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Will JPMorgan's "Enron" Be The End Of Blythe Masters?
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 It was a losing business that relied on “inefficient” and outdated technology, or as JPMorgan called it, “an unprofitable asset.”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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Blythe Masters can be summed up as follows......a stunning cunt that pulled off one too many cunning stunts.
*My apologies for my crassness.
it's fight club, JPM is taking care of crass
"Blythe Masters can be summed up as follows......a stunning cunt that pulled off one too many cunning stunts.
My apologies for my crassness"
No it's a good one! :-)
+100
Oh, I'll get in trouble for this one...
This image is a screen cap taken from her testimony. Let's just say, she either has marfan syndrome or she's a squid. Dig yourself for the video, and watch the fingers wiggle.
JPM defense attorney becomes head of SEC’s enforcement division ? I just vomited all over my breakfast. I can’t take this corruption. The foxes guarding the hen house is the best analogy.
Im truely thinking these are the days of our lives. Gossip hey?
Isn't a "systematic cover-up" something like a conspiracy?
Roger that.
Somehow Im thinking this will not be on E! Too bad though.. If people had half a clue theyd eat this up. Its very sad that that the acual people who make lifehorrible for commoners get the least amount of coverage.
What's he building in there?
https://www.youtube.com/watch?v=JaLjwSpZ6Cs
She looks as if she was born with a 'paper' silver spoon in her mouth....
Good article, and the NY Times recently featured her as a woman who had broken through the glass ceiling in a male dominated world of finance. What a cold blooded crook, all the more so because she is a woman and is supposedly an embodiment of long term, ethical and moral value....
LMAO!! But if these criminals got what they deserved they would be lined up against the wall and machine gunned down and their wealth confiscated; but not going to happen where every criminal gets rehabilitated.
Uh oh. Time for another international incident distraction....which is exactly what happened the last time Dimon and JPM were on the hot seat.
I hope FERC is looking at Goldman and their energy assets. Some shady things going on there.
*Looks like she is going to get the Martha Stewart treatment. *Those crazy Duke brothers really know how to throw women and darkies under the bus.*It looks bad because, she's no bundler.*A little political housekeeping to eliminate competition for Zames. *"I am going to fuck up that little bitch" Blythe about Jamie, *Well, there is always government work.
The government is about to make a shocking "discovey" that metals markets have been manipulated, and those champions of justice have found the Lone Gunman responsible for it all!
Once in a while the curtain falls apart a crack. It is as unpleasant a view as watching one of those beheading videos.
i had no idea paul krugman considered himself a journalist..
Jail is the best she will get. If the SHTF, they will probably remove her head from her body. There are some that are making a list of traitors that will pay for their crimes after the SHTF and I would bet she is on top of the list.
"Many executives at Enron were indicted and were sentenced to prison"
So if JPM is nothing short of the next Enron...
WHERE ARE THE HANDCUFFS?
... Jail is for minority and blue collar participants in the American Dream, the Elitist Deciders are above prosecution. Pay the fine Jamie, enjoy your 20 million dollar bonus and rock star status.
Like I said two days ago, I can hardly wait for the next whale to surface. Even the biggest ones have to come up for air eventually.
Anyway, go FERC. Don’t give in. Show those idiots at the SEC and CFTC who’s boss and take back the energy industry from the pinstriped pirates of Wall Street. For punishment, I recommend incarcerating Blythe until she develops an electric car that doesn’t blow up like her career is about to.
Thar she blows! :)
It's interesting that the most of the replies, so far to date, are pithy and degrogatory towards a single individual ( whether that person deserve it or not is not my point to debate here) rather than about the actions under investigation and the cover ups, nor about the bank JPMorgan.
So what? There's an Everest-sized pile of blame to go around--we can only attack so many targets at once. But don't worry, we'll get around to them all...
I take it that you've never been long Ag or Au.
unintended consequences of these assholes
http://www.nytimes.com/2013/05/03/health/suicide-rate-rises-sharply-in-u...
Is it a bug or a feature?
It's a feature in Health. I am not smart enough like the others to place the link in a word.
i think he meant in the Larger Scheme of Things.
see Chumba's inaugural blogpost for greater detail.
gotcha....I am a little slow today.
no worries...read that article yesterday...says much about our current times indeed.
time to flip the script, yes?
my feeling is the rates are allot higher.
What makes you think it's unintended?
Interesting nugget here, Tylers and might explain the recent gyrations in the morgues PM inventory. All things being equal, the simplest explanation is usually the correct one: perhaps the morgue is going to implode and the well-informed clients have been tipped off and are getting their assets out as fast as they can. While we at ZH are better informed than most, we shouldn't be so naive as to think we are better informed than "select clientele."
Interestingly, the real threat of a repeat of Enron is probably one of the few things that could get the regulators to actually do their job. "Enron" is political kryptonite and no one wants a second one on their watch. If that's what is happening, I wouldn't want to be "Bag holder Blythe."
If JPM goes under, the fecal tsunami has already reached Biblical proportions.
And as a suprise mid year bonus I hear JPM is installing a hot tub in her penthouse at their expense. How generous.
Why do I keep hearing a voice that sounds exactly like a whining 8 year old:
" But it's too haaaard to prove a case of intent beyond a reasonable doubt."
They somehow dodged the silver lawsuit. I'll believe things are changing when I see some downward movements in the stock market finally.
Why are they not starting at the top with loose shoes Jamie? I mean . . . doesn't the buck stop with the top dog in any organization instead with a sacrifical lamb at a much lower level. I think it is time to stand them all against the wall.
The top is the Rothschild family.
On this POMOless morning. "May we meddle less in the fATE OF OTHERS" ....
Machines are but a textile quandry, and a loaf of bread crisper... Oh,\Llords of of the matrix, please let carbon based souls reign supreme on this Friday May 3rd 2013.
An angry mob of black Mandingos should descend on Blythe and bang her into oblivion....literally fuck her to death...since she's fucked over so many.....fitting...
Not pleasurable for Ms. Cunt....but damning
This may turn out a bit like Al Capone. You can't convict him of running a muderous criminal empire but you jail him for income tax evasion. After doing nothing with blatant silver manipulation, I doubt they get JPM for energy manipulation. Instead, the angle seems to be to go after Blythe for perjury and obstruction if justice. Of course, any fine is meaningless, but it would be nice to see her in prison for a couple of years with the common folk.
if you think that anyone in DC is going to tear down the House of the Morgans and the Rockefellers, i've got a bridge that you might want to take a look at buying.
looks like the Boyz are unveiling the latest iteration of their New Archetype: The Fall Bitch. looks like Lady Blythe in her quest to be a BSD forgot that she is being played just like the rest of us: as a pawn.
"Look over there! Squirrels!"
Allow the highest bidder to CUNT PUNT the bitch!
I'll bid 10,000!
More fiasco. Guillotine time.
This is Gobles Propaganda Calling Austrians Rightwingnuts vs peace proponents? The sheeple who buy the left right DNC/RNC spin. What we need is trust busting in bank, media, military, medical, cabals. Come on Mel Watts at FHA? If the audit FED passed Senate (too bad so few senate seats during that election). we would not have the problems today?" Clinton really screwed America in 1998 Glass–Steagall Act.. .. Now JPM has an LTC guy LOL ..The shadow markets stole the pensions of public employees world wide... They violated the grand public bargain lower pay in public sector as a trade of for security and benefits. Déjà vu
"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."
Wait...can't we just steal all her wealth while she's in there?
Uh-oh Blythe, is that a flock of lawyers flying lazy circles over your head? Better get out your wallet. Better go ask Matt for a raise.
Wait a minute, when did fraud become illegal?
I think what most people do not understand is that when push comes to shove, governments in a desperate act to preserve their power will turn like a rabid dog on the hands that feed them. In JPM case they feed the entire lot of pols but, but, BUT, politicians will always, ALWAYS throw them over board when it comes to desperation. Will Ms. Masters be enough to quench the fires of Mount Shitstormia? I mean really, what is to stop laser guided bombs from wiping out the entire Rothschild clan in a nano second, Chalets it far away lands from just vaporizing, villas going up in a puff of smoke. When Oidiot said to the banksters "the only thing standing between you and them (the peeps) is ME" he was establishing this fact and in the end watching them eat each other will not be without collateral damage to the peeps. Absolute power means just that and Oshithead is just dumb enough to believe he could pull this off.
500 trillion in derivatives are not going to go *POOF* without some bloodshed.
I hope they make her clean Brooksley Born's toilets - on her knees with a toothbrush.
When I say eat the rich I don't mean her.
I volunteer for the jury...i can phone it in:
GUILTY!!!!
FERC Blythe!?!??
So Masters is going to potentially get sent to the pokey over $85million bucks from charges cooked up by the Department of Energy?! Meanwhile the Fed has given the TBTF banksters how many trillion dollars and counting? Sometimes I just have to say, WTF!
"Masters is going to potentially get sent to the pokey"
NOT-A-CHANCE-IN-HELL.
hey, frankly!! full support to FERC - endlessly -
nO cOMMENT. z/h CONTRIBUTERS MADE ME WHOLE...>
There is a better chance of seeing Ben Bernanke running down the Vegas strip wearing nothing but garters and a g-string than there is of ever seeing anyone that high up at JPM convicted of anything let alone serve so much as 3 seconds of jail time.
Who the fuck do you people think runs this country? Nothing will happen, we all know that. the celebration being displayed here now will turn into yet another bitter disappointment. Don't get your hopes up. It's a recipe for heartache.
Her sentence of 3 seconds has been reduced to a 15 million dollar golden parachute parting severance.
The same people are in charge of the DoJ. Since when did JPM become Small Enough to Jail anyway? Get ready for the "wrist slap". Which in this case means a fine Dimon and Masters can pay out of the funds they found in their drier lint.
@WarrenBuffett https://twitter.com/WarrenBuffett
Ask Warren a questionHey Warren: does Becky swallow?
Yea, I guess that's the only question we'd ask
Interesting that the Morgue is dropping in this nice little rally. (Nice for me as I'm short). Any thoughts?
every other fucking talking head on the boob tube says the economy is improving.
who's missing what?
Why are you watching TV?
I predict nothing will come from this...this is simply a case of FERC being out of the loop i.e. not getting the memo from the "Justice" department...that GS and JPM are untouchable no matter how much fraud is perpetrated on the muppets.
I reckon she and Corzine will start a hedge fund together.
I have a hunch she'll get fired first, then out of revenge she'll talk and a shitstorm will ensure...
This is what Buffet meant by going 100% all in!
Blimey -1%. This story can't be such a big deal, can it?
Zetro Hedge is ( AWESOME) The Tylers know their shit....
ATTENTION JPM STOCK HOLDERS- BLUE LIGHT SPECIAL ON PHYSICAL PM'S ON AISLE 666 FOR THE REST OF THE YEAR.
What does this mean?
My ass is up in the middle of the night. Nap time Bitchez<
Fuck that bitch .....
Half of ZH is probably masturbating to that very thought right now.
Orange is def. not her color, but wake me when she's wearing it.
You might have to change your name to Rumpelstiltskin.
What kind of a scumbag names his daughter Blythe?
Excellent Question. I like you.
perhaps he was given some insight into the role she would play in the future of mankind and decided to name her appropriately?
Blythe coming from Middle English, which in turn came from Old English (bl?the), and began from Old High German (bl?di) meaning "joyous"
Source: Wikipedia
Life is joyous if you're part of the .0001%, not so when you are a common person.
i'd fuck her
You'le regret it.
sounds like you're just begging to have your dick rehypothecated.
I'd spray her with Lysol...
So let's look at another manipulation:
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 of what occurred. So basically JPM was a major factor in the fall of 2008.
Bastards
take another bonus out of loss reserves and call it a day
PLUS 1 Buzz.
I'd hit it. (with a 2 by 4)
Relax Blythe.....Jamie would never throw you under the bus to save himself! Sleep tight next to your cell mate!
She's probably feeling pretty paranoid and isolated about now. As her emails dry up in the coming weeks she will realize what an awful bed she has made for herself. No rest for the wicked........
If Martha Stewart had to serve 5 months in prison on bogus insider trading charges involving ImClone (from which she was supposed to have made a profit of about $52,000), then Blythe Masters should get a century in prison, according to Federal prison sentencing guidelines. "Predator" movie director John McTiernan is going to federal prison on a one year sentence under the "Lying To The FBI Act," section 1001. What sentence will Masters get for lying to the government? Probably nothing. AG Holder runs the most corrupt Justice Department in U.S. history. Have the right connections, you pay and the charges go away.
SO WHAT?
They squeeze another multi billion dollar fine (which never benefits the people who got SCREWED) and no one goes to jail because there is never an admission of any wrongdoing.
No wonder these fuckers don't want natural gas anything.