Tag Archives: JPMorgan Chase

“The Fed Was Suddenly Facing Multiple LTCMs”: BIS Offers A Stunning Explanation Of What Really Happened On Repocalypse Day, by Tyler Durden

This is far and away the best article SLL has seen on the explanation behind the explosive move in the repo market that saw repo rates go from 2% to 10% in a matter of minutes on September 16, and has forced the Federal Reserve to essentially liquify the repo market. The repo market is where banks, hedge funds, and other institutions finance various instruments, putting up those instruments as collateral for loans for a set term by selling them and agreeing to repurchase the instruments at a higher price that embeds an interest rate. It’s a little known but incredibly important part of the financial markets. From Tyler Durden at zerohedge.com:

About a month ago, we first laid out how the sequence of liquidity-shrinking events that started about a year ago, and which starred the largest US commercial bank, JPMorgan, ultimately culminated with the mid-September repo explosion. Specifically we showed how JPM’s drain of liquidity via Money Markets and reserves parked at the Fed may have prompted the September repo crisis and subsequent launch of “Not QE” by the Fed in order to reduce its at risk capital and potentially lower its G-SIB charge – currently the highest of all major US banks.

Shortly thereafter, the FT was kind enough to provide confirmation that the biggest US bank had been quietly rotating out of cash, while repositioning its balance sheet in a major way, pushing more than $130bn of excess cash away from reserves in the process significantly tightening overall liquidity in the interbank market. We learned that the bulk of this money was allocated to long-dated bonds while cutting the amount of loans it holds, in what the FT dubbed was a “major shift in how the largest US bank by assets manages its enormous balance sheet.”

Continue reading→


The U.S. Justice System Must Focus on Elite Criminality, by Michael Krieger

A two-tiered justice system has been a hallmark of corrupt regimes for time immemorial. From Michael Krieger at libertyblitzkrieg.com:

Two very important articles published in recent days serve to once again highlight America’s metastasizing elite criminality problem. A problem which our justice system simply refuses to address. This corrupt two-tier justice system is something I’ve been focused on from the very beginning of my writings, and I continue to see it as a civilization-level threat for this country if not aggressively addressed and confronted in the very near future.

The two articles in question focus on different aspects of untouchable elite culture in America. The first relates to the continued fraud pervasive in America’s largest financial institution, while the second covers a thirty year history of predatory sexual behavior by one of Hollywood’s biggest moguls, Harvey Weinstein. In both cases, countless people have known and reported on repeated abuses perpetrated by both the institution and the man, yet the U.S. justice system and the vast majority of “elite” culture happily help shield them from justice. Predators are predators, and elite predators are far more dangerous to society that your average street crook, so why does our justice situation deal with it in the exact opposite way?

Let’s start with the blockbuster article published in The Nation by the always informative David Dayen. The article is titled, How America’s Biggest Bank Paid Its Fine for the 2008 Mortgage Crisis—With Phony Mortgages!

Here’s just brief excerpt:

JPMorgan’s share of the settlement was $5.3 billion, but only $1.1 billion had to be paid in cash; the other $4.2 billion was to come in the form of financial relief for homeowners in danger of losing their homes to foreclosure. The settlement called for JPMorgan to reduce the amounts owed, modify the loan terms, and take other steps to help distressed Americans keep their homes. A separate 2013 settlement against the bank for deceiving mortgage investors included another $4 billion in consumer relief.

A Nation investigation can now reveal how JPMorgan met part of its $8.2 billion settlement burden: by using other people’s money.

To continue reading: The U.S. Justice System Must Focus on Elite Criminality

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

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.