OF COURSE THEY WANT TO 'MOVE ON'. ALL CAUGHT CRIMINALS DO.
Just that if you do it with a gun and a mask they throw you in jail for a decade or so. Do it with a suit, an email ending in "@TBTFbank" and a trading terminal.... you just give back a small portion of your bank's yearly profit a settlement neither admitting or denying the charges and a non-binding promise to try not to do it again in the future.
They should just call it the government's "getting caught tax". Exact payment amount at the government's discretion, but usually 'nominal' compared to the size of the crime. Just a cost of doing business, nothing more.
Like the towers, same perpetrators. Sometimes they know not what they admit to :D
Ah but the world will only see through the prism by which they are fed, i.e. Facebook, the new Bible.
Wow, getting caught in one of your typical acts of financial fraud is akin to a terrorist attack that killed thousands of innocent people? I'm not sure which is worse, that they think so highly of their own criminal activity, or that they think so little of human life.
What I think he meant was that "they planned it that way."
YMMV
@redpill: Both, duuuhhh.
Wow, getting caught in one of your typical acts of financial fraud is akin to a terrorist attack that killed thousands of innocent people?
His comparison is over the top and he may of been saying it more on behalf of him and his co-workers but to some degree it's appropriate because if that position had collapsed tens of thousands of innocent people would've been very negatively affected. Maybe an atom bomb allusion would've been less of a sore spot.
Dimon's public lies actually saved a lot of damage (damage he would've been directly responsible for of course). If that 150B went down the tubes what would've happened to the bank? And by extension the financial industry?
you can't handle the truth...
They found nano thermate in Dimon's desk, so I think it's not an exaggerated statement.
The next not-so-black swan?
The head will swim away anyway. No other way this can end.
So ....What is trying to say? Jet fuel melted steel? Norad stood down? There were explosions in the lobby?
Damn right.
It's all Bush's fault.
Pass out the bonus checks!
hand-jobs all around, boys!
And hookers, and blow, and ..... hmmm, let me see .... BOLLINGER!
Right. As long we mark the curve within two Bollinger bands of the bid-ask, it's, uhhh, conservative.
And it's trending in our direction.
http://www.youtube.com/watch?v=4CTMTyDcm2A
Can we get a gulliotine for Jamie, Serpico, Pedro, Blythe and the Rockefeller owners.
Twin Towers falling? Javier, does that include WTC7?
No. WTC7 was just an hallucination. It never existed. It can't be explained away therefore it never happened. Rpeat that lie often. Everychance you get. Because remember, if you repeat the lie often enough it will become the truth.
Why already in the short time that has passed you can ask most of general public about WTC7 and they will respond with, "HUH?"
You see it works. So keep on keeping on.......
Holographic simulation of reality that had been announced by the BBC some 30 minutes earlier.
As in scripted, FFS!
"I don't even know where it IS?" - Billy Bob Clinton.
And they didn't fall, there were imploded...much like I suspect these markets will be one day. Question is; will Al-Qaeda be blamed for that too? We damn sure know Corzine won't be...
Damn right. Corzine already took his colonoscopy for the Gipper.
Agh, just pull it.
From victim to vindictive bitch
Good luck Ina
Oh and careful crossing the street from now on. In fact, it's probably better if you just don't cross any more streets.
Your days of relaxing in the 'hot tub' are over my lad...
Ina in a hot tub. Talk about your London Whale!
And Leon's getting larger, bitchez.
Doesn't JPM issue all those gubmint food cards? Isn't JPM the one that has kept down silver the mostest? What kind of exposure does JPM have to the derivative flock of black swans in gross terms?
What does it matter. Have we not seen the miracles St. Dimon is capable of? Why has he not shown how he can turn black swans white just as our lord could trun water into wine. Did we not watch his disciples gaze in awe as they stuttered to find platitudes enough to praise their king. I tell you and you would be wise to listen a rich man can make a needle large enough to open the doors of heaven. With hinges, and a door, to be slammed in the face of those who will inherit the roted earth fertilized with chorus of, "WTF happened?"
Well, I gotta say, I find Carl Levin's performance to be riveting. He's treating this like it's something serious.
Based just on *this* show, I'd say he's earning his pay as an entertainer.
I puke on them all. Groveling at the feet of corruption. All hail the golden calf, The one an only true deity and it's high priest Diamond Dimon who shall feed you the questions between slices of dollars so that you will have no need to understand the answers but may instead walk away with the knowledge that you have served your people well. It was White Smoke that came from the halls of congress today and we all celebrate and as good christians leave the mechanism for the feeding of the poor in the hands of the money changers!
The senate report is incredible and this hearing is good as well. No complaints should be lobbed at Levin for this.
If the media would rather talk about stupid assualt rifle bullshit the fault lies elsewhere.
Right now Levin is asking Scott Waterhouse about Dimon yelling at Baurnstein (infront of Waterhouse) for sending reports to the OCC, too funny.
God I hope they get Dimon back infront of the panel!
Judaics blatantly state that no "jew" ever sinned, because they are incapable of sin. Even the building of the golden calf in the OT the Judaics state was not a sin. Even David's stealing another man's wife and sending that man to death in war was not a sin, so state today's Rabbis.
Levin, long time senator from new york, is going to lead the crusade to bust the (joo york shitty based) jpm trust. Things are the way they are BECAUSE OF GUYS LIKE LEVIN. LMAO!! LOLOLOLOL!!!!
Actually, he is my senator, from Michigan.
But your point still stands.
Just a show for the masses.
He prolly meant Schumer.
And the point STILL stands.
Thank you for correcting me.