If I recall, corporate executives who signed off on knowingly false financial statements were personally liable under the Sarbanes Oxley law. Jamie Dimon signed off on knowingly false financial statements. I always thought that lying under oath before Congress was a crime. Jamie Dimon lied under oath before Congress. There are hundreds of thousands of Americans behind bars for minor drug offenses. Why is a man who committed crimes that resulted in billions of losses still leading one of the biggest banks in the world? Why is he still living in a multi-million dollar luxury home in NYC? Why is he being paid $10 million per year?
Do you think your vote counts? Do you think our legal system is designed to protect you? Do you think the politicians you elected give a fuck about you and your best interests? Did you spend $8 million last year lobbying politicians in Washington DC?
The Complete History Of JPMorgan’s “Monstrous” Derivative Risks And Abuses – The Full Senate Report
Submitted by Tyler Durden on 03/14/2013 17:50 -0400
Curious what according to Jamie Dimon is just a “tempest in a teapot“, or, alternatively, why Mr. Dimon is richer than pretty much all of you, here is the full 307 page report that explains everything, including all the events that transpired at the JPM CIO office, all the trades that led up to the “monstrous” Whale portfolio, leading to an epic prop trade failure, coupled with countless lies and misrepresentations to regulators, to investors, to the public, and to politicians, many of which under oath. Oh yes, free Jamie Dimon!
Finally, we are happy that our small contribution to exposing the catastrophic JPM TBTF prop trading behavior made its way into the report, and specifically footnote 1442.
REPORT – JPMorgan Chase Whale Trades (3!15!13)2
Administrator says:
Ina Drew Throws Jamie Dimon Under The Bus
Submitted by Tyler Durden on 03/15/2013 10:06 -0400
From the prepared remarks of Ina Drew, former JPM CIO:
•… In January the Company’s independent Model Review Group, part of the corporate Risk Management organization, approved a new, and purportedly better and more accurate, value-at-risk (VaR) model for the synthetic credit book… Although I, as well as the Company’s senior management, was well aware that a new VaR model was pending, I had no involvement in the process of developing, requesting or approving the new model and no basis to personally assess the merits of either the new or old model.
•… It is also important to note that the Task Force Report itself lays out the critical factors – the flaws in the new VaR model and the deceptive conduct by members of the London team – that undermined my management and my oversight of the book.
•… It appears that CIO Risk Management failed to properly understand and assess the risks in the book, and that CIO Finance failed to properly review the position valuations recorded by the traders.
•… Though I did not (and do not) believe I bore personal responsibility for the losses in the synthetic credit book, in late April I began to consider whether, for the good of JPMorgan Chase, I should step down and make it easier for the Company to move beyond these issues. In the wake of the May 10 disclosures I approached Mr. Dimon and told him that I thought it would be best for the Company if I stepped down. He reluctantly agreed, and shortly thereafter I submitted my retirement letter. Similarly, although I did not (and do not) believe that I engaged in any misconduct, I offered to give up a significant amount of my recent JPMorgan Chase compensation, which I have done, in recognition of the size of the losses and my position as head of the business. Although asset-liability management, by its nature, involves regular ups and downs in both investment and hedging books, I had never before experienced a situation like this one.
•… I have since come to learn – based on the Company’s public statements in July 2012 and Task Force Report in January of this year – that valuations for many of the book’s positions were inflated and not calculated or reported in good faith; that the original version of the second quarter scenario analyses reflected much higher projected losses and was specifically re-done before it was sent to me so as to reflect lower projected losses; and that some members of the London team participated in or condoned such conduct and hid from me important information regarding the true risks in the book. I have also since come to learn – based on the same public statements of the Company – that the new VaR model was flawed and significantly understated the true risks in the book. Needless to say, I had no knowledge of these things at the time.
And the piece de resistance:
•Since my departure I have learned of the deceptive conduct by members of the London team, and I was, and remain, deeply disappointed and saddened to learn of such conduct and the extent to which the London team let me, and the Company, down.
Maybe it is time to call back Jamie “This is why I am richer than you” Dimon?
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15th March 2013 at 11:28 am
Administrator says:
The investigation notes that Dimon intentionally withheld investment bank profit and loss data from federal regulators in January and when the reports were reinstated soon after he “reportedly raised his voice in anger” and disclosed that he had ordered the halt to the reports.
According to the report, many red flags were ignored, including that the bank’s chief investment unit and its investment bank assigned different values to identical credit derivatives holdings.
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15th March 2013 at 11:50 am
AWD says:
This will be an interesting case. Shithead Dimon lied to Congress and committed multiple crimes, which should land him in jail, except he’s enriching the criminals in Washington, so he’ll get a pass. The criminals won’t bite the hand that feeds them. They should be in jail with Dimon and Corzine.
JPMorgan’s Political Lobby Spending In 2012 Hit A Record High
Submitted by Tyler Durden on 03/15/2013
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15th March 2013 at 11:57 am
Administrator says:
Complete Timeline Of Events In The JPM London Whale Implosion
Submitted by Tyler Durden on 03/15/2013 11:44 -0400
For those curious about the timeline of the world’s biggest prop-desk blow up, here it is day by day and, pardon the pun, blow by blow.
Nov. 2006
•Bank authorizes Chief Investment Office (CIO) to trade credit derivatives.
2008
•Synthetic Credit Portfolio (SCP) acquires its name.
2009
•As financial crisis eases, SCP earns $1 billion.
2010
•OCC examines CIO investment portfolios; SCP is not explicitly mentioned. OCC requires documentation of investment decisions; Ina Drew criticizes OCC intrusiveness.
2011
•Over 2011, SCP’s notional size increases tenfold from $4 billion to $51 billion.
Nov. 2011
•SCP makes $1 billion credit derivatives bet for gain of $400 million.
Dec. 2011
•Bank & CIO managers decide improving economy lessens need for credit protection. Jamie Dimon instructs Ina Drew to reduce the CIO’s Risk Weighted Assets (RWA).
Dec. 22, 2011
•CIO traders propose reducing RWA, in part, by manipulating models. CIO quantitative head Pat Hagan develops CIO models that artificially lower SCP risk results.
Jan. 6, 2012
•SCP trading breaches CS01 risk limit; breach continues and increases until CIO risk metrics are overhauled in May.
Jan. 16-20, 2012
•SCP trading causes four-day breach in bankwide VaR; breach reported to Jamie Dimon.
Jan. 23, 2012
•Dimon and Chief Risk Officer John Hogan approve a temporary bankwide VaR limit increase to end the breach; told a new CIO VaR model will reduce CIO’s VaR by 44%.
Jan. 27, 2012
•CIO names SCP for the first time in a routine VaR report to OCC.
•New VaR model approval is rushed through and drops CIO’s VaR overnight by 50%. Late Jan. 2012 SCP losses escalate. CIO traders begin mismarking SCP values to minimize losses.
•Mr. Dimon orders bank to stop giving daily CIO profit/loss data to OCC; OCC objects; Chief Financial Officer Doug Braunstein restores data, angering Mr. Dimon.
Late Jan. 2012
•CIO trader Bruno Iksil gives presentation showing SCP lost $100 million in January and could lose $300 million more; proposes “trades that make sense” — buying more longs to offset losses and reduce RWA.
•OCC holds standard quarterly meeting with CIO; told SCP would be reduced. Feb. 2012 Over February, SCP loses another $69 million.
Mar. 2, 2012
•Comprehensive Risk Measure (CRM) used to calculate RWA indicates SCP could lose up to $6.3 billion in 2012, in worst case scenario. CIO risk manager calls result “garbage.”
Mid-Mar. 2012
•Julien Grout, SCP trader, keeps 5-day spreadsheet showing reported SCP values deviated from midpoint prices by over $400 million. Trader Bruno lksil calls SCP’s booked values “idiotic” and calls SCP book “more and more monstrous.”
•Over two weeks, CIO traders acquire $40 billion more in multiple long credit derivatives, in what OCC called “doubling down” on an already losing trading strategy.
Mar. 20. 2012
•Traders Iksil and Grout report internally $40 million loss, largest SCP loss to date, and a $600-800 million “lag” in SCP book, but Ina Drew says she did not read the email.
Mar. 23, 2012
•Ms. Drew orders “phones down” and stops SCP trading.
•SCP trading breaches CSW10% limit; it continues until risk metrics overhauled in May. Mar. 29, 2012 SCP trading breaches CIO Stress Loss limit, which is tested weekly, through April.
Mar. 3 2012
•At quarter end, SCP’s notional size triples from $51 billion to $157 billion, and SCP flips from net short to net long. Total quarterly losses reported internally as nearly. $719 million.
•CIO London office head Achilles Macris says he’s “lost confidence” in his team, SCP has moved into “crisis mode.”
Apr. 5, 2012
•After media inquiries, bank prepares talking points that SCP is a “hedge” and regulators were “fully” informed of trades, but then drops both words from talking points.
Apr. 6, 2012
•Bloomberg and Wall Street Journal report whale trades by WM CIO office in London.
Apr. 9, 2012
•Senate confirms new Comptroller of the Currency, Thomas Curry.
•Regulators have first meeting with JPM on whale trades; bank downplays any problem.
Apr. 10, 2012
•CIO traders report internal SCP daily loss of $6 million, then 90 minutes later, different credit derivative values leading to a loss of $400 million.
Apr. 11, 2012
•–Bank’s chief spokesman, Joe Evangelisti, quoted saying whale trades were a “hedge” of bank’s overall risk.”
•–To prepare for earnings call, bank executives receive SCP presentation showing, in a financial crisis, SCP would not offset bank losses, but lose $250 million.
•SCP also lost money in 3 negative credit scenarios, showing it wasn’t hedging bank’s credit risks.
Apr. 13, 2012
•Bank executives learn SCP positions are huge & hard to exit; SCP reports $1.2 billion loss.
•Bank files 8-K form previewing first quarter earnings and holds earnings call.
◦Bank CEO Jamie Dimon calls whale trade stories “a complete tempest in a teapot.”
◦With respect to SCP, Chief Financial Officer Doug Braunstein says:
◦”All of those positions are put on pursuant to risk management at the firm-wide level.”
◦”[A]ll those positions are fully transparent to the regulators” who get “information on those positions on a regular and recurring basis as part of our normalized reporting.”
◦”All of those decisions are made on a very long-term basis.”
◦”[W]e also need to manage the stress loss associated with that portfolio … so we have put on positions to manage for a significant stress event in Credit.”
◦”[W]e believe all of this is consistent with what we believe the ultimate outcome will be related to Volcker.”
•8-K filing discloses CIO’s VaR results, but not the January change in CIO’s VaR model.
Apr. 19, 2012
•OCC inquires for first time about CIO breaches, including CS01 breach of over 1,000% for 71 days. CIO Chief Market Risk Officer, Peter
•Weiland, tells OCC that risk limit will be replaced with something more “sensible” in the future.
Apr. 27, 2012
•Bank’s Chief Risk Officer John Hogan dispatches Ashley Bacon, his deputy, to London CIO office to analyze SCP.
May 4, 2012
•Bank calls OCC Examiner-in-Charge Scott Waterhouse to disclose SCP loss of $1.6 billion; internally, losses were reported to be $2.3 billion.
May 9, 2012
•Bank meets with OCC; Chief Risk Officer John Hogan denies SCP books were in ismarked, despite collateral valuation disputes.
May 10, 2012
•Bank’s Controller validates SCP marks, even though the marks were $512 million off the midpoints, were “aggressive,” consistently favored the bank, and minimized SCP losses.
•Bank files 10-Q form finalizing first quarter earnings and holds business update call. Mr. Dimon discloses:
◦SCP in much worse shape than disclosed a month earlier.
◦SCP lost $2 billion in second quarter. (Internally, losses reported as $2.8 billion.)
◦”[T]he synthetic credit portfolio was a strategy to hedge the Firm’s overall credit exposure…. We’re reducing that hedge.” Calls SCP a hedge 8 times during call.
◦”In the first quarter, we implemented a new VAR model, which we now deemed inadequate. And we went back to the old one, which had been used for the prior several years, which we deemed to be more adequate.” 10-Q filing does not clearly disclose that same information.
May 11, 2012
•Internally, bank reports SCP daily loss of $570 million, its largest; no public disclosure.
May 14, 2012
•Bank fires London CIO personnel: Achilles Macris, Javier Martin-Artajo, Bruno Iksil. Ina Drew, CIO head, retires from JPMorgan Chase.
June 2012
•Bank discloses SCP has lost $4.4 billion.
July 13, 2012
•Bank restates first quarter profits, disclosing additional SCP losses of $660 million.
Fourth quarter
•OCC issues six Supervisory Letters with 20 Matters Requiring Attention involving CIO.
Dec. 2012
•SCP losses for the year total $6.2 billion. SCP has been dismantled, with most credit derivatives transferred to JPMorgan Investment Bank.
Jan. 2013
•Bank releases management task force report on whale trades.
•OCC issues Cease and Desist Order requiring JPMorgan Chase to take corrective actions.
Source: JPM Exhibits
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15th March 2013 at 11:58 am
AWD says:
Oops, that chart is on the other post. SS
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15th March 2013 at 11:58 am
Yojimbo says:
Tom Ball died for their sins.
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15th March 2013 at 12:19 pm
Administrator says:
This is why Jamie Dimon is richer than you. It takes someone with truly special qualities and brilliance to lose $3.6 billion with a single trade.
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15th March 2013 at 12:26 pm
Administrator says:
Bankistan Vanquishes America
By Barry Ritholtz – March 15th, 2013, 7:30AM
Is there a single doubt left in your mind?
Are you still a believer in Rufus T. Firefly Jamie Dimon as the world’s smartest banker?
Is there a scintilla of wonder left in your mind that the giant banks are legitimate?
Have you come around to understanding — finally — what some of us have long understood about banks?
Are you willing to accept the truth about these corporate behemoths — that they are a horrific combination of economically dangerous, criminally inept, led by pathologically lying CEOs?
Do you harbor any doubts that the giant banks are anything less than ruthlessly efficient criminal enterprises?
Can you — finally — admit that our bank-created financial crisis of 2008-09 has led us to where we are today?
Do you understand the only options presented as a result of that — either corporate bankruptcy and nationalization or a completely artificial Fed driven recovery? (The third option was a Japan-like multi decade recession). Do you realize that the feeble recovery, the slow, deleveraging-driven process of gradual economic healing was the result of how our policy makers chose?
Do you recognize that the world of banking is divided into two camps?
On one side, there are those who understand that the giant banks must be broken up. They are dismayed at the large banks under-capitalization, over-leverage and opacity. These folks have figured out that these banks are not only too big to fail, but are so large that they are too big to succeed, and that the best route is to let insolvent banks fail. They are unhappy that our finance sector is a trillion dollar black box. They know that the majority of giant banks’ profits come from bailouts, and subsidies. This group is dismayed at the corruption of our political system by financiers. They understands huge banks are anti-competitive, a blaspheme against capitalism. They are shocked about corruption of even the most fundamental measures of interest rates such as LIBOR. They are stunned that bankers have overturned a bedrock, fundamental principle of our society — the rule of law rule — with the threat of disrupting the world’s economy if prosecuted for their crimes.
On the other side lay the bank apologists, corrupted politicians, and crony capitalists. They advocate the Big Lie of the financial crisis. They choose to ignore the facts and data that disprove their narrative. They continue to push the lies that the bailouts were a good investment. (They weren’t). They work against the Bipartisan consensus that the giant banks should be broken up. They ignore the many former bank CEOs who call for the break up of “Too Big to Fail” banks. They mandated that GSEs were banned from Lobbying, but they made sure that the big banks retained their influence peddling and hold on Washington DC.
They no longer represent the voters of their districts, but instead are the elected representatives of Bankistan.
And unless we do something — and soon — they will vanquish America.
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15th March 2013 at 1:17 pm
Administrator says:
Is This The Email That Ended The Career Of JPM’s Chief Risk Officer?
Submitted by Tyler Durden on 03/15/2013 12:09 -0400
On October 2, 2012, news hit that Barry Zubrow, JPM’s Chief Risk Officer from November 2007 to January 2012 (in other words, key supervisor of the risk onboarded by the CIO, aka JPM’s prop trading desk, for the biggest part of its existence), and then briefly head of corporate and regulatory affairs, would retire from JPMorgan. As Bloomberg reported then, “Now is the right time in my life” to retire, Zubrow, 59, wrote to colleagues in a note today. “We have learned from the mistakes of our recent trading losses.”
We wonder, if the time was “right” for Zubrow’s retirement because the firm realized that the Senate was in possession of the following email sent from Zubrow on April 12, a day before the first fateful Q1 earnings preview conference call in which Jamie Dimon, responding to media reports of Iksil’s blow up, said the whole situation was a “tempest in a teapot”, in which the Chief Risk Officer essentially told the firm’s executives: Braunstein and Dimon, to lie to the public and shareholders (in light of the full Senate report which reveals that all three statements “suggested” by Mr. Zubrow were lies)?
If that is the case, we wonder: why is Mr. Zubrow not being prosecuted?
…
Sorry, that was obviously rhetorical.
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15th March 2013 at 2:37 pm
backwardsevolution says:
Good piece, Admin. Abby at RT today interviewing Max Keiser re Jamie Dimon. J.P. Morgan now pays 12% of their net income in fines (Max calls them bribes from the mafia). Where do we get a business model like that – no risk, and a 12% taxing of the proceeds of crime.
http://www.youtube.com/watch?feature=player_embedded&v=nJB4dnBShX8#t=6s
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15th March 2013 at 3:06 pm
AWD says:
Bankster; You Won’t Believe What They’ve Done …
Here are just some of the improprieties by big banks:
Funding the Nazis
Laundering money for terrorists
Financing illegal arms deals, and funding the manufacture of cluster bombs (and see this and this) and other arms which are banned in most of the world
Launching a coup against the President of the United States
Handling money for rogue military operations
Laundering money for drug cartels. See this, this, this, this and this (indeed, drug dealers kept the banking system afloat during the depths of the 2008 financial crisis)
Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
Manipulating gold prices … on a daily basis
Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts
Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)
Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
Cheating homeowners by gaming laws meant to protect people from unfair foreclosure
Committing massive fraud in an $800 trillion dollar market which effects everything from mortgages, student loans, small business loans and city financing
Manipulating the hundred trillion dollar derivatives market
Engaging in insider trading of the most important financial information
Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this
Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this
Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this
Otherwise manipulating markets. And see this
Participating in various Ponzi schemes. See this, this and this
Charging veterans unlawful mortgage fees
Helping the richest to illegally hide assets
Cooking their books (and see this)
Bribing and bullying ratings agencies to inflate ratings on their risky investments
Violently cracking down on peaceful protesters
The big banks no longer do very much traditional banking. Most of their business is from financial speculation. For example, less than 10% of Bank of America’s assets come from traditional banking deposits. Instead, they are mainly engaged in financial speculation and derivatives. (and see this)
The big banks have slashed lending since they were bailed out by taxpayers … while smaller banks have increased lending. See this, this and this
A huge portion of the banks’ profits comes from taxpayer bailouts. For example, 77% of JP Morgan’s net income comes from taxpayer subsidies
The big banks are looting, killing the economy … and waging war on the people of the world
And our democracy and republican form of government as well
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15th March 2013 at 3:55 pm
backwardsevolution says:
This quote always makes me chuckle:
“Hell is empty and all the devils are here.”
Shakespeare
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15th March 2013 at 4:00 pm
AWD says:
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15th March 2013 at 4:07 pm
AWD says:
The Biggest Lie Ever Sold to the American Public
Submitted by Phoenix Capital Research on 03/15/2013 12:53 -0400
The US has been lying to all of us for decades now.
We’re not talking about some kooky conspiracy theory… we’re talking about INFLATION.
By understating inflation, the Federal Government and Federal Reserve have done two things:
Exaggerated our economic growth.
Lied about the true cost of living in the US.
Regarding #1, every time the US prints GDP growth numbers, it adjusts this data for inflation. The reason for this is that if the economy grows at 10%, but prices also rise at 10%, then there really hasn’t been any actual growth.
To deal with this, the US adjusts its GDP measures for inflation to make it appear as f they’re objective. The only problem is that the US adjusts GDP using a phony inflation number that is much lower than reality.
A great example is last quarter when we were told that the GDP grew at an annual rate of 0.1%. The reality is that if you used realistic inflationary measures, the US economy SHRANK at a rate of over -1% last quarter. Yes, negative 1%. The worst GDP print since 2009.
The same lie has been extended to the US population about our standard of living.
For decades now we’ve been told that we were getting wealthier because incomes were growing and asset prices like stocks and real estate were rising.
However, the reality is that inflation was the source for much of this “growth.” The US Dollar has lost nearly 20% of its value in the last decade. The end result is all of us are paying much more for EVERYTHING. But we’re being told that we’re actually richer because incomes are up
This is why understating inflation is a HUGE LIE: it is a lie to all of us that our living standards are improving when in fact they’re not.
And the media is FINALLY beginning to report on it.
Those who know the price of everything and the value of nothing are said to be cynics. Americans can be forgiven for being a bit cynical, though, when it comes to prices. Their own cost of living rarely seems to be as low as official statistics claim it is.
Friday’s consumer-price index for February is seen rising 0.2% month on month, excluding volatile food and energy costs. That would bring the year-on-year pace to 2%.
A change to the inflation-measuring process 30 years ago by the Bureau of Labor Statistics, Uncle Sam’s arbiter of prices, is starting to raise eyebrows again. Since 1983, house prices haven’t been part of the consumer-price index. Instead, the BLS calculates “owners’ equivalent rent,” a mix of actual rents and what homeowners guess their homes would fetch if rented.
http://online.wsj.com/article/SB10001424127887324392804578360553019755538.html
Look around you. The cost of everything is increasing dramatically. Gas prices are UP. Home prices are UP. Healthcare costs are UP. Energy prices area UP. Everything you need to survive is UP.
Forget the Fed’s CPI measure. Inflation is here now. And things are only going to be getting worse going forward. History has shown us countless times that you cannot print money without prices soaring. There is not one single instance in which currency devaluation has not done this. And the US Federal Reserve is now printing $84 billion every single month.
What effect do you think this will have on the cost of everything?
Make no mistake, now is the time to be preparing yourself and your portfolio for this. Inflation can take its time to arrive. But once it does… things move very very quickly.
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15th March 2013 at 8:08 pm