Will JPMorgan's "Enron" Be The End Of Blythe Masters?

Tyler Durden's picture

One year after the infamous Jamie Dimon "tempest in a teapot" fiasco, which promptly turned out to be the biggest TBTF prop-trading desk debacle in history, things were going well for JPMorgan.

On one hand, the chairman of the TBAC (and thus US Treasury advisor and policy administrator), and former LTCM trader, Matt Zames, was just recently promoted to the sole second in command post at the biggest US bank (and 2nd biggest in the world) by assets, and first in line to take over from Jamie Dimon. On the other hand, one of Mary Jo White's former co-workers, and a JPM defense attorney from Debevoise just became head of the SEC's enforcement division, in theory guaranteeing that the US government would never do more than slap the wrist of JPM in perpetuity.

And then, when everything seemed like smooth sailing ahead, the Federal Energy Regulatory Commission (FERC) showed up on March 13, the day before Carl Levin's committee released its latest report on JPM's prop trading blunder, and according to the NYT, alleged that JPM in the past several years, quietly became nothing short than the next Enron.

Government investigators have found that JPMorgan Chase devised “manipulative schemes” that transformed “money-losing power plants into powerful profit centers,” and that one of its most senior executives gave “false and misleading statements” under oath. The findings appear in a confidential government document, reviewed by The New York Times, that was sent to the bank in March, warning of a potential crackdown by the regulator of the nation’s energy markets.

Another "tempest in a teapot"... Or is JPM reprising the role of the most hated company from the early 2000s, Enron, now that absolutely everyone's attention is focused on its purportedly criminal activity, potentially a problematic development? It very well might be.

The JPMorgan case arose, according to the document, after the bank’s 2008 takeover of Bear Stearns gave the bank the rights to sell electricity from power plants in California and Michigan. It was a losing business that relied on “inefficient” and outdated technology, or as JPMorgan called it, “an unprofitable asset.”

Funny: another "case" that has arisen, so far at mostly in the tinfoil hat periphery of the blogosphere is that JPM also inherited some massive precious metal shorts when it was handed over Bears Stearns on a Fed-subsidized silver platter, and it is the legacy of these short positions that has encouraged various JPM employees, such as Blythe Masters for example, to not only do everything in their power to push the price of gold and silver lower, but to align directly with the Fed, which wants nothing more than to destroy every single last believer in real, not paper-based, "quality-collateral."

For now, however, let's get back to what was previously conspiracy theory, and is now fact:

Under “pressure to generate large profits,” the agency’s investigators said, traders in Houston devised a workaround. Adopting eight different “schemes” between September 2010 and June 2011, the traders offered the energy at prices “calculated to falsely appear attractive” to state energy authorities. The effort prompted authorities in California and Michigan to dole out about $83 million in “excessive” payments to JPMorgan, the investigators said. The behavior had “harmful effects” on the markets, according to the document.

Uh-oh. Sounds suspiciously close to what a certain Houston firm, once upon a time called Enron (advised by none other than one Paul Krugman) was doing to the California electricity market. And where the FERC and legacy ENRON instances arise, sparks are sure to fly.

But what is worst for JPM, and its brilliant (abovementioned) employee, often times credited with creating the Credit Default Swap product and market (simply an instrument to trade credit with negligible upfront collateral and thus allow equity option-like speculation in the credit realm), is that FERC may be seeking to throw the book at none other than Blythe Masters.

In the energy market investigation, the enforcement staff of the Federal Energy Regulatory Commission, or FERC, intends to recommend that the agency pursue an action against JPMorgan over its trading in California and Michigan electric markets. 


The 70-page document also took aim at a top bank executive, Blythe Masters.

Blythe did a bad, bad thing. So bad she lied about it under oath 

The regulatory document cites her supposed “knowledge and approval of schemes” carried out by a group of energy traders in Houston. The agency’s investigators claimed that Ms. Masters had “falsely” denied under oath her awareness of the problems and said that JPMorgan had made “scores of false and misleading statements and material omissions” to authorities, the document shows.

Oops. And it's only downhill from here, because what follows, are the two scariest words a banker can hear in the context of a potential enforcement decision: "individually liable"

For now, according to the document, the enforcement officials plan to recommend that the commission hold the traders and Ms. Masters “individually liable.” While Ms. Masters was “less involved in the day-to-day decisions,” investigators nonetheless noted that she received PowerPoint presentations and e-mails outlining the energy trading strategies.

And some more scary words: "systematic cover-up"

The bank, investigators said, then “planned and executed a systematic cover-up” of documents that exposed the strategy, including profit and loss statements.


In the March document, the government investigators also complained about what they said was obstruction by Ms. Masters. After the state authorities began to object to the strategy, Ms. Masters “personally participated in JPMorgan’s efforts to block” the state authorities “from understanding the reasons behind JPMorgan’s bidding schemes,” the document said.


The investigators also referenced an April 2011 e-mail in which Ms. Masters ordered a “rewrite” of an internal document that raised questions about whether the bank had run afoul of the law. The new wording stated that “JPMorgan does not believe that it violated FERC’s policies.”

Looks like the FERC disagreed. But how could it? It was only a year ago that Blythe was on CNBC promising that not only she, but JPMorgan would and could never do anything wrong in the commodities, or any other, arena. Who can possibly forget her unforgettable platitude: "What is commonly out there is that JPMorgan is manipulating the metals market. It's not part of our business model. it would be wrong and we don't do it."

But... if she fabricated data, blocked regulatory investigations, and lied under oath could she possibly also have... lied to CNBC? No... that is unpossible.

So what happens next?

Well, JPM can hope that its guy at the SEC, Andrew Ceresney, who happens to be in charge of the porn-addicted agency's "enforcement" division, has just enough clout to make that other regulator, the FERC forget all about its inquiry, and its factually-justified allegations.

Or, failing that, and should justice finally prevail in this banana republic for one of the TBTF banks, what may just happen is that Blythe may end up in prison. Minimum security, of course, and for a very brief period of time, with all of her (allegedly) ill-gotten and accumulated wealth waiting for her upon reentry into society. And that's fine.

But what we hope for is that there is at least a brief period of time when Blythe's finger is not be on the gold "sell" button. Not because we want to be deprived of the opportunity to buy physical gold and silver at far cheaper than fair value prices (which, by the way, are meaningless when expressed in dying fiat), but because we are simply curious how high gold may go should JPM's commodity queen finally be put away temporarily... or permanently.

Even for a total banana republic, this does not seem like such a far-fetched request.

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jepicza's picture

Hmm, she's cute? What's the problem?

Rubicon's picture

Just tell us Tyler...

Manthong's picture

jep.. you are probably a cool dude, but keep in mind that the best looking hooker with the clap is likely not a good thing for anybody.

Manthong's picture

maybe Blythe chaffed me up there..?

or is that the pro-gonorrhea contingent speaking up?

Supernova Born's picture

WmBanzai7 has got some tantalizing crime ["allegedly"] porn material.

I find his visuals are so powerful as to be dangerous to subsequent original thought.

...and don't forget Eric Holder. He certainly isn't staying up late trying to make a case (more likely a Chicago wish list).

Manthong's picture

no good reference to "black mandarin" outside of a silly suit on google.

thinking about the current power structure, is there something to be concerned about? 

Supernova Born's picture

The gold bug's Lorena Bobbitt.

I hate her.

However, it would be very tough to get a unanimous verdicked from a jury of clueless grannies whose financial acumen is embodied by their joy playing slot machines.

Manthong's picture

hmm. that is an interesting perspective..

but likely, in her mind she is just going with the flow..  a rewarding flow.. and she has not a concern of the how the flow is drowning the little people that are not on her radar and nowhere in her scope.

Supernova Born's picture

She has spent her professional life (in part, apparently) trying to keep those "little people" down.

She is presently failing.

China and India "little people"? How 20th Century of you...

She will burn like a witch if the real deciders wish it. Period.

[Period? actually likely not, she's 44 and going off the radar and the rag [uncalled for generally, but this particular "BM" deserves it].

Manthong's picture


they might give her up.

like Demi Moore in Margin Call.

Manthong's picture

and to the moron that feels the personal need to be negative at me ..  FU and your progeny

Supernova Born's picture

[Whispered] "It's her, man. It's her!"

HoofHearted's picture

Oh, come on. Shit gets serious and you know she is heading home to escape the prosecution. I mean it's not like the UK has an extradition treaty with the US. OK, well at least JPM still runs the SEC. Blythe will have no troubles. She might get a $1000 fine for being a bad bad girl. Yes, I've gotten cynical. But that's the way it is when you live in a banana republic that forgot that it doesn't produce bananas. So, what does that make the US? Something like a hamburger republic?

Bearwagon's picture

If it fits into JPM's policies to throw her under the bus, they won't hesitate a second ...

GetZeeGold's picture





Two second head start.


......and go!

bernorange's picture

Burn the witch!  She turned me into a newt!

Bearwagon's picture

I thought, you got better!

FEDbuster's picture

Fire up the electric chair one more time.

TheFourthStooge-ing's picture


Fire up the electric chair one more time.

...affectionately known as Ol' Sparky.

Pinto Currency's picture

Blythe will be hung out.

Just like in the 1930s when FDR said that the 1929 crash and subsequent depresson was caused by "a few bad apples" requiring new regulation (hell, it wasn't the Fed), Blythe will be fingered, Eric "fast and furious" Holder will propose new reglations, and everyone will go home happy that they've caught the perp in silver and gold manipulation.


strannick's picture



Meanwhile the CFTC's Inspector Clouseaus like Bart Chilton enable gold and silver manipulation by never closing their bullshit investigation. 

tarsubil's picture

For God's sake, someone throw a pie!

outamyeffinway's picture

She's lighter than very small rocks!


$83M!!?? So what, she'll be fined 50 bucks? Non-event this will be.

Jonas Parker's picture

And when she's wearing her brass bra, her left boob is noticeably colder than her right boob.

jharry's picture

I agree.  It's much ado about nothing.  When they jail Santa Claus, they might fine Blythe Masters.


philipat's picture


"That would be wrong and we don't do it"

Manthong's picture

if it's you, foxy..

maybe we get it on? !!

oops.. you are going to have to accommodate  wife Hilga in the arrangements. 

and star dude.. if I had her as a pronounced enemy, I would feel enormous new energy.

fonestar's picture

When this pile of shit blows up there will be no more bubbles to blow for the Wicked Bitch of the West.

Lets_Eat_Ben's picture

Ferc her up! Ferc'ing Blythe!

Dealyer Turdin's picture

Less then a week and it's already broken...
A little over two weeks ago I was looking on Amazon.com looking for a good cheep vibr and I found this one. It was a great price and all the reviews were pretty positive about this product.About a week ago I received this vibr

I was very excited because it's my first. It worked great but to day I dropped it it wasn't a large drop maybe 6 inches most likely less...


Due diligence jus sayn

prains's picture

come on! maybe the battery is stuck and not making contact

Iam_Silverman's picture

The reviews were great, and the comments?  Priceless!

MythicalFish's picture

Don't be fooled by looks.


She's a Killer Queen
Gunpowder, Gelatine
Dynamite with a laser beam
Guaranteed to blow your mind


Georgiabelle's picture

She keeps her Moet et Chandon
In her pretty cabinet
'Let them eat cake' she says
Just like Marie Antoinette


Off with her head.

fockewulf190's picture

I can picture Blythe sitting behind her desk, violently stabbing a voodoo doll over and over, screeching with rage everytime the small paper copy of Tyler Durden's ZH avatar falls off the doll's head.

FEDbuster's picture

If Tyler is the face of her voodoo doll, then Max Keiser is the bulls eye on her dart board.  Max has been telling ugly truths about Masters and her master, Dimon, for years.  I look forward to Max's show tomorrow, perhaps he will touch on this subject and the appropriate punishment.  Max was at his best this past week talking about the banksters, at ICAP, who rig interest rate swaps:


nope-1004's picture

OJ got away with it, for a time.  Blythe will get away with her evil and manipulative ways, for a time.  But there will be public disgrace at some point.  The damage inflicted and the narcissism runs deep.  Nature will realign her and bring her back to center, which in her world is a complete fall from grace.

She deserves zero respect.


dryam's picture

I don't use this term very often, but when I see her face or come across her name the only word that comes to mind is "Cunt".

jeff montanye's picture

now now.  nothing wrong with cunt.  with b. masters on the other hand ....

q99x2's picture

They photo-shopped the horns off her head.

Colonel Klink's picture

Fuck you Blythe and the horse you rode in under!

I am more equal than others's picture

Or to put the words in a different order....


Blythe you rode in and fuck the horse under you!


Me_Myself_and_I's picture

what.. Ann Coulter kick you out?