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Also dug up some interesting related analysis:
http://economix.blogs.nytimes.com/20...-new-opponent/
http://money.cnn.com/2011/04/13/news...n=money_latest
By Jennifer Liberto, senior writerApril 13, 2011: 12:49 PM ET
WASHINGTON (CNNMoney) -- JPMorgan Chase CEO Jamie Dimon, who is critical of a key provision in the financial reform law, has been taken to task by a U.S. senator in a scathing letter.
On the eve of JPMorgan's (JPM, Fortune 500) announcement of strong first-quarter profit, Sen. Richard Durbin, an Illinois Democrat, chastized the bank for warning its customers they may have to pay more in fees to use their debit cards.
0Email Print "There is no need for you to threaten your customers with higher fees when you and your bank are already making money hand-over-fist," Durbin wrote to Dimon. "And there is no need to make such threats in response to reform that simply tries to spare consumers from bearing the cost of interchange fees that are anticompe ive and unreasonably high."
The fight is getting downright personal over the Federal Reserve's work to cap so-called "interchange" or "swipe" fees at 12 cents per transaction, down from an average of 44 cents now. Retailers pay those swipe fees, which cover the cost of processing debit cards.
Such a cap could cut into the banking industry profits by tens of billions of dollars -- a point often reiterated by Durbin, who has been fighting to crack down on the swipe fees for years.
But banks, large and small, have launched a fierce fight over the cap and are making legislative progress in signing lawmakers up to delay it.
Dimon wrote in a letter to shareholders, that the proposed caps are "price fixing" and "downright idiotic."
In his letter to Dimon, Durbin argued for swipe fee "reform," rebutting Dimon's allegations and accusing JP Morgan of trying to keep fees high for the sake of profits.
"I recognize that Chase will likely see decreased revenue from interchange reform, but I urge you to keep some perspective," Durbin wrote, enumerating Chase's recent run of strong profits and taking aim at Dimon's "own personal compensation."
Banker bonuses are back
"In contrast, middle-class American families are struggling to get by in a tough economy -- an economy that went south because of the banking industry's unregulated excesses," Durbin wrote.
The idea behind the new caps is to help small businesses at the expense of credit card companies, such as Visa, as well as Wall Street banks.
Smaller community banks and credit unions were exempted from having to abide by the new caps. However, the little guys also oppose the caps, saying that they will also be forced to cut debit card swipe fees either to match compe ion or to ensure retailers won't reject their cards with higher swipe fees.
While giant banks such as JPMorgan have been the loudest foes of the caps, it's the smaller banks and credit unions that have proven to be the most powerful on Capitol Hill in persuading lawmakers that the new cap should be delayed. There are legislative efforts underway in both chambers to delay the caps.
Last week, Rep. Barney Frank, a powerful Massachusetts Democrat, who helped write much of the financial reform, said he also supported legislation to delay the limits on debit card swipe fees, calling it the "only part of the financial reform bill that needs to be amended."
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I dug up the full text here:
http://online.wsj.com/public/resourc...urbinDimon.pdf
It is refreshing to see *someone* in Washington get pissed at bankers enough to say so publicly.
Also dug up some interesting related analysis:
http://economix.blogs.nytimes.com/20...-new-opponent/
SEC Warns Former JPMorgan Exec It Plans to Sue Over Magnetar Deal
The Securities and Exchange Commission may soon file suit over a mortgage securities deal involving JPMorgan Chase and a hedge fund called Magnetar, Bloomberg reported. Two individuals have been notified of potential charges. They include a former executive at JPMorgan, the bank that created and marketed the security, and a former executive at GSC Capital, the firm that managed the selection of assets.
http://www.propublica.org/blog/item/...-magnetar-deal
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Of course, nobody else, esp not Dimon, knew anything about Magnetar.
So this is what the senators do now...they write angry letters to CEOs that will be completely ignored."There is no need for you to threaten your customers with higher fees when you and your bank are already making money hand-over-fist," Durbin wrote to Dimon. "And there is no need to make such threats in response to reform that simply tries to spare consumers from bearing the cost of interchange fees that are anticompe ive and unreasonably high."
Just like our letters to the senators!
Well, when I write to my senators I usually get tons of free spam to show for it.
Six decades after U.S.-led forces ousted the Nazis from Cassino, a new generation is grappling with the fallout from the debts of postwar rebuilding -- borrowings that grew because of a derivative that backfired. Soaring costs forced Cassino, 80 miles southeast of Rome, to settle an interest-rate swap with JPMorgan Chase & Co. in 2009, leaving the town unable to pay for daycare for 60 infants and services for the poor.
but, but, but we need more "innovation from the private sector" in finance.
Looks like we will hit the QUADRILLION dollar mark here in the next few years.Banks globally sold $707.6 trillion of over-the-counter derivatives as of June 30, about 18 percent more than the $601 trillion at the end of 2010, according to data published by the Bank for International Settlements last month. Counterparties would have to pay $19.5 trillion to replace the contracts at market rates, the data show.
$1,000,000,000,000,000
That is a lot of ing zeros.
If you aren't nervous about that much in derivatives floating around, I have a nice little Russian game involving a revolver and a single bullet you should play.
http://www.propublica.org/article/se...-magnetar-dealAccording to The Wall Street Journal, the Securities and Exchange Commission has warned a top banker that it may bring civil charges against him for his role in creating a risky collateralized debt obligation, or CDO, that exploded spectacularly as the housing market crashed. It's the first public evidence that the SEC is considering charges against a top banking executive involved in CDOs, which fueled the financial crisis.
The CDO, from the end days of the boom in 2007, was one of dozens that had been created with the help of the hedge fund Magnetar. As we reported with This American Life and NPR, Magnetar often pushed for riskier assets to be included in CDOs, and placed bets against many of the same investments so that it would profit if those risky assets went sour. (Magnetar has never been charged with any wrongdoing, and has always maintained that it did not have a strategy to bet against the housing market.)
Alexander Rekeda, the banker warned by the SEC, helped create a $1.6 billion CDO called Delphinus CDO 2007-1 for the Japanese bank Mizuho. Investigators allege that investors were not told Magnetar stood to profit if the investments failed. (Here's the pitchbook for Delphinus.)
In a related matter, the Financial Industry Regulatory Authority, an independent Wall Street watchdog, has made a preliminary recommendation that Rekeda be disciplined for "alleged misrepresentations in the sale of" another type of security -- we have the details here.
Delphinus is not the first deal involving Mizuho and Rekeda that the SEC has looked into. As The Journal reported last year, the agency has been investigating a CDO called Tigris that Magnetar created with Mizuho. That CDO was a collection of the riskiest bits of other CDOs — as we described it, they were "bundling up the dregs of a CDO," a "rare, if not unprecedented" strategy. The Tigris deal has not yet resulted in charges.
We've reached out to Rekeda, who no longer works at Mizuho, but have yet to hear back. A Mizuho spokesman told The Wall Street Journal that it "has been asked by the SEC to provide related do ents and information, and it's currently dealing with it." (We also have reached out to Mizuho.)
The warning sent to Rekeda, called a Wells notice, says that the SEC has made a "preliminary determination … to recommend charges based on alleged misrepresentations in connection with the structuring of a CDO."
As we noted last fall, the SEC has also warned the ratings agency Standard & Poor's that it also may face civil charges in connection with the Delphinus CDO. Standard & Poor's abruptly downgraded Delphinus just a few months after the security was issued and received a top rating.
Other banks have been charged by the SEC and settled allegations involving CDOs. In 2010, Goldman Sachs settled with the SEC for more than $500 million. In June, J.P. Morgan agreed to pay $153 million, and in October, Citigroup reached a $285 million settlement.
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