May 2013 archive

Jamie Dimon, the head of it, is one of the smartest bankers we got.”- Barack Obama

And now he’s maybe going to lose his job.

Investors May Lobby JPMorgan to Clip Dimon’s Wings If Vote Fails

Reuters

Sunday, 5 May 2013, 5:15 PM ET

JPMorgan Chase’s Jamie Dimon may be losing ground in his fight to keep the title of chairman, as some major investors push for more oversight of the chief executive after the “London Whale” trading losses.

At the largest U.S. bank’s annual meeting in two weeks, shareholders will be able to vote on a non-binding proposal to separate the chairman and CEO roles. Two of the bank’s top 10 shareholders told Reuters they are considering voting in favor of the proposal, a reversal of their position last year, because of the disastrous bets on credit derivatives that cost the bank more than $6 billion last year.

Though he’s flat out promised to quit if he loses the Chairmanship.  And he’s not the only Director in trouble.

JPMorgan Directors Feel Heat in a Vote

By SUSANNE CRAIG and JESSICA SILVER-GREENBERG, The New York Times

May 3, 2013, 8:08 pm

Some JPMorgan shareholders are taking public aim at individual directors who hold crucial positions on the bank’s audit and risk committees as the bank grapples with an onslaught of regulatory challenges.

On Friday, the CtW Investment Group, which represents union pension funds and owns six million shares in JPMorgan, said it planned to vote against the three directors on the risk policy committee and the head of the audit committee.

…

Shareholders like CtW are singling out members of the risk committee because they think the board failed to police the bank in important areas, contributing to the trading loss in 2012.

“What we have learned over the past year is that the performance of the risk committee is even worse than we thought,” said Richard Clayton, CtW’s research director. “Their behavior is a combination of being out at sea and asleep at the wheel. Both are bad and together they are disastrous.”

James S. Crown, who has been a director of JPMorgan or one of its predecessor companies since 1991, is chairman of the risk policy committee. The other members are David M. Cote, the head of Honeywell International; Timothy P. Flynn, a former KPMG executive; and Ellen V. Futter, president of the American Museum of Natural History. Mr. Flynn was appointed to the risk policy committee in August 2012.

CtW also plans to vote against Laban P. Jackson, chairman of the audit committee, which shares responsibility for oversight.

They should all lose their jobs.

JPMorgan Caught in Swirl of Regulatory Woes

By JESSICA SILVER-GREENBERG and BEN PROTESS, The New York Times

May 2, 2013, 10:00 pm

The possible action comes amid showdowns with other agencies. One of the bank’s chief regulators, the Office of the Comptroller of the Currency, is weighing new enforcement actions against JPMorgan over the way the bank collected credit card debt and its possible failure to alert authorities to suspicions about Bernard L. Madoff, according to people who were not authorized to discuss the cases publicly.

In a meeting last month at the bank’s Park Avenue headquarters, the comptroller’s office delivered an unusually stark message to Jamie Dimon, the chief executive and chairman: the nation’s biggest bank was quickly losing credibility in Washington. The bank’s top lawyers, including Stephen M. Cutler, the general counsel, have also cautioned executives about the bank’s regulatory problems, employees say.

…

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. A seminal Wall Street figure, Ms. Masters is known for helping expand the boundaries of finance, including the development of credit default swaps, a derivative that played a role in the financial crisis.

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.

…

In the credit card investigation, people briefed on the case said the comptroller’s office had discovered that JPMorgan was relying on faulty documents when pursuing lawsuits against delinquent customers. The accusations, which are expected to prompt an enforcement action later this year, echo complaints that JPMorgan and rivals plowed through home foreclosures with little regard for accuracy.

In a separate investigation into JPMorgan’s relationship with Mr. Madoff, the comptroller’s office raised concerns that the company may have violated a federal law that requires banks to report suspicious transactions.

Out of Control – New Report Exposes JPMorgan Chase as Mostly a Criminal Enterprise

David Dayen, Naked Capitalism

Thursday, March 14, 2013

It’s hard to summarize all of the documented instances in this report of JPM has been breaking the law, but here’s my best shot. I try to keep up on these matters, and yet some of these I’m learning about for the first time:

• Bank Secrecy Act violations;
• Money laundering for drug cartels;
• Violations of sanction orders against Cuba, Iran, Sudan, and former Liberian strongman Charles Taylor;
• Violations related to the Vatican Bank scandal (get on this, Pope Francis!);
• Violations of the Commodities Exchange Act;
• Failure to segregate customer funds (including one CFTC case where the bank failed to segregate $725 million of its own money from a $9.6 billion account) in the US and UK;
• Knowingly executing fictitious trades where the customer, with full knowledge of the bank, was on both sides of the deal;
• Various SEC enforcement actions for misrepresentations of CDOs and mortgage-backed securities;
• The AG settlement on foreclosure fraud;
• The OCC settlement on foreclosure fraud;
• Violations of the Servicemembers Civil Relief Act;
• Illegal flood insurance commissions;
• Fraudulent sale of unregistered securities;
• Auto-finance ripoffs;
• Illegal increases of overdraft penalties;
• Violations of federal ERISA laws as well as those of the state of New York;
• Municipal bond market manipulations and acts of bid-rigging, including violations of the Sherman Anti-Trust Act;
• Filing of unverified affidavits for credit card debt collections (“as a result of internal control failures that sound eerily similar to the industry’s mortgage servicing failures and foreclosure abuses”);
• Energy market manipulation that triggered FERC lawsuits;
• “Artificial market making” at Japanese affiliates;
• Shifting trading losses on a currency trade to a customer account;
• Fraudulent sales of derivatives to the city of Milan, Italy;
• Obstruction of justice (including refusing the release of documents in the Bernie Madoff case as well as the case of Peregrine Financial).

And, exhale.

The sheer litany of illegal activities just overwhelms you. And these are only the ones where the company has entered into settlements or been sanctioned; it doesn’t even include ongoing investigations into things like Libor, illegally concealing inclusions of mortgage-backed securities in employer funds (another ERISA violation), the Fail Whale trades, and especially putback suits for mortgages, where a recent ruling by Judge Jed Rakoff has seriously increased exposure. While the risks are still very much alive and will continue to weigh on the firm, ultimately shareholders will pay, certainly not executives as long as the no-prosecutions standard holds.

Mirabile Dictu! JP Morgan Finally on Regulatory Hot Seat for Widespread Control Failures and Alleged Lying by Blythe Masters Under Oath

Yves Smith, Naked Capitalism

Friday, May 3, 2013

The Times reports that the bank faces actions across eight regulators including: FERC, for a series of “schemes” to dupe state authorities to overpay for power and includes allegations that JP Morgan executive Blythe Masters lied under oath; using false documents when collecting credit card debt; and a failure to report suspicious trading activities by Bernie Madoff.

The fact that JP Morgan is in hot water isn’t news. Josh Rosner revealed in an extensive report released in early March that the bank had paid out over $8.5 billion in fines since 2009, nearly 12% of its net income, for violations across virtually all of its operations. This account showed the carefully cultivated picture of JP Morgan as a well-managed operation was an artful fabrication.

…

The London Whale fiasco alone demonstrated beyond doubt that JP Morgan was, as Rosner put it, out of control. Even before the Senate investigation, media reports provided compelling evidence of astonishing risk management failures, such as having risk management reporting to the CIO, rather than being independent. Sarbanes Oxley expert Michael Crimmins saw the risk management and control failures to be so severe as to firing Dimon.

…

And despite this impressive history of bad conduct, JP Morgan was getting special treatment from regulators as recently as January of this year. Marcy Wheeler noted the OCC failed to clean up “previously identified systemic weaknesses” in its anti-money laundering compliance. Eighteen months of intransigence and all the OCC did was scold a bit. It issued no fine.

Even though regulators are finally waking up to the fact that JP Morgan is a dangerous institution that thinks it can act as a law unto itself, the bank does not appear ready to change its ways.

JPMorgan’s annual meeting will be May 21 in Tampa, Florida.

Our regular featured content-

• On This Day In History May 6 by TheMomCat
• Punting the Pundit by TheMomCat

These featured articles-

• “JPMorgan is one of the best-managed banks there is. by ek hornbeck
• Sunday May 5, 2013: Up with Steve Kornacki Tweets by priceman
• Medical Bankruptcy in the US Even With Insurance by TheMomCat

Follow us on Twitter @StarsHollowGzt

Write more and often.  This is an Open Thread.

after re-election.

Obama diversity disappoints again

By JENNIFER EPSTEIN, Politico

5/5/13 7:04 AM EDT

There were, after all, just eight women among the 23 Cabinet-level officials in Obama’s first term. And that number will be even lower in his second.

After picking an all-white, all-male slate to fill departures at key departments including State and Treasury, Obama urged critics to be patient. Given time, he promised just before his second inauguration, he’d erase concerns sparked by an entirely white and male group of top picks.

“I would just suggest that everybody kind of wait until they’ve seen all my appointments – who is in the White House staff and who is in my Cabinet – before they rush to judgment,” he said. “Until you’ve seen what my overall team looks like, it’s premature to assume that somehow we’re going backwards. We’re not going backwards, we’re going forward.”

Now the second term Cabinet is complete, with final selections that include both Pritzker and Anthony Foxx, an African American, for Transportation secretary. Still, Obama’s put together a less diverse Cabinet than in his first term, when his picks were criticized for being too white and male. And quite a few of the people Obama had asked to hold off until the picture was complete say they they’re not so sure it was worth the wait.

…

(O)verall, there’s no denying the group he wound up with isn’t just less diverse than the current demographics of the country, and far less representative of the coalition of voters that got Obama reelected. It even falls short in virtually every category of the marks he set in his first term.

…

If Foxx is confirmed, there will be three African Americans in the Cabinet, one fewer than before. The number of Asian Americans has dropped from 3 to just 1: first-term holdover Eric Shinseki, the Secretary of Veterans Affairs. And if Labor Secretary-designate Thomas Perez is confirmed, the number of Latinos will have officially made an identical slide.

…

“I at least expected that more than a third of the jobs would go to women,” NOW’s president, Terry O’Neill told POLITICO. “Women should be half the Cabinet. We’re 51 percent of the population, and more than half of us voted for the president’s reelection.” Instead, women have been picked for just seven of 23 Cabinet posts.

The numbers speak for themselves.

Our regular featured content-

• On This Day In History May 5 by TheMomCat

These weekly features-

• Six in the Morning: On Sunday by mishima
• Punting the Pundits: Sunday Preview Edition by TheMomCat
• What We Know Now by TheMomCat

These featured articles-

• Saturday May 4, 2013: Up with Steve Kornacki Tweets by priceman
• Cinco de Mayo by ek hornbeck

Follow us on Twitter @StarsHollowGzt

Write more and often.  This is an Open Thread.

No good deed ever goes unpunished.

H. L. Mencken

I never met the man but knew him well.  It is not likely you would know him even had you been acquainted with him for years.  You would have to grow up in America’s Outback to know him.

I heard only the briefest mention of the story from Dad, who owned the Shamrock.  The Shamrock was where the cowboys and Indians, the working class and the top millionaires drank.  

Dad knew everyone in town except the middle class.  That bunch dawdled over a cocktail at Hunter’s Lodge with its own geysers and duck pond in the time a regular at the Shamrock would put down half a quart of whiskey.  Dad wondered how Hunter’s could make any money.

One time I came into the Shamrock and there were three millionaires together on stools at the end of the bar.  That was when a million was actual money. The millionaires were getting free drinks on the house from working stiffs spending their last dime and maybe the baby’s milk money.

I asked Dad why the millionaires were not buying for the house too.

The answer was obvious.  I can be dumber than whale blubber at times.  The regulars could brag forever about buying the drinks for the millionaires.  If the millionaires bought, they would be just showing off.  Even the most desperate down ‘n outers don’t like to be insulted.

Those days all the regular people were Democrats and so were the top millionaires though the latter would not have liked it known.  The very few Republicans were the dawdling drinkers at Hunter’s.

Today all are Republicans because the Democrats chose to go upscale and even the dawdlers don’t want to know them.  The Democrats don’t even know how to talk to regular people anymore.  Listen to any Democrat.  All you hear is middle class.

Middle class folks in a town in America’s Outback would never adopt a wild burro.

The wild burros were saved from being shot to save the area around the Grand Canyon. With the extermination of so many predators (except Republicans), the invasive burros threaten destruction of what little there is in desert country.  

PETA and less violent sorts don’t want no killing and so the quandary.

The adoptive father of the wild burro is single (no wife would allow a wild burro to be adopted), probably retired but never made much money anyway, drinks a lot, lives on a dirt road in a rundown house with falling down barn or shed or something with too little land to support a turkey, let alone a burro, but wants to do some good for once in his life.  

Make that past tense.

When the animal abuse people and prosecutors and judges got on the case, there was no out for our hero but to shoot himself.  There are no hero abuse people.  Praise the Lord there are guns for heroes.  Nobody is going to take those away.

Best,  Terry