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A settlement wouldn't suprise me, but I'm struggling to see what kind of merit the lawsuits could have. JPM made some bad decisions, but shareholders know that investing comes with risk.
Likewise.
I'm not sure how much traction this gets though...or perhaps a settlement is inevitable simply due to the context in which this suit takes place (with respect to the events of the past 5 years or so).
A settlement wouldn't suprise me, but I'm struggling to see what kind of merit the lawsuits could have. JPM made some bad decisions, but shareholders know that investing comes with risk.
"Shareholder class action suits do occasionally go somewhere"
74+ suits have been killed by referring to the recent SCOTUS anti-citizen decision greatly restricting class action suits. It means that, eg ATT, could screw 10Ms of users on their phone bills, pocketing $100Ms for doing nothing, with false/erroneous charges. Each user would have to sue individually.
Last edited by boutons_deux; 05-17-2012 at 09:09 AM.
Romney: JPMorgan’s $3 billion loss is ‘the way America works’
saying it was just “the way America works.”
“I would not rush to pass new legislation or new regulation,” Romney said during a Wednesday interview with Hot Air blogger Ed Morrissey. “This is, in the normal course of business, a large loss but certainly not one which is crippling or threatening to the ins ution.”
http://www.rawstory.com/rs/2012/05/1...=Google+Reader
========
iow, W. Gecko, predatory capitalist, will do nothing to shutdown or even restrict extremely risky, uncoverable bets in the Wall St casino.
Michael Crimmins: Why the Cops Should be Knocking on Jamie Dimon’s Door Soon
The scandal surrounding JP Morgan’s losses in its Chief Investment Office is not going away, and for good reason. Its trading book continues to lose money at an astounding rate. The most recent report estimates that the losses have increased by at least 50% more than the bank’s original loss estimates. The total damage is anyone’s guess at this point.
This fiasco is beginning to look a lot like accounting control fraud. The Justice Department and the FBI have begun criminal probes. The SEC is also investigating. So far, the objectives of these investigations are under wraps, but if I were an SEC or DOJ enforcement official I’d be laser-focused on bringing a Sarbanes-Oxley case against Jamie Dimon.
Sarbanes-Oxley emerged out of the Enron frauds. This law requires the CEO to certify that internal controls are operating effectively to give comfort to readers of the financial statements that the disclosures contained in the reporting are reliable. There are civil penalties for filing a false certification and criminal penalties, including jail time, for false filings found to be fraudulent. So far none of the obvious candidates like Fuld at Lehman or Jon Corzine at MF Global have been prosecuted under the law.
Jamie Dimon looks like a very attractive candidate to investigate for SOX violations.
For starters, Dimon’s description of what happened rings SOX alarm bells:
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.
- Meet the Press, May 13, 2012
Warning signs and red flags were ignored. And they’ve apparently been ignored since 2007. Once again, echoing what happened at MF Global, risk managers who raised alarms about the riskiness of the positions in 2009 were replaced with more cooperative risk managers:
Several bankers said that risk controls were not sufficiently strengthened by Doug Braunstein, who took over as chief financial officer in 2010, another reason the bolder trades continued.
More damning is Dimon’s tacit admission that the controls designed to protect the firm from these sorts of blowups were ineffective, due to lack of intervention. Ignoring internal controls, or red flags as Dimon characterizes them, is a failure in the control environment. The failure to disclose inoperative key controls in the CEO certification is a violation the law.
http://www.nakedcapitalism.com/2012/...=Google+Reader
What the Mainstream Media Still Doesn't Get About Big Banks
Eliot Spitzer suggested persuasively that Occupy should hold protests calling for Jamie Dimon’s removal from the board of the New York Federal Reserve Bank, which is tasked with overseeing banks like JPMC. Spitzer writes,
“The Fed conflict is so obvious that it defies any possible rationalization or explanation. For a decade, the New York Fed has failed to pick up on any of the significant Wall Street threats: excess leverage, subprime fraud, dangerous concentration in “too big to fail” en ies. Maybe the reason is that the board is controlled by the very voices that have been at the root of the failure.”
Elizabeth Warren joined Spitzer in calling for Dimon's ouster, saying, "[w]e have to say as a country, no, the banks cannot regulate themselves."
http://www.alternet.org/module/printversion/155450
... why Wall St took down Spitizer and is spending $Ms to defeat Warren.
The point is that it’s not O.K. for banks to take the kinds of risks that are acceptable for individuals, because when banks take on too much risk they put the whole economy in jeopardy — unless they can count on being bailed out. And the prospect of such bailouts, of course, only strengthens the case that banks shouldn’t be allowed to run wild, since they are in effect gambling with taxpayers’ money.
Incidentally, how is it possible that Mr. Romney doesn’t understand all of this? His whole candidacy is based on the claim that his experience at extracting money from troubled businesses means that he’ll know how to run the economy — yet whenever he talks about economic policy, he comes across as completely clueless.
Anyway, it goes without saying that Jamie Dimon is no Jimmy Stewart. But he has, in a way, been playing Jimmy Stewart on TV, posing as a responsible banker who knows how to manage risk — and therefore the point man in Wall Street’s fight to block any tightening of regulations despite the immense damage deregulated banks have already inflicted on our economy. Trust us, Mr. Dimon has in effect been saying, we’ve got this covered and it won’t happen again.
Now the truth is coming out. That multibillion-dollar loss wasn’t an isolated event; it was an accident waiting to happen. For even as Mr. Dimon was giving speeches about responsible banking, his own ins ution was heaping on the risk. “The unit at the center of JPMorgan’s $2 billion trading loss,” reports The Financial Times, “has built up positions totaling more than $100 billion in asset-backed securities and structured products — the complex, risky bonds at the center of the financial crisis in 2008. These holdings are in addition to those in credit derivatives which led to the losses.”
And what was going on as these positions were being ac ulated? According to a fascinating report in Sunday’s Times, the reality behind JPMorgan’s facade of competence was a scene all too reminiscent of the behavior that brought down firms like A.I.G. in 2008: arrogant executives shouting down anyone who tried to question their activities, top management that didn’t ask questions as long as the money kept rolling in. It really is déjà vu all over again.
The point, again, is that an ins ution like JPMorgan — a too-big-to-fail bank, not to mention a bank whose deposits are already guaranteed by U.S. taxpayers — shouldn’t be engaged in this kind of speculative investment at all. And that’s why we need a return to much stronger financial regulation, stronger even than the Dodd-Frank regulations passed back in 2010.
http://www.nytimes.com/2012/05/21/op...acle.html?_r=1
...
Last edited by boutons_deux; 05-21-2012 at 01:50 PM.
http://in.reuters.com/article/2012/0...8JF34O20120829Banks are urging U.S. authorities to broaden a little-noticed exemption in the Volcker rule's trading curb that critics say could blind regulators to the next version of the JPMorgan Chase & Co Whale trade.
The forthcoming Volcker rule to curb proprietary trading is one of the most hotly debated measures called for in the 2010 Dodd-Frank financial reform law.
Advocates say the rule is needed to make sure banks that receive government backstops like deposit insurance don't make risky bets that could blow up and create the need for a taxpayer bailout. Wall Street has pushed back, saying the rule is too severe and will prevent banks from managing their operations, especially their ability to hedge risk.
At the center of debate are hedging and market-making exemptions tucked into the proposal that regulators issued in October.
Concerns about exemptions grew in May when JPMorgan revealed that a botched hedging strategy had "morphed" into a risky bet at a London unit that was supposed to be balancing the bank's overall credit exposure, costing the bank at least $5.8 billion. The trader was nicknamed the "London Whale" for the giant positions he took.
But another exemption designed to protect banks' ability to manage liquidity risk has mostly escaped the glare.
The exemption covers a special type of account, designed to prevent the kind of cash crunches that took down Bear Stearns and Lehman Brothers in the heat of the 2007-2009 financial crisis.
Banks want an even broader exemption. But critics say the proposed rule, as is, already excludes liquidity trades almost entirely from the Volcker rule, expected to be finalized later this year.
As is, the liquidity exemption "deeply undermines the applicability of the Volcker firewall," Democratic Senator Jeff Merkley, one of the authors of the Dodd-Frank provision authorizing the rule, said in an interview.
Just a thought, if we break up the banks into small enough pieces where no single piece is too big to fail, we can get the same assurance that there won't need to be another bailout without having to put our trust in yet another inept and incompetent government oversight program. We could even let those smaller banks manage their operations and hedge their risk however they darn well please.Advocates say the rule is needed to make sure banks that receive government backstops like deposit insurance don't make risky bets that could blow up and create the need for a taxpayer bailout. Wall Street has pushed back, saying the rule is too severe and will prevent banks from managing their operations, especially their ability to hedge risk.
needs to happen; almost surely will not, barring another financial panic. which is not impossible.
You're right of course, but for some reason I still feel the need to shout this into the wind every so often.
http://www.reuters.com/article/2013/...0AZ1P520130130There is a new twist in the London Whale trading scandal that cost JPMorgan Chase $6.2 billion in trading losses last year. Some of the firm's own traders bet against the very derivatives positions placed by its chief investment office, said three people familiar with the matter.
The U.S. Senate Permanent Committee on Investigations, which launched an inquiry into the trading loss last fall, is looking into the how different divisions of the bank wound up on opposite sides of the same trade, said one of the people familiar with the matter.
That seems more like an issue of poor coordination internally than anything criminal going on. Any business with multiple divisions that operate independently runs the risk of left hand not talking to right hand. Ideally a situation to be avoided, but not an uncommon occurence.
not impossible?
it's inevitable, just as soon as the Banksters and wealthy figure out their next scam, like they have ever since lending and banking were invented 100s of years ago.
if you keep saying it every day for 30 years you're bound to be right every now and then . . .
the history of the financial sector's ripoff, scams, bubbles, collapses, disaster is well known. Aren't you supposed to be some kind of financial student or expert or something?
Lanny Breuer Now Blames 94 US Attorneys for Immunizing Banksters
It’s not Lanny’s fault the banksters have gone free, you see, it’s the fault of people like John Leonardo, Arizona’s US Attorney, Alicia Limtiaco, Guam’s US Attorney, or Felicia Adams, Northern Mississippi’s US Attorney, all of whom had no hint of jurisdiction in these cases.
This, in spite of the fact that Lanny has repeatedly admitted being personally involved in the bankster cases.
This, in spite of the fact that Lanny did play a leadership role in one of the few cases that had a similar task force structure as BP–the mortgage fraud settlement. In that case, Lanny under-resourced the investigative team, ensuring it would be unable to do adequate investigation to reach adequate settlement. And he didn’t even show up for the big announcement that–basically–the settlement was immunizing the banksters for stealing millions of people’s homes. Somehow, now that it’s time to claim credit, Lanny has forgotten about that willful attempt to help banks bury their crimes.
Lanny has, in the past, clearly admitted to actions that led directly to amnesty for banksters. But in his effort to shore up his reputation as he heads out the door (though not until March 1, unfortunately), he’s gonna blame everyone else for the fact that, on his watch, the most destructive criminals in the country got a pass.
http://www.nakedcapitalism.com/2013/...94qlLoj8yic.99
Yet Another Cost of Doing Business Fine: Lender Processing Services Settles with 46 Attorneys General for $127 Million
As we recounted at length on this blog, the issues with LPS go well beyond robosigning. “Robosigning” was a convenient label to divert attention from the fact that the party that was attempting to foreclose didn’t merely have improperly executed do ents, which is what this lame settlement would lead you to believe. It was that it was often the improper party, raising a host of issues (borrower exposure to liability from the proper party, which has occasionally turned out to be a real issue, clouded le). I happened to speak to a reporter on the mortgage beat one of the major New York papers, and that individual was sputtering about the settlement.
Worse, notice how this settlement ins utionalized the undermining of procedures that go back to the 1677 Statute of Frauds. LPS is permitted to sign do ents on behalf of a servicer if it is authorized to do so. But a bedrock concept of the law has been that evidence submitted in court (an an affidavit stands in lieu of testimony) is based on personal knowledge. LPS does not know the integrity of the underlying servicer systems (and our Bank of America series confirms our su ion that they often suck). Is it going to be, as before, that servicers file affidavits attesting as to the amount the borrower owes? We might as well throw our judicial system down the toilet if so.
http://www.nakedcapitalism.com/2013/02/yet-another-cost-of-doing-business-fine-lender-processing-services-settles-with-46-attorneys-general-for-127-million.html#IYGTyAMquZlkOZPl.99
Alright then, give it to us in a nuts .
Nope. Just an interested reader. Are you an expert?
of course, why do you even bother to ask?
Morgan settles with Justice for $13B, agrees to cooperate with criminal investigations.
http://www.huffingtonpost.com/2013/1...n_4128994.htmlJPMorgan Chase has reached a tentative $13 billion settlement with the Justice Department over a number of investigations related to to the bank's residential mortgage-backed securities business, according to The Wall Street Journal.
Tweets from The Wall Street Journal and CNBC broke the news Saturday.
News of the deal comes just a day after a JPMorgan was reported to have reached a tentative $4 billion settlement with the Federal Housing Finance Agency over claims it sold bad mortgages to government agencies ahead of the financial crisis
At $13 billion, the potential settlement with the Justice Department exceeds estimates in September that JPMorgan would end up paying as much as $11 billion over the allegations. If finalized, the settlement would be the largest the U.S. government has ever made with a single company, according to WSJ.
JPMorgan may still also face criminal charges, according to a tweet by CNBC reporter John Harwood:
More from Reuters:
WASHINGTON, Oct 19 (Reuters) - JPMorgan Chase & Co has reached a tentative $13 billion agreement with the U.S. Justice Department to settle government agency investigations into bad mortgage loans the bank sold to investors before the financial crisis, a source said on Saturday.
The tentative deal does not release the bank from criminal liability for some of the mortgages it packaged into bonds and sold to investors, a factor that had been a major sticking point in the discussions, the source said.
As part of the deal, the bank will likely cooperate in criminal inquiries into certain individuals involved in the conduct at issue, the source, who declined to be identified, said.
Officials at JPMorgan and the Justice Department declined to comment.
Another source close to the discussions characterized a deal as likely, but cautioned that parts of the agreement are still being hammered out, and the settlement could conceivably fall apart.
The record settlement could help resolve many of the legal troubles the New York bank is facing. Earlier this month JPMorgan disclosed it had stockpiled $23 billion in reserves for settlements and other legal expenses to help cover the myriad investigations into its conduct before and after the financial crisis.
The deal is being hammered out by some of the most senior officials at the Department of Justice and the largest U.S. bank. Attorney General Eric Holder and JPMorgan Chief Executive Jamie Dimon spoke on the phone on Friday night to finalize the broad outlines of the broad deal, the first source said.
The bank's general counsel Stephen Cutler and Associate Attorney General Tony West are negotiating a statement of facts that will be part of a final agreement, the source said.
Long considered one of the best-managed banks, JPMorgan has stumbled in recent years, with run-ins with multiple federal regulators as well as authorities in several states and foreign countries over issues ranging from multibillion-dollar trading losses and poor risk controls to probes into whether it manipulated a power market.
In September, as the Justice Department prepared to sue the bank over mortgage securities that the bank sold in the run-up to the financial crisis, JPMorgan tried to reach a broader settlement with DOJ and other federal and state agencies to resolve claims over its mortgage-related liabilities stemming from the bust in house prices.
Dimon went to Washington to meet with Holder on Sept. 25, and discussed an $11 billion settlement at that point.
Some of the problems relate to mortgage bank Washington Mutual and investment bank Bear Stearns, two failing firms that JPMorgan took over in 2008.
The bank and the Justice Department have been discussing a broad deal that would resolve not only the inquiry into mortgage bonds it sold to investors between 2005 to 2007 that were backed by subprime and other risky residential mortgages, but also similar lawsuits from the Federal Housing Finance Agency, the National Credit Union Administration, the state of New York and others.
The broader settlement is a product of a government working group created nearly two years ago to investigate misconduct in the residential mortgage-backed securities market that contributed to the financial crisis. Officials from the Justice Department, the New York Attorney General and others helped to lead the group.
Reuters reported late Friday that JPMorgan and FHFA had reached a tentative $4 billion deal. That agreement is expected to be part of the larger $13 billion settlement.(Full Story)
So How Big a Deal is the Pending “$13 Billion” JP Morgan Settlement?
http://www.nakedcapitalism.com/2013/...lWkAZyzvJz7.99
As always, the comments are as interesting as the articles.
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