Over the past week, many have been scratching their heads over why JPMorgan is so eager to comply with the DOJ's investigation into the banks misrepresentation of the quality of its RMBS bundled mortgages, having gone so far as to suggest a number that could be as large as $4 billion in cash (with a $7 billion non-cash component), though still shy of the DOJ's $20 billion ask. The reason, as the WSJ reports, may be very simple one: a rat is providing the Feds with information deep from within the house of the whale. "The Justice Department's pursuit of possible criminal charges against J.P. Morgan Chase & Co. is based in large part on a key cooperator from inside the bank who is aiding the government and has provided information suggesting the bank vastly overstated the quality of mortgages that were being bundled into securities and sold to investors, according to people familiar with the matter."
Breaking Bad With Big Bank CEOs: How Bad Bank CEOs Use the Bystander Effect to Dupe Good People Into Working For ThemSubmitted by smartknowledgeu on 09/30/2013 05:09 -0500
This may become the most important article I’ve ever written. But whether it becomes that article or dwells in anonymity is up to you, the reader.
- House GOP banking on Plan C (Politico)
- Pimco shook hands with the Fed - and made a killing (Reuters)
- BlackBerry's Torsten Heins has a $55 Million golden parachute (Reuters)
- JPMorgan Urged to Pay More in Mortgage Deal (NYT)
- Soros Adviser Turned Lawmaker Sees Crisis by 2020 (BBG)
- U.N. Members Agree on Syria Disarmament (WSJ)
- U.N. Says Humans Are 'Extremely Likely' Behind Global Warming (WSJ)
- The non-falsifiable threats emerge: Shutdown Would Shave Fourth-Quarter U.S. Growth as Much as 1.4% (BBG)
- Swaps Rules Worry Industry: Coming Regulations Have Market Players Concerned About Possible Disruption (WSJ)
While a mortgage-related lawsuit and/or a settlement was long in the making, and was well-known to most in the industry, it is the monetary aspect of the resolution that is slowing down the outcome. Because if the NYT is correct, not even taking credit for all its fake "earnings" in the form of a complete reserve release would save JPM: "Underscoring the breadth of the scrutiny, the people said, JPMorgan and the Department of Housing and Urban Development briefly discussed the possibility of striking a wide-ranging settlement to conclude many of the looming mortgage investigations from federal authorities and state attorneys general. But the housing agency floated a price tag of about $20 billion for the settlement, the people said, effectively derailing settlement talks with JPMorgan lawyers, who were stunned by the size of the proposed penalty and expected to pay a fraction of that sum."
"By late April 2012, JPMorgan senior management knew that the firm's Investment Banking unit used far more conservative prices when valuing the same kind of derivatives held in the CIO portfolio, and that applying the Investment Bank valuations would have led to approximately $750 million in additional losses for the CIO in the first quarter of 2012." Translated: Jamie Dimon lied to Congress.
- Fed likely to reduce bond buying, pass policy milestone (Reuters)
- Fall in Home Loans Pushing Fed Away From Taper in Mortgage Bonds (BBG)
- Russia says U.N. report on Syria attack preconceived, political (Reuters)
- China House Price Surge Raises Prospect of Steps to Cool Market (FT)
- Cyprus Plans to Complete End of All Capital Controls... some time in 2014 (FT)
- GOP Reworks Budget Terms (WSJ)
- U.S. Navy was warned that Washington shooter 'heard voices' (Reuters)
- Berlusconi Impeachment Vote Looms (WSJ)
- Ageing could weaken central banks, spur rate volatility (Reuters)
Deep Thoughts From Jamie Dimon's Daughter On Fi-Nance, "What The Hell Is A Bond", And Who Should Get TaxedSubmitted by Tyler Durden on 09/16/2013 20:28 -0500
One would think Laura Dimon, the daughter of one James Dimon, would be on familiar terms with such concepts as bonds, capital structure and finance (especially the more arcane substrata thereof). After all the father of the graduate from the Columbia School of Journalism (author of such previous pieces as "The Last Office Taboo for Women: Doing Your Business at Work" which examines "the lengths women go to avoid getting caught in the stall") is none other than the CEO of the largest bank in the US, best-known for such "one-time items" as constantly recurring legal charges associated with financial innovation gone horribly wrong (today's rumor of a $750MM settlement over the bank's London-based prop trading group being a case in point). As it turns out, one may be mistaken...
What started off as a tempest in a teacup just ended up becoming not only the largest, $6.2 billion prop trading blunder in JPMorgan history, but the latest ligitation headache for Jamie Dimon amounting to at least $750 million to get the government off his back, and who will of course neither admit nor deny it used customer deposits in an attempt to corner the IG and HY markets:
- JPMORGAN SAID TO AGREE TO AT LEAST $750 MILLION IN WHALE FINES
- JPMORGAN SAID TO SEEK END TO U.S., U.K REGULATORY PROBES IN Q
- SOME WHALE SETTLEMENTS MAY BE ANNOUNCED AS EARLY AS THIS WEEK
- JPM TO ADMIT FAULTY INTERNAL CONTROLS IN WHALE SETTLEMENT: WSJ
Of course, we hope that as part of the settlement JPM will announce just what it is investing its current $500 billion in prop trading dry powder in as we disclosed last week.
Current US Treasury issuance is relatively low due to sequestration and (at least temporarily) less US warmongering in the Middle East. That's about to change, of course, now that the US is getting ready to launch a Cruise missile attack on Syria (we’re already been arming and financing the opposition rebels, including groups directly linked to al-Qaeda for several years now). Bernanke and the Fed doves would like nothing better than another “controlled” war in the Mideast, because with war comes massive debt issuance, and with massive debt issuance comes the transmission mechanism (QE) for monetizing that debt and mainlining it onto the Wall Street banks' broken balance sheets. And yes, they’re still broken, and Ben is still bailing them out at the expense of the American middle class. Make no mistake, Jamie Dimon, Lloyd Blankfein, and every other complicit banker on the Street has no problem with this, or any other, war, regardless of whether such a conflict would destabilize the entire region and would almost assuredly pull Russia and China into the fray. The more the merrier, just keep letting that free QE monopoly money roll in from the 4X weekly Federal Reserve Permanent Open Market Operations (POMO’s). And with the significant financing needs for a large war effort in the Middle East, say good-bye to “Taper.”
The US is demanding a sum of $6 billion - the total loss associated with the "London Whale" debacle - in compensation for JPMorgan's mis-selling of mortgage-backed-securities. The FT reports that, unsurprisingly, the bank is resisting the payment, which would be its single biggest penalty in a catalog of expensive run-ins with US authorities and one of the largest post-crisis settlements by any bank. The FHFA said the bank falsely claimed that loans backing $33bn of mortgage-backed securities complied with underwriting guidelines and that it "significantly overstated the ability of the borrowers to repay their mortgage loans". It seems, perhaps, it is time to trade in the old jewelry for some new Kremlin cufflinks (the enemy of your enemy is your friend?)
In Part 1 of this article we documented the insane remedies prescribed by the mad banker scientists presiding over this preposterous fiat experiment since they blew up the lab in 2008. In Part 2 we tried to articulate why the country has allowed itself to be brought to the brink of catastrophe. There is no turning back time. The choices we’ve made and avoided making over the last one hundred years are going to come home to roost over the next fifteen years. We are in the midst of a great Crisis that will not be resolved until the mid-2020s. The appearance of stability is illusory, as the civic fabric of the country continues to tear asunder. Record high stock markets do not trickle down. The masters of propaganda seem baffled that their standard operating procedures are not generating the expected response from the serfs. They have failed to take into account the generational mood changes that occur; propaganda loses its effectiveness in proportion to the pain and distress being experienced by the citizenry.
First Signs of Hyperinflation Have Arrived: US National Debt Can Travel From the Earth to the Sun and Back a Stunning 83 Times!Submitted by smartknowledgeu on 08/26/2013 09:44 -0500
If one were to lay $1 bills side by side, the current US National Debt would reach from the earth to the moon 32,358 TIMES AND BACK and to the sun 93 million miles away 83 times AND BACK.
DOJ Picks Up Where FERC Left Off: Begins Investigation Of JPMorgan's "Enronesque" Energy Market ManipulationSubmitted by Tyler Durden on 08/19/2013 17:50 -0500
On July 30, when FERC announced that it had agreed to resolve it allegations of JPMorgan manipulation of the energy market for a $410 million fine, with the bank neither admitting nor denying guilt, we posited that the only question on Jamie Dimon's mind was whether to pay the fine from petty cash or just to charge it on his corporate Amex. Three weeks later he may have some other questions swirling in his head, such as "whose Christmas lobbying stocking did I not fill with campaign donations?" after the WSJ reported that it is no longer FERC, but the DOJ itself, led by Preet Bharara, which is investigating whether JPM manipulated energy markets. Ironically, this is a deja vu of the SAC take down by the same Bharara, when a few months after SAC settled with the SEC it was shocked to be crushed by the Department of Justice which pulled an "Arthur Anderson" on it and for all intents and purposes shut it down (although with nobody sent to prison). It remains to be seen if Bharara will have the balls to take this prosecution to the next level and whether after he made SAC into Arthur Anderson, he will make JPMorgan into the New Normal's Enron and whether Jamie Dimon or Blythe Masters will be the next Lay and/or Skilling. One can hope.
Nothing like kicking a beached scapewhale when it's down.
Don't be alarmed. These crabs only inflict superficial flesh wounds.