JP Morgan - A Nightmare on LOL Street

HouseHead78 · May 14, 2012

http://www.politico.com/politico44/...n-fiasco-reinforces-need-for-wall-123368.html

Surprised we haven't seen a thread on this yet. While Wall Street lobbyists have been busy watering down Dodd-Frank during implementation, banks are apparently engaging in the same exotic trades that sunk us in the first place. They've learned nothing and our government is unable to regulate them.

I think there's more of this going on, dookie is going to hit fans, and we're all screwed.

While I take much delight in the demise of arrogant traders and executives who get paid a ton of money while offering nothing to the economy except huge amounts of risk - I can't help but think we're going to have to have yet another destructive crisis before we fix it.

JohnR · May 14, 2012

I'm not quite there. I fully believe that Wall Street owns the politicians, that as a result the Street is too lightly regulated, that once again too many firms are too big to fail, and that at some point in the future the Street will have another costly systematic failure.

But I don't see that time as being now. For various reasons.

HouseHead78 · May 14, 2012

So you're Polly Anna and I'm Polly Pissypants.

JohnR · May 14, 2012

If Pollyanna thinks Wall Street will screw us over once again in the not too distant future, then yes I am Pollyanna.

By the way, per my son, this winter J.P. Morgan was the #1 dream destination for the college football players seeking summer internships. It used to be Goldman before the vampire squid bit ...

Cascarino's Pizzeria · May 15, 2012

President Wall Street Buttlicker gave his thumbs up to Jamie "No Mo' Regulations" Dimon on The View yesterday saying he's such a great banker and they're sooooo awesome at handling risk.

Apparently the Prez didn't know that Wall St. is still stuck in a 2008 mentality:

In the years leading up to JPMorgan Chase’s $2 billion trading loss, risk managers and some senior investment bankers raised concerns that the bank was making increasingly large investments involving complex trades that were hard to understand. But even as the size of the bets climbed steadily, these former employees say, their concerns about the dangers were ignored or dismissed.
An increased appetite for such trades had the approval of the upper echelons of the bank, including Jamie Dimon, the chief executive, current and former employees said.

http://dealbook.nytimes.com/2012/05/14/warnings-said-to-go-unheeded-by-chase-bosses/?hp

tomwilhelm · May 15, 2012

The nations 5 largest banks now control 56% of our financial assets.

They controlled 43% when the $#!@ hit the fan.

Yeah, we're ********ed.

cleansheetbsc · May 15, 2012

tomwilhelm said: ↑

The nations 5 largest banks now control 56% of our financial assets.

They controlled 43% when the $#!@ hit the fan.

Yeah, we're ********ed.
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Need a good trust-buster.

JohnR · May 15, 2012

Hey, we Americans are the ones who are giving our assets to the Big 5. Nobody is making us do it.

Sorry, you Americans. My account is with an independent community bank, thanks much.

tomwilhelm · May 15, 2012

We had one, but the big banks are literally throwing money around at the state and federal level to cut her and the agency she conceived off at the knees. She's running for Senate now against the guy who used his tie-breaking vote on Frank/Dodd to literally hand the banking industry $19 Billion.

With a B.

Pretty good return on investment really...

tomwilhelm · May 15, 2012

JohnR said: ↑

Hey, we Americans are the ones who are giving our assets to the Big 5. Nobody is making us do it.

Sorry, you Americans. My account is with an independent community bank, thanks much.
Click to expand...

So's mine.

But my mortgage, which I got from a local bank, was sold to one of the big banks before I even closed.

Kobranzilla · May 15, 2012

JPMorgan may take back pay over trading loss
http://www.marketplace.org/topics/business/jpmorgan-may-take-back-pay-over-trading-loss

My sales people get docked commission when their customers don't pay...

cleansheetbsc · May 15, 2012

Can't wait to see how they offset their NYS income taxes with these losses.

VFish · May 15, 2012

Thank God Dodd-Frank saved us!

Oh wait, Dodd-Frank didn't have any effect on JPM or its' huge losses which aren't even threatening the banks viability.

Sigh, at this point I think Barney Frank is too big to fail.

argentine soccer fan · May 15, 2012

HouseHead78 said: ↑

http://www.politico.com/politico44/...n-fiasco-reinforces-need-for-wall-123368.html

Surprised we haven't seen a thread on this yet. While Wall Street lobbyists have been busy watering down Dodd-Frank during implementation, banks are apparently engaging in the same exotic trades that sunk us in the first place. They've learned nothing and our government is unable to regulate them.

I think there's more of this going on, dookie is going to hit fans, and we're all screwed.

While I take much delight in the demise of arrogant traders and executives who get paid a ton of money while offering nothing to the economy except huge amounts of risk - I can't help but think we're going to have to have yet another destructive crisis before we fix it.
Click to expand...

Frankly I don't understand your post, or the WH's spokesman. Maybe I'm missing something.

Which specific regulations from Dodd-Frank do you propose were watered down and would have had any influence on the specific "bad trades" JP Morgan made that are mentioned in your link?

Is the WH proposing that we outlaw all risks so traders never lose money?

HouseHead78 · May 16, 2012

argentine soccer fan said: ↑

Frankly I don't understand your post, or the WH's spokesman. Maybe I'm missing something.

Which specific regulations from Dodd-Frank do you propose were watered down and would have had any influence on the specific "bad trades" JP Morgan made that are mentioned in your link?

Is the WH proposing that we outlaw all risks so traders never lose money?
Click to expand...

The Volcker Rule. It was meant to keep banks from risking money that's meant to back customer deposits and was a cornerstone of the reform. It's now been watered down by lobbyists during the regulatory process to the point where it has so many holes that it can't do what was intended, and it's tied up in procedure until 2014. So your bank can take your deposit and throw it at some exotic instrument and lose it, and we taxpayers have to pick up the pieces.

http://en.wikipedia.org/wiki/Volcker_Rule

The Volcker Rule is a specific section of the Dodd–Frank Wall Street Reform and Consumer Protection Act originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from making certain kinds of speculative investments that do not benefit their customers.

HouseHead78 · May 16, 2012

VFish said: ↑

Thank God Dodd-Frank saved us!

Oh wait, Dodd-Frank didn't have any effect on JPM or its' huge losses which aren't even threatening the banks viability.

Sigh, at this point I think Barney Frank is too big to fail.
Click to expand...

I'm surprised you all haven't done your homework on this.

This trade could have been prevented if the Volcker Rule had gone in as originally written. The problem is JP Morgan led the charge against the regulation after it was passed (because, they said, they're so awesome at managing risk that we don't need to protect our economy from it), and their lobbyists have so gummed up the process that the law hasn't been implemented.

JohnR · May 16, 2012

When Paul Volcker said interest rates had to be high for the good of the country, the left howled and the right applauded. When Paul Volcker said banks needed to be regulated more tightly for the good of the country, the right howled and the left applauded.

It appears that this guy actually does care about the good of the country, and that just about everybody else is selling partisanship.

HouseHead78 · May 16, 2012

JohnR said: ↑

When Paul Volcker said interest rates had to be high for the good of the country, the left howled and the right applauded. When Paul Volcker said banks needed to be regulated more tightly for the good of the country, the right howled and the left applauded.

It appears that this guy actually does care about the good of the country, and that just about everybody else is selling partisanship.
Click to expand...

Being a policy expert in the current political environment would make me suicidal.

argentine soccer fan · May 16, 2012

HouseHead78 said: ↑

The Volcker Rule. It was meant to keep banks from risking money that's meant to back customer deposits and was a cornerstone of the reform. It's now been watered down by lobbyists during the regulatory process to the point where it has so many holes that it can't do what was intended, and it's tied up in procedure until 2014. So your bank can take your deposit and throw it at some exotic instrument and lose it, and we taxpayers have to pick up the pieces.

http://en.wikipedia.org/wiki/Volcker_Rule

The Volcker Rule is a specific section of the Dodd–Frank Wall Street Reform and Consumer Protection Act originally proposed by American economist and former United States Federal Reserve Chairman Paul Volcker to restrict United States banks from making certain kinds of speculative investments that do not benefit their customers.
Click to expand...

Except that the Volcker Rule -or the other regulations that were proposed under Dodd-Frank - would not have prevented the particular JP Morgan trades that are being referenced by your link. That's why I say that I must be missing something. Maybe the White House is talking about something else that hasn't been proposed yet, or if it has, has not been widely reported or I haven't seen it. Or maybe they are just using the fact that there were trades that lost money to make a general political point, this being the political season after all.

HouseHead78 · May 16, 2012

argentine soccer fan said: ↑

Except that the Volcker Rule -or the other regulations that were proposed under Dodd-Frank - would not have prevented the particular JP Morgan trades that are being referenced by your link.
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It's a gray area. They called them hedges when really they were speculative trades made by a whale trader seeking profits, and by calling them hedges they avoid the terms of the Volcker Rule which is not in place. But I'm not convinced that they were really hedging transactions and neither is anyone else. And if the rule had been in place perhaps JP Morgan wouldn't have been so content to play in a gray area like this.

So yes, the point is that we need to regulate banks from gambling with customer deposits and risking the health of the entire financial system.

JohnR · May 16, 2012

HouseHead78 said: ↑

And if the rule had been in place perhaps JP Morgan wouldn't have been so content to play in a gray area like this.
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That's putting it lightly. With the Volcker Rule in place, the bank would install risk-management and compliance systems to ensure that all hedging trades are in fact hedging trades. Because there would be severe and real penalties for banks that are conducting trades that are not hedges. And as anybody who has ever dealt with compliance knows, compliance & legal draw the line well before the line is actually reached. So no way this particular trade gets made under the Volcker Rule, not unless the trader has gone completely rogue and is lying to compliance.

JohnR · May 16, 2012

In case anybody loses perspective -

The argument against Dodd-Frank was that Wall Street had learned its lesson that it had to have tight control over its derivatives books, and that it was possible for an investment bank to have tight control over its derivatives book: look at JPMC.
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This why even as the right spins talking points about how this JPMC issue means nothing, the normally brash Jamie Dimon is in sheepish mode. The case is a body blow to the notion that the banks can be trusted to self-police.

VFish · May 17, 2012

Can someone please compare the Fannie/Freddie losses with those of JPM. Those would be some interesting numbers.

HouseHead78 · May 18, 2012

VFish said: ↑

Can someone please compare the Apples with those Oranges? Those would be some interesting frootz.
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I fixed it!

Chris M. · May 18, 2012

HouseHead78 said: ↑

I'm surprised you all haven't done your homework on this.
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In response to a vfish post?

If clicking on a link from the Drudge front page constitutes "homework" then our education system is really messed up.