Tag: Felix Salmon

Why the $2 Billion Chase Loss Matters to Everyone

Cross posted from The Stars Hollow Gazette

Felix Salmon, finance blogger at Reuters and Matt Taibbi, of ‘vampire squid” fame from “Rolling Stone“, were guests on “View Point with Eliot Spitzer“, discussing the implications JPMorgan’s $2 billion trading loss and why it should matter to anyone with a banking account at Chase, or any other to big to fail bank.

Taibbi and Salmon agree JPMorgan’s risk-taking has broad implications. “JPMorgan Chase takes deposits in from every single mom and pop, and small business and large business, in the world, and the President of the United States,” Salmon says. “They’re a utility bank and it is their job and their duty … to take those deposits and lend them out into the economy. And what do they do instead? They take $360 billion and put it in a hedge fund in London.”

Jamie Dimon’s failure

by Felix Salmon

Drew’s Chief Investment Office quadrupled in size between 2006 and 2011, reaching $356 billion in total, and it’s easy to see how that happened. On the one hand, it was incredibly profitable, with the London team alone, which oversaw some $200 billion, making $5 billion of profit in 2010, more than 25% of JP Morgan’s net income for the year. At the same time JP Morgan accumulated enormous new deposits in the wake of the financial crisis, both by acquiring banks and by attracting big new clients wanting the safety of a too-big-to-fail bank. Historically, JP Morgan has served big corporations by lending them money, but nowadays, as the cash balances on corporate balance sheets get ever more enormous, the main thing these companies want from JP Morgan is a simple checking account – one where they can be sure that their money is safe.

With lots of deposits coming in, and little corporate demand for loans, it was easy for all that money to find its way to the Chief Investment Office, which could take any amount of liabilities (deposits are liabilities, for a bank) and turn them into assets generating billions of dollars in profits.

Never mind the weak tea Volker rule, what is needed is a new, revised Glass-Steagal, the break up the TBTF and protection for investors and the economy.

Banksters get Tagged in the UK, Only to Flee to, Guess Where?

Finally a Representative body, that knows WHO they work for …

Class war breaks out in the U.K.

The Labor government announces a tax on exorbitantly-paid bankers. American populists gnash their teeth in envy

By Andrew Leonard, Dec 9, 2009

Unsurprising headline of the year: “U.S. Probably Will Avoid Matching U.K. 50 percent Bonus Tax.”

Alistair Darling, the U.K. Chancellor of the Exchequer, announced the tax — aimed squarely at overpaid bankers

[…]

From Bloomberg:

“There are some banks who still believe their priority is to pay substantial bonuses,” Darling said in Parliament. “I am giving them a choice. They can use their profits to build up their capital base. If they insist on paying substantial rewards, I am determined to claw money back for the taxpayer.”

Paul Krugman says the move is “entirely reasonable.” Justin Fox asks, “why the heck not?” Felix Salmon says “well done.”

But don’t expect a repeat across the pond.

http://www.salon.com/technolog…

Interesting … maybe the People CAN Fight back?