Tag Archives: Jamie Dimon

Unwinding QE will be “More Disruptive than People Think”: JP Morgan CEO Dimon, by Wolf Richter

Posted on July 12, 2017 | Leave a comment

This article was worth posting simply because it contains what sounds like some sort of intellectual humility from JP Morgan’s CEO, Jamie Dimon. From Wolf Richter at wolfstreet.com:

“We act like we know exactly how it’s going to happen, and we don’t.”

“We’ve never had QE like this before, and we’ve never had unwinding like this before,” said JPMorgan CEO Jamie Dimon at the Europlace finance conference in Paris. “Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.”

He was referring to the Fed’s plan to unwind QE, shedding Treasury securities and mortgage-backed securities on its balance sheet. The Fed will likely announce the kick-off this year, possibly at its September meeting.

According to its plan, there will be a phase-in period. It will unload $10 billion the first month and raise that to $50 billion over the next 12 months. Then it will continue at that pace to achieve its “balance sheet normalization.” Just like the Fed “created” this money during QE to buy these assets, it will “destroy” this money at a rate of $50 billion a month, or $600 billion a year. It’s the reverse of QE, with reverse effects.

Other central banks are in a similar boat. The Fed, the Bank of Japan, and the ECB together have loaded up their balance sheets with $14 trillion in assets. Unwinding this is going to have some impact – likely reversing some of the asset price inflation in stocks, bonds, real estate, and other markets that these gigantic bouts of asset buying have caused.

The Bank of Japan has been quietly tapering its asset purchases for a while to where it buys only enough to keep the 10-year yield barely above zero. And the ECB has tapered its monthly purchases by €20 billion earlier this year and is preparing the markets for more tapering. Once central banks stop buying assets, the phase starts when central banks try to unload some of those assets. The Fed is a the threshold of this phase.

Dimon was less concerned about the Fed’s rate hikes. People are too focused on rate hikes, he said, according to a Bloomberg recording of the conference. If the economy is strong, economic growth itself overcomes the issues posed by higher rates, he said. The economy has been through rate hikes many times before. They’re a known quantity.

But “when selling securities in the market place starts,” that’s when it gets serious.

To continue reading: Unwinding QE will be “More Disruptive than People Think”: JP Morgan CEO Dimon

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“He Woke up on 3rd Base and Thought He Hit a Triple” – A Community Banker Responds to Jamie Dimon, by Michael Krieger

Posted on April 11, 2015 | 1 comment

If there is any one individual who has come to symbolize the evil of crony capitalism, too big to fail, and the financial crisis bailouts, it is Jamie Dimon, CEO of JP Morgan Chase. Unbelievably arrogant, he holds himself out as a symbol of capitalistic accomplishment, never acknowledging that his bank’s business model is built on a heads we win, tails you lose proposition—leveraged speculation where the bank takes the profits and the taxpayers bear the risk. JPM and the rest of the too big to fails should have been allowed to go down the drain in 2009. Instead, Dimon’s smug countenance graces a recent Barron’s cover and a JPM shareholder letter. It’s the kind of face you’d like to plant a fist in the middle of, with all the force you can muster. From Michael Krieger, at libertyblitzkrieg.com:

The recent shareholder letter by JP Morgan CEO Jamie Dimon provides a crystal clear example of why it’s so dangerous to encourage and subsidize the corporate welfare babies known as the “Too Big to Fail” mega banks. The letter, which features a gigantic photograph of the executive seated casually with legs crossed in jeans, a shirt that appears almost uncomfortable around his neck in the absence of a tie, and all ten fingers touching flawlessly in what undoubtably took multiple takes to provide the sufficient creepiness factor (the presence of presidential cufflinks cannot be confirmed or denied), expounded on how well the mega banks performed during the financial crisis compared to the hundreds of small banks that failed.

This was understandably too much to handle for Camden R. Fine, president and chief executive of the Independent Community Bankers of America. He wrote a scathing piece in American Banker in rebuttal titled, Dimon’s Defense of Big-Bank Model: An Exercise in Hubris.

Here are some choice excerpts:
The financial crisis caused by Wall Street has been devastating for the U.S. economy, bringing on a downturn from which we are still emerging. But apparently there are some on Wall Street who still don’t understand the effect the collapse they constructed has had on the rest of us.

With baseball season underway, I get the feeling Jamie Dimon woke up on third base and thought he hit a triple.

Ridiculing the smaller financial institutions that have to answer to the free market — that do not enjoy an absolute taxpayer backstop against failure — is beyond hubris. It shows a complete unwillingness to accept responsibility. It shows that Wall Street, infantilized by privilege, has learned nothing from what it wrought in those panic-stricken months in 2008 and 2009 and in the years of economic doldrums that have followed.

That is not only infuriating to those of us who have had to survive on our wits instead of billion-dollar backstops — it is fundamentally dangerous. The danger lies in Dimon’s point that the largest banks are not the riskiest. He suggests the megabank model is nothing to worry about, even though its taxpayer-funded backstop incentivizes large institutions to continue growing and taking outsized financial risks. His point — in fact, his plea, to shareholders who might prefer to split up the massive institution into smaller, more manageable and more valuable parts — was that they’ve got a pretty good thing going and shouldn’t relinquish the benefits of their sheer size and complexity.

We as a nation cannot allow ourselves to fall back into the too-big-to-fail trap. We must continue to seek ways to end federal subsidies and funding advantages for the largest financial firms that incentivize risky behavior and put taxpayers at risk. And we shouldn’t fall victim to the siren song of the Wall Street megabanks, those institutions to which the rules of the free markets do not apply.

Simply brilliant. I have nothing to add.

http://libertyblitzkrieg.com/2015/04/10/he-woke-up-on-3rd-base-and-thought-he-hit-a-triple-a-community-banker-responds-to-jamie-dimon/

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Posted in Business, Debt, Economics, Other Views

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The $9 Billion Witness: Meet JPMorgan Chase’s Worst Nightmare, by Matt Taibbi

Posted on November 7, 2014 | 8 comments

There are reasons why the word “bankster” has become part of the vernacular. From Matt Taibbi, The Rolling Stone, 11/6/14:

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn’t take it anymore.

“It was like watching an old lady get mugged on the street,” she says. “I thought, ‘I can’t sit by any longer.'”

Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She’s had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations.

Thanks to a confidentiality agreement, she’s kept her mouth shut since then. “My closest family and friends don’t know what I’ve been living with,” she says. “Even my brother will only find out for the first time when he sees this interview.”

Six years after the crisis that cratered the global economy, it’s not exactly news that the country’s biggest banks stole on a grand scale. That’s why the more important part of Fleischmann’s story is in the pains Chase and the Justice Department took to silence her.

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. “Every time I had a chance to talk, something always got in the way,” Fleischmann says.

This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called “statements of facts,” which were conveniently devoid of anything like actual facts.

And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”

Read more: http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106#ixzz3IQPpgFT1

 

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Posted in Business, Financial markets, Government, Law, Uncategorized

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