BAILOUT

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Posted on 14th May 2012 by Administrator in Economy |Politics |Social Issues

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6 Comments

  1. sensetti says:

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    14th May 2012 at 8:23 am

  2. Administrator says:

    Jamie Dimon: JPMorgan’s Chief is the World’s Funniest Financier

    by: Janet Tavakoli

    Sure the economy is still a mess, unemployment is high, civil services and pensions are being slashed, a record number of people are on food stamps, and families are losing homes. But Jamie Dimon, Chairman and CEO of JPMorgan Chase, does his best to distract the United States from these unpleasant realities.

    Here’s Jamie

    After losing $2.2 billion (and rapidly rising) in mark-to-market losses in credit derivatives, the multi-trillion dollar global product JPMorgan created and claims it manages well, Dimon had the perfect response on yesterday’s Meet the Press to straight man David Gregory’s question: “How did this happen?”

    “First of all, there was one warning signal — if you look back from today, there were other red flags. That particular red flag — you know, we made a mistake, we got very defensive and people started justifying everything we did. You know, the benefit in life is to say, ‘Maybe you made a mistake, let’s dig deep.’ And the mistake had been brewing for a while, so it wasn’t just any one thing.”1

    That’s so funny I’ll bet President Obama blew coffee out of his nose.

    The Pay Joke

    In 2011, Jamie Dimon got a total pay package of $23 million. Of course, those earnings came on the back of a global financial bailout, Fed enabled mergers that created an insanely big balance sheet, and ongoing cheap financing from the Fed. Meanwhile, U.S. savers get paid virtually no interest on low-risk investments to subsidize the banking system.

    Dimon’s pay partly depended on reported profitability of the division with the troubled credit derivatives, JPMorgan’s Chief Investment Office (CIO). Dimon reportedly paid its chief investment officer, Ina Drew, $14.5 million in 2011. Dimon just allowed Drew to retire. Dimon paid Bruno Iksil, one of the traders in the unit, $100 million.

    The Model Joke

    The thing about credit derivatives is that the models are very vulnerable to the assumptions one uses in the model. So you wouldn’t want to say, push your people to make more money for JPMorgan and then let the people whose multi-million dollar bonuses depend on the outcome influence the assumptions. But that’s only if you don’t have Dimon’s flair for comedy.

    At JPMorgan, the CIO abandoned an old model it had used for several years. It started using a new model in 2012 and apparently grew its trading positions in size and complexity. Rather than rigorously question the reports submitted by the people whose pay depended on making themselves look good, Dimon did what every good comedian does. In response to concerns raised in April about news reports that JPMorgan’s positions were too big, Dimon set up his big joke. He called it “a tempest in a teapot.”

    On Thursday, May 10, just five days before JPMorgan’s annual sharholders’ meeting, he announced the losses and said they are likely to grow. He also said the CIO went back to the old model, because the new one had been inadequate. He let listeners question in their own minds whether 2011 assumption-based earnings for the unit could be trusted any more than 2012′s numbers.

    The Pratfall

    As for the management controls Dimon was paid so highly to put in place, he deadpanned:

    “In hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored.”

    That’s really funny to U.S. taxpayers, since we bailed out the banking system and continue to subsidize JPMorgan with loans at near zero interest rates. Meanwhile, Dimon has bashed the reputation of esteemed former Treasury Secretary Paul Volcker. He’s whined that criticism of bankers is unfair. Dimon refuses to acknowledge there’s merit to the idea of the return of Glass-Steagall, yet he has again proved JPMorgan is Too Big to Manage:

    “We’ll do what we’ll always do. We’ll admit it [because you caught on], we’ll learn from it [next time you may not catch on], we’ll fix it [the fix is in], and we’ll move on.” [Then, as we've done in the recent past, 2 we'll do it again.]
    New JPMorgan shareholders, who watched the share price plummet after Jamie Dimon’s announcement, must be laughing so hard it hurts.

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    14th May 2012 at 10:42 am

  3. newsjunkie says:

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    14th May 2012 at 11:16 am

  4. Administrator says:

    newsjunkie

    You can’t make me laugh out loud at work. I’ll get fired.

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    14th May 2012 at 11:33 am

  5. Administrator says:

    newsjunkie

    That deserves it’s own post.

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    14th May 2012 at 11:37 am

  6. Administrator says:

    Obama financial forms show big JP Morgan account

    Maybe it’s a case of putting your mouth where your money is.

    President Barack Obama praised JP Morgan Chase in an interview recorded Monday as “one of the best managed banks there is” and its CEO, Jamie Dimon, as “one of the smartest bankers we got.” On Tuesday, the White House made public financial disclosure forms showing the president and First Lady Michelle Obama had between $500,001 and $1,000,000 in a “JP Morgan Chase Private Client Asset Management Checking Account.”

    The annual peek into the Obamas’ finances showed that the president held between $1,000,001 and $5,000,000 in U.S. Treasury Notes, generating between $5,001 and $15,000 in interest. They also held between $500,001-$1,000,000 in Treasury Bills.

    Obama, who recently said he had only paid off his student loans eight years ago, has been doing pretty well by daughters Sasha and Malia: The disclosures show four college savings accounts each with between $50,001 and $100,000 in them.

    Obama’s “Dreams From My Father” book pulled in royalties between $100,001 and $1,000,000. “The Audacity of Hope” had more modest earnings, making the Obamas between $50,001 and $100,000. Obama’s “Of Thee I Sing: A Letter To My Daughters” children’s book generated between $100,001 and $1,000,000 (though the forms noted that those funds will go to the Fisher House Foundation for a scholarship fund honoring children of fallen or disabled soldiers).

    The Obamas reported a regular JP Morgan Chase checking account, this one worth between $1,001-$15,000, and listed interest of less than $201.

    (In his wide-ranging conversation on ABC’s “The View,” Obama also said that JP Morgan Chase’s $2 billion trading loss is “going to be be investigated.”)

    The only liability listed in the Obamas’ disclosure form was the mortgage on their home in Chicago. The first couple is paying 5.625% interest on a 30-year loan of between $500,001 and $1,000,000.

    Vice President Joe Biden also released his financial disclosure forms, which are far more modest than the Obamas’ (repeat national bestsellers have a way of pumping up one’s bottom line). But they include one intriguing item: A gift. According to the disclosure, Biden accepted a Vulcain Cricket Watch, with an estimated value of $800.

    “The Vice President received a Vulcain Cricket watch from the proprietor of a small jewelry store while on an official trip to Finland,” a Biden aide said on condition of anonymity.

    “The Vice President accepted it in keeping with a tradition established by the proprietor’s family of presenting this watch to U.S. Presidents visiting Finland, including Presidents Ford, Reagan, Herbert Walker Bush, and Clinton,” the aide said.

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    14th May 2012 at 9:46 pm

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