JPMorgan Chase News Today

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OUT OF THE MOUTH OF JPMORGAN CHASE: SCHEDULE OF LOANS PURCHASED FROM WAMU DOES NOT EXIST!

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Piggybankblog posted on 08/23/12

Cross linked with dailypaul.com

Confirming, under oath and in print what we already suspected: there is no schedule of mortgage loans evidencing what JPM allegedly “purchased” from the FDIC in connection with the failure of WaMu. This is from the sworn deposition testimony of Lawrence Nardi, the operations unit manager and a mortgage officer for JPM, who was previously with WaMu and was picked up by JPM after WaMu’s failure. The 330 page deposition was taken by counsel for the homeowner on May 9, 2012 in the matter of JPMorgan Chase Bank, N.A. as successor in interest to Washington Mutual Bank v. Waisome, Florida 5th Judicial Circuit Case No. 2009-CA-005717.

Here is the question and the answer:

Q: (page 57, beginning at line 19): Okay. The — are you aware of any type of schedule of loans that would have been created to represent the — either the loans that were asset loans or the loans that were serviced by WAMU? Are you — was the — do you know if there is a schedule or database of loans like that?

A: (page 58, beginning at line 1): I know that there was a schedule contemplated in certain documents related to the purchase. That schedule has never materialized in any form. We’ve looked for it in countless other cases. We’ve never been able to produce it in any previous cases. It would certainly be a wonderful thing to have, but it’s — as far as I know, it doesn’t exist, although it was — it was contemplated in the documents.

As we all know, JPM has also stated, in a Federal Court filing, that it is NOT the “successor in interest to WaMu.” However, the deposition testimony gets even better as the day went on:

Q: (beginning at page 260, line 18): Have you ever in your duties of being a loan analyst — a loan operations specialist, have you ever seen an FDIC bill of sale or a receiver’s deed or an assignment of mortgage or an allonge?

A: (page 260, beginning at line 23): For loans, I’m assuming you’re taling about the WaMu loan that was subject to the purchase here.

Q: (page 261, line 1): Right.

A: (page 261, beginning at line 2): No there is no assignments of mortgage. There’s no allonges. There’s no — in the thousands of loans that I have come into contact with that were a part of this purchase, I’ve never once seen an assignment of mortgage. There is simply not — they don’t exist. Or allonges or anything transferring ownership from WAMU to Chase, in other words. Specifically, endorsements and things like that.

So, JPM allegedly “purchased” mortgage loans from the FDIC out of the WaMu failure, but there is no schedule of what loans were purchased, no assignments, no allonges, no endorsements, nothing that transferred ownership of the loans from WaMu to Chase. However, as we all know, JPM goes around the country touting that it is the “successor in interest to WaMu” (which it has admitted in Federal Court that it is not) and relies on the amorphous “FDIC Affidavit” which, as far as what the “Affidavit” is proffered for, is directly contradicted by the sworn deposition testimony of JPM’s authorized representative WHO WAS FORMERLY WITH WAMU AND WAS PICKED UP BY JPM.

Fraud on the courts, anyone?

UPDATE: Friends, I just received this note from our friend and mortgage fraud expert Vermont Trotter regarding this story:

“The trusts are all empty. The master loan doc contractually allows for the hypothecation and re-hypothecation of the assets. Hypothecation is a legal term meaning to pledge, but not deliver an asset. To hypothecate means there is no true sale of the asset. To re-hypothecate means it can be pledged multiple times and, again, never have a true sale. No one owns anything.” – V. Trotter — source article

Full Deposition transcripts of Lawrence (Larry) Nardi

 

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It almost makes you wonder about BofA and Countrywide. (Smirk)

Or, what about the United States Government and Fannie and Freddie and the loans they have? (Smirk)

Do you still wonder why the government might be protecting the banks?

IT IS BECAUSE THE GOVERNMENT IS A BANK!

And Guess what?

Brooklyn Judge: ‘Roughly 90 Percent Of The Credit Card Lawsuits Can’t Prove The Person Owes The Debt’
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My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge Wright has left The Courtroom of Public Opinion!

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tp://piggybankblog.com/2012/08/16/jpmorgan-ubs-said-among-banks-queried-in-libor-probe/” target=”_blank”>JPMorgan, UBS Said Among Banks Queried in Libor Probe

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Piggybankblog posted on 08/16/12

Piggybankblog posted picture

Cross linked with businessweek.com

JPMorgan Chase & Co. (JPM) and Barclays Plc (BARC) are among seven banks subpoenaed in New York and Connecticut’s investigation into alleged manipulation of Libor, according to a person familiar with the matter and company filings.

Subpoenas were sent in recent weeks to Deutsche Bank AG (DBK), Royal Bank of Scotland Group Plc and HSBC Holdings Plc (HSBA) in addition to JPMorgan and Barclays, the person said yesterday.Citigroup Inc. (C) and UBS AG (UBSN) received subpoenas earlier this year as part of the investigation.

New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen are jointly investigating alleged manipulation of the London interbank offered rate by lenders. RBS, UBS, Lloyds Banking Group Plc (LLOY) and Deutsche Bank are among the lenders that regulators in Europe, Asia and the U.S. are investigating. The U.S. is conducting a criminal investigation.

Confidence in Libor, a benchmark for financial products valued at $360 trillion worldwide, has been dented by Barclays’admission that it submitted false London and euro interbank offered rates. Robert Diamond resigned as Barclays’ chief executive office after the bank was fined 290 million pounds ($456 million).

False Submissions

Derivatives traders requested the false submissions in the Libor and Euribor setting process, as they were “motivated by profit and sought to benefit Barclays’ trading positions,” the U.K. Financial Services Authority said.

The investigation by Schneiderman and Jepsen could broaden to include additional banks, said the person. Jennifer Givner, a spokeswoman for Schneiderman, and Jaclyn Falkowski, a spokeswoman for Jepsen, declined to comment on the subpoenas.

Separately, Florida Attorney General Pam Bondi’s office is“actively reviewing the Libor matter” and has subpoenaed 14 banks, spokeswoman Jenn Meale said. In addition to the seven institutions in the New York and Connecticut probe, Florida subpoenaed Bank of America Corp. (BAC), Societe Generale SA (GLE), Credit Suisse Group AG (CSGN), Credit Agricole SA (ACA), Royal Bank of Canada, Rabobank Groep and Lloyds Banking Group.

Sarah Binnie, a spokeswoman for Edinburgh-based RBS, said the bank continues to receive requests from various regulators investigating the setting of Libor and other interest rates. The lender is cooperating with the investigations and “keeping relevant regulators informed,” she said in an e-mail.

“It is not possible to estimate with any certainty what effect these investigations and any related developments may have on the group,” Binnie said.

Information Requests

Kathryn Hanes, a spokeswoman for Frankfurt-based Deutsche Bank, said the lender has received subpoenas and requests for information from some regulators and governmental entities in the U.S. in connection with setting interbank rates and is cooperating.

New York-based Citigroup said in a regulatory filing that subsidiaries “have received additional requests for information and documents from various U.S. and non-U.S. governmental agencies, including the offices of the New York and Connecticut attorneys general.”

UBS, based in Zurich, said in a regulatory filing that numerous agencies, including “various state attorneys general”are investigating whether there were improper attempts to manipulate Libor and other rates. A second person familiar with the matter said the bank received a subpoena from New York in February. Both declined to comment because the matter is private.

Regulatory Demands

Nicole Sharp, a spokeswoman for London-based Lloyds Banking Group, said the company is assisting various regulators in their investigations. Royal Bank of Canada (RY) spokeswoman Katherine Gay said the bank is also cooperating with regulators.

“We did not find any evidence of collusion with other banks, and we have determined that our Libor submissions reflected our perception of our cost of funds,” Gay said in an e-mailed statement.

London-based HSBC said in a 2012 interim report that it is“the subject of regulatory demands for information” and is cooperating with the investigations.

Representatives of the other institutions couldn’t be reached for comment or declined to comment.

Massachusetts Attorney General Martha Coakley’s office said in July it was also conducting a Libor investigation and was working with other state agencies.

Libor is derived from a survey of banks conducted each day on behalf of the British Bankers’ Association in London. Lenders are asked how much it would cost them to borrow from one another for 15 different periods, from overnight to one year, in currencies including dollars, euros, yen and Swiss francs. After a set number of quotes are excluded, those remaining are averaged and published for each currency by the BBA before noon.

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomxberg.net

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net

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My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge Wright has left The Courtroom of Public Opinion!

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No It Is Not A, ‘Free Fucking Country’ For We The Little People! Just Maybe For Jamie Dimon!

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August 16th, 2012

Written By John Wright

Did any of you read the interview last week where a potentially disgruntled Jamie Dimon of JPMorgan Chase said that people should not blame the BIG BANKS for the financial crisis? Now correct me if I am wrong — but I could have sworn that this is the same Golden Boy Brat that just explained to us back in June that his BIG BANK LOST OVER TWO to SEVEN BILLION DOLLARS — because why?

Jamie Dimon: “There were many errors, sloppiness and bad judgment” and “these were egregious mistakes.”

Now Jamie Dimon said our economy is doing so badly right now because of our constant finger-pointing and asking of unhelpful questions, like: “Why aren’t banks holding more capital?” and “Why aren’t any of you bastards in jail?” and “Who took all of my money?”

We can all just be so selfish sometimes. (shaking my head and rolling my eyes) Of course he knows it is a free country though. That is because it is exactly what every potential organized crime organization needs to survive. However, to be fair, I can see why this potentially overpaid taxpayer welfare recipient criminal bank CEO might find these kinds questions annoying. It might be because it suggests accountability. That is why in some ways Jamie Dimon reminds me of the male version of Leona Helmsley. She was the hotel billionaire that the press ended up calling The Queen of Mean because she was known for treating people poorly that she felt might be beneath her because of her money. Then she made the mistake of saying taxes were for the little people — but would soon find out that she was wrong — because the bitch then went to jail shortly after saying it.

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That is why someone should please tell Jamie Dimon to stop being a bitch bef0re he pisses off the American people more than he has already. Otherwise, the press might start calling him The King of Mean. This is for maybe arrogantly acting like he is also not accountable to the same laws as us little people are.

Listen — I felt like Jamie Dimon was sort of threatening us with what he said. What I mean is — I feel like he might be saying that he will continue to make decisions that will destroy our economy if we continue to try and hold him accountable. It also seemed like he does not think that the BIG BANKS should be asked any questions about the taxpayer money they were given in the tune of 16.6 TRILLION DOLLARS while being held accountable to the laws of our land. This is even though the banks are the first ones to rush into court to make sure that all of us little people are held accountable to the law with their potentially fraudulent documentation they made up that might say they have accurately identified the owner of the debt when they have not. – Washington highest court ruled on 08/16/12 that MERS cannot foreclose on the homeowners

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The point is that us little people (The American People) do not feel that a good economy should be built on the bank broken backs of the American taxpayer by stealing our homes. That is because that is the exact type of injustice that Adolf Hitler used to build the German economy. The American people rather have the economy collapse before we ever have to live in a system that rewards the rich for being rich and punish the poor for being poor.

1. Senate Banking Committee Testimony Of JPMorgan CEO Jamie Dimon Described As “A Big Ass Grabbing Love Fest!”

2. JPMorgan, UBS Said Among Banks Queried in Libor Probe

That is why I want you all to NEVER GIVE IN! I want you to NEVER GIVE UP! And I want you TO NEVER STOP POINTING YOUR FINGER AT Jamie Dimon at JPMorgan chase.

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………That is why we shall continue to point our finger at you Jamie Dimon.

 

……………………Hey Jamie! Guess what? It’s a free. Fucking. Country.

…………..It just should not be for you if it comes out you have broken the law.

……………………………………….So enjoy it while you can!

…………Do you like apples, Jamie? Well what did you think of them there apples?

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………………….My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge Wright has left The Courtroom of Public Opinion!

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Jamie Dimon: ‘It’s A Free. Fucking. Country.’

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Piggybankblog posted on 08/15/12

Cross linked with huffingtonpost.com

Jamie Dimon wants you to remember what made this country great.

The JPMorgan Chase CEO insisted in a New York magazine interview, published on Monday, that people should not blame big banks for the financial crisis.

When asked him about his consistent defense of Wall Street and criticism of financial rules, Dimon pushed back, saying he considered himself more “an outspoken defender of the truth.” “This is not the Soviet Union,” he continued. “This is the United States of America. That’s what I remember. Guess what…. It’s a free. Fucking. Country.”

Since the financial crisis, Dimon has embraced his role as defender of Wall Street. Earlier this month, he said the larger problem surrounded scapegoating and finger-pointing, rather than systemic problems in his industry.

Here is a big reason the public may be holding Dimon and other big bank CEOs responsible: In 2008, the size and interconnectedness of struggling big banks like JPMorgan Chase threatened to take down the financial system and the economy with it. As a result, big banks, including JPMorgan, received generous bailouts as businesses laid off workers en masse.

Dimon has said in the past that banks should not be too big to fail. But he also has said that some banks need to be big in order to serve their clients well.

He’s not the only figure in financial circles with a short temper though. In 2009, Treasury Secretary Timothy Geithner unleashed a slew of f-bombs in an exchange with Neil Barofsky, then the country’s bailout watchdog, according to Barofsky’s new book Bailout.

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My name is John Wright AND I AM FIGHTING BACK!

All Rise!  The Honorable Judge Wright has left The Courtroom of Public Opinion!

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JPMorgan, Citi Units Sued by FDIC Over Colonial Sales

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Piggybankblog posted on 08/13/12

Cross linked with Bloomberg.com

JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C) were among the banks sued by the Federal Deposit Insurance Corp. over $388 million in securities sold to Colonial Bank.

The FDIC alleged that the banks misrepresented the quality of the loans underlying residential mortgage-backed securities that Colonial purchased, according to a complaint filed yesterday in federal court in Manhattan.

The misrepresentations included inaccurate loan-to-value ratios based on inflated property values, according to the filing. Also, many of the properties at issue had second mortgages that weren’t disclosed, the FDIC said.

“In many cases, the amount of the undisclosed additional liens was much greater than the owners’ ostensible equity, putting the owner ’under water’ on the day on which this securitization closed,” the FDIC said in the complaint, filed by attorneys David J. Grais, Mark B. Holton, Leanne M. Wilson and Maria Heifetz.

Colonial Bank, of Montgomery, Alabama, was closed by the Alabama State Banking Department on Aug. 14, 2009, and the FDIC was named as a receiver for the institution, according to the FDIC’s website.

Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, declined to comment on the lawsuit. Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, spokeswoman didn’t immediately return a call yesterday seeking comment on the complaint.

The case is Federal Deposit Insurance Corp. as receiver for Colonial Bank v. Chase Mortgage Finance Corp, 12-cv-06166, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Christie Smythe in New York at csmythe1@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net

 

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge Wright has left The Courtroom of Public Opinion!

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Harry Engel’s Death Caused By JPMorgan Chase Foreclosure, Lawsuit Claims

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Piggybankblog posted on 08/08/12

Cross linked story with huffingtonpost.com

A Texas woman is suing JPMorgan Chase, claiming that the bank’s eviction caused the heart attack of her husband, a retired minister.

Wanda Jo Engel alleges that JPMorgan’s wrongful home foreclosure and eviction created so much stress that it “overwhelmed” her husband, Harry Engel, ultimately triggering his death. She and her children, Steve, Debra and Josh, are suing the bank for wrongful death and wrongful foreclosure and eviction among other claims, according to a lawsuit filed in Dallas County Court.

Harry Engel, a retired minister, collapsed in a chair in his home within days of receiving an eviction notice from Chase, the suit claims. He was 79.

“It was just a close family; it’s been a difficult loss,” the Engels’ lawyer Steve Shaver said. “They certainly didn’t expect Mr. Engel to pass when he did or certainly for the reasons he did.”

A JPMorgan Chase spokesman told The Huffington Post that the bank never foreclosed on the home.

“There are serious factual inaccuracies in the filing, but we are not going to comment because it is ongoing litigation,” a JPMorgan spokesman said in a statement. “We have not completed any foreclosure on the property. We work with homeowners across the country to help them to avoid foreclosure whenever possible.”

As the foreclosure crisis has wreaked havoc across the country, tragedy has not been far behind. A California man killed himself in May in the middle of a battle with Wells Fargo, which was trying to foreclose on his home. Other foreclosure threats have turned violent; in March, a man facing eviction in Ohio shot his wife and then himself.

The Engels lived in their home for 22 years and were current on their mortgage payments during that time, according to the suit. But in early 2009, they received a letter from the bank advising them to refinance their loan; the Engels went to their local Chase branch and spoke to a staff member who told them to “miss a payment” to more easily qualify for government refinancing assistance, the suit alleges.

After missing the payment as instructed, the Engels received a bank letter telling them to immediately become current on their payments, Shaver said. Living on a fixed income, Wanda Jo and Harry Engel had already used the money allotted for the instructed “missed payment” for other finances so they went to the bank to inquire about a government refinancing program, he added. For a time, the Engels’ refinancing request was considered but then rejected; then the bank sent a letter indicating it planned to foreclose and still another letter stating it had indeed already foreclosed and planned to evict the Engels, according to Shaver.

“Finally, a personal representative of Chase physically went to the Engel home, knocked on the Engel’s [sic] door, and enforced the eviction notice,” the suit claims.

But JPMorgan Chase maintains that the bank did not go as far as to foreclose on the property.

Shaver clarified by phone that JPMorgan Chase never went through with filing for foreclosure in court and instead the bank indicated that the house would soon be in foreclosure and that the Engels would have to leave.

The Engels went to the local Chase branch multiple times to talk to the staff member who had advised them to miss a payment; each time they would “sit in the lobby and stew for hours,” according to Shaver.

“He was trying to get them to leave; he was hoping they’d just walk out. But this was too important to them, so they didn’t,” Shaver said.

The lawsuit indicates that the home was very special to Harry Engel “because he grew up as an orphan and never had a home of his own until he was an adult.”

JPMorgan Chase is not the only bank accused of giving advice that ultimately led to foreclosure and eviction. The phenomenon became so widespread during the housing bust that it was the subject of a 2010 Senate Banking Committee hearing.

Bank of America allegedly advised Georgia homeowner Pamela Flores to stop making payments on her mortgage so that she could qualify for the Making Home Affordable Program, a government mortgage relief initiative. The bank then initiated foreclosure proceedings on her home. A Bank of America spokeswoman told CBS Atlanta that the bank sent Flores a modification offer and she paid a month late, forcing the bank to decline her participation in a Treasury Department program.

A Massachusetts couple, the Dixons claimed to have had a similar experience with Wells Fargo. They say they made a verbal agreement with the bank to take steps toward securing a loan modification and Wells Fargo told them to stop making payments on their current loan, according to the Atlantic; but the Dixons say instead of modifying the loan, the bank told them it planned a foreclosure because they were in default. Wells Fargo argued that the Dixons should not have assumed the modification was a done deal because the verbal agreement wasn’t “definite as to be binding.”

In the two years since Harry Engel’s death and the family’s eviction, the home has been vacant, according to Shaver. “Just the stress of the foreclosure process itself was too much for Mr. Engel who was a really good man,” Shaver said.

View the Engels’ petition below:

Engel Petition

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JPMorgan Chase investigated for manipulating California energy market

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Piggybankblog posted on 07/25/12

Piggybankblog posted picture

Cross linked story with wsws.org

By Oliver Richards 23 July 2012

The California Independent Systems Operator (CalISO), the nonprofit organization that coordinates the state’s electricity market, has alleged that JPMorgan Chase & Co. manipulated the state’s energy market, resulting in at least $73 million in improper payments—costs passed along to the state’s energy consumers.

The accusation emerged on July 2 in court filings by the Federal Energy Regulatory Commission (FERC), which oversees CalISO, as part of its investigation into the bank. Normally, ongoing FERC investigations are not disclosed to the public. The case was only revealed after the agency subpoenaed e-mails from JPMorgan relating to the inquiry.

The bank claimed that the e-mails were confidential on the basis of attorney-client privilege. However, under pressure, it released some of the e-mails in non-redacted form to the agency that belied their argument. The bank responded to the petition by arguing that FERC was engaged in an “abusive litigation tactic.”

FERC was granted expanded powers in 2005 in the aftermath of the manipulation of California’s energy market by Enron, which resulted in energy warnings and rolling blackouts throughout the state. The regulatory overhaul gave the agency the ability to fine companies as much as $1 million a day per violation. These fines, however, in no way discourage companies from gaming the system. JPMorgan’s investment arm, which includes its energy group, collects $14 billion annually; in comparison, six months’ worth of fines would amount to a paltry $180 million.

“The incentive remains for outfits like JPMorgan,” notes a July 18 article in the Los Angeles Times, “to stretch the rules to the breaking point—if they get caught, the cost is tolerable; if not, the returns are fabulous.”

Responding to the allegations, the bank’s spokeswoman Jennifer Zuccarelli said, “We believe we have complied in all respects with the law, as well as FERC rules and applicable tariffs, governing this market.” This claim, in fact, is likely true.

JPMorgan was able to take advantage of loopholes built into the regulations governing energy and natural gas markets. The ISO takes bids from power plant owners on energy costs in both the future day-ahead and current real-time markets. To encourage plant owner participation in the auction, the ISO provides a “bid cost recovery,” which ensures that the operators receive a guaranteed minimum support for running the plant even if their bid is not accepted.

JPMorgan exploited these rules by placing extremely low bids on the day-ahead markets—sometimes negative bids where the bank would be paying the ISO to take its energy—making them eligible for bid cost recovery payments, then charging electricity prices so high on the real-time market that ISO would never purchase the energy.

As the LA Times reports, “JPMorgan’s traders never intended to sell its electricity via these bids. The scheme, [the ISO] says, seems to have been designed purely to capture a bid cost recovery payment the bank didn’t deserve, at a rate that was inflated anyway.”

Carl Wood, who was on the California Public Utilities Commission in the aftermath of the 2000-2001 energy crisis, commented on the latest allegations that “there is something fundamentally broken about the system.”

FERC opened its probe into the bank in August 2011 after California and Midwest grid operators noticed unusual trading patterns and questionable bidding practices between March and June of 2011. The agency has conducted 11 probes of alleged manipulation of electricity and natural gas markets since January 2011. FERC recently reached a record $245 million settlement with Constellation Energy Group Inc. and has issued a preliminary determination that Deutsche Bank AG manipulated the California energy market.

The drive toward privatization and deregulation of energy markets emerged in the 1970s as the postwar boom began to wane and placed pressure on profit rates. Privatization of electricity began first in Chile after the US-sponsored military coup of 1973. In the US, systematic deregulation of the energy market was set off with the Natural Gas Policy Act of 1978 in the aftermath of the 1973 oil crisis, the Public Utility Regulatory Policy Act of 1978 (PURPA), and the National Energy Policy Act of 1992.

California became the first state to deregulate its energy markets, which opened the doors to the criminal activities of Enron. But California is no aberration. Starting in the late 1970s, both Democratic and Republican administrations have worked to remove virtually any legal limitation on the pursuit of corporate profit in every sector of the economy, from finance, to communications, and finally to energy.

Major corporations have been given free rein to supervise their own safety, environmental, and ethics practices. The Obama administration’s record on the pursuit of such policies is unequivocal. The BP Gulf oil disaster of April 2010 is a recent example of the results of energy deregulation policies. In his 2012 State of the Union address, President Obama boasted: “Over the last three years we’ve opened millions of new acres for oil and gas exploration.” In the aftermath of the Gulf oil spill, no new regulations were established to prevent another similar disaster.

The latest allegations against JPMorgan once again underscore the parasitic nature of the financial oligarchy that dominates all aspects economic and political life. The speculative activities that triggered the current economic crisis continue unabated.

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It All Started With The Federal Reserve Conspiracy

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Written by John Wright

July 18th, 2012

Bow down before the one you serve! You’re going to get what you deserve Bank of Destroying America and JPMorgan Chase!

I think you will agree with me that the banks have had far too much control and power over countries and their governments throughout history.  Now I know Adolf Hitler would agree with me — because that is exactly what he blamed the depression on in Germany.  What I am saying is — even though I do not agree with his final solution — I do agree that it was the banks that caused the depression in Germany and caused the wars around the world.

Did he just say that he agreed with Adolf Hitler? Well before everybody here gets upset with that statement – I need to remind you that the Founding Forefathers of America agreed with him on the banking issue too.

Thomas Jefferson said:

‘I believe that banking institutions are more dangerous to our liberties than standing armies.  If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.’

Then there was President Abraham Lincoln who flatly refused to allow these rich European influences back then bring a central bank to America.  That is when Americans used to use what was called the “greenback” for our currency.  The greenback was actually worth the paper it was put on because it was backed by gold back then.  Abraham Lincoln simply knew there were powerful and wealthy families in Europe trying to get control of America by having us use a central bank to control our money and our country.  The simple fact is that Lincoln knew it is the central banks that have been known to collapse economies and start wars and finance wars — which if brought to America — it would leave our country and our people enslaved to having to pay high taxes to pay back the war debt.  The United States of America still uses these tactics today in other countries.  This is how we get control of their country — by controlling their debt.  The simple horrible fact is that the central banks simply make money on wars — which incidentally — might explain why we have so many of them. — Youtube about Abraham Lincoln and banking.

It would not be until good old President Woodrow Wilson that a central bank here in the United States was allowed to control our money and our country. (Abraham Lincoln shaking his head)  The name of this central bank would be called “The Federal Reserve”.   However, it is about as “federal” as “federal express” — because it is actually a PRIVATE BANK.

The Federal Reserve was created on December 23^rd, 1913 with the enactment of the “Federal Reserve Act,” largely in response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System (more commonly known as the fed) have expanded and its structure evolved. Events such as the Great Depression were a major factor leading to the changes in the system. — Youtube about Federal Reserve Act

The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s said:

“Some people think that the Federal Reserve Banks are United States Government institutions.  They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

President Woodrow Wilson would later be quoted as saying on his deathbed:

“I am a most unhappy man. I have unwittingly ruined my country.  A great industrial nation is controlled by its system of credit.  Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men.  We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.” – Woodrow Wilson after singing the Federal Reserve Act.

Then President John F. Kennedy tried to give us our America back by disolving the Federal Reserve.  Then something went terribly wrong in Texas that would change that.

Watch the Secret Service Agent look like he is saying, “Step down? Why am I stepping down?”

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The Current Federal Reserve:

Now according to globalresearch, the Federal Reserve (or Fed) has assumed sweeping new powers in the last year.  This is because in an unprecedented move in March of 2008, the New York Fed advanced the funds for JPMorgan Chase Bank to buy investment bank Bear Stearns for pennies on the dollar.

Now here is the best part!   Jaime Dimon (the current CEO of JPMorgan) SITS ON THE BOARD OF THE FEDERAL RESERVE!

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That’s right! Jamie Godfather Dimon participated in the secret weekend negotiations between the Federal Reserve and the United States Government and the banks — when in September 2008, the Federal Reserve did something even more unprecedented.  It bought the world’s largest insurance company.  The Fed announced on September 16 that it was giving an $85 billion loan to American International Group (AIG) for a nearly 80% stake in the mega-insurer.  The Associated Press called it a “government takeover,” but this was no ordinary nationalization.  Unlike the U.S. Treasury, which took over Fannie Mae and Freddie Mac the week before, the Fed is not a government-owned agency. Also unprecedented was the way the deal was funded. The Associated Press reported:

“The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs.”

I hate to tell you this — but your America has been gone for a very long time.

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And you just thought you were losing your house. (Wink)

That is why the American people have this message for all those CEO’s and executives at JPMorgan Chase and Bank of Destroying The America Dream.

CLICK HERE FOR BOW DOWN BEFORE THE ONE YOU SERVE. YOU SOON WILL GET WHAT YOU DESERVE MESSAGE! – (non-violent protest disclaimer)

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My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge Wright has left The Courtroom of Public Opinion!

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Follow John’s Daily Blog

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Please donate if you liked today’s blog.

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Thousands Of Small Banks Could Sue Wall Street Giants Over LIBOR

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Piggybankblog posted on 07/16/12

Cross linked picture with businessinsider.com

The thousands of community banks have often said their much larger counterparts have trampled on them. Now some hope the latest Wall Street scandal could give them ammunition to strike back.

Big banks’ alleged manipulation of interest rates has become the subject of a deepening global investigation by regulators. It has also led one small bank in Wisconsin to file a lawsuit accusing JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and other major banks of colluding to set rates artificially low.

The Community Bank & Trust of Sheboygan — a town on the shores of Lake Michigan about 60 miles north of Milwaukee — is claiming manipulation of the benchmark London interbank offered rate, commonly known as Libor, has kept its interest margins artificially low.

Determined in London by the world’s biggest banks, the Libor is used to set interest rates on everything from credit cards to student loans and mortgages.

Charles Tompkins of Boston law firm Shapiro Haber & Urmy filed the lawsuit in late May on behalf of the 11-branch bank, which has assets of about $554 million. It seeks class-action status so other community banks can join the litigation.

While it is unclear whether many small banks will do so, the legal action is further evidence that the scandal is reverberating well beyond the confines of Wall Street and the City of London. Big banks are already facing an array of Libor-related lawsuits by some big investors and local governments, such as the city of Baltimore.

Tompkins, whose class-action firm has handled securities, antitrust and consumer lawsuits, said U.S. community banks might have lost more than $1 billion over four years on loans to small businesses at artificially low rates.

The alleged manipulation hurt small banks that operate on thin profit margins and rely more on interest income than large banks with diverse trading operations, he said.

The lawsuit accuses the banks of violating the mob-busting U.S. Racketeer Influenced and Corrupt Organizations Act by rigging rates.

The bank defendants declined to comment. They have said in court papers seeking dismissal of other Libor lawsuits that plaintiffs have failed to show how banks acted to restrict competition, even if rates were misstated.

ALL OTHER MEANS

In its complaint, Community Bank & Trust estimated that if Libor were understated by 80 basis points in 2008, it would have lost $64,000 in interest income on its $8 million of floating rate loans. The lawsuit applies that figure to the roughly 7,000 U.S. community banks, which it defines as those with assets of $1 billion or less, to come up with an estimate of $448 million in damages for that year alone. The extrapolation makes the estimate very rough.

Documents released by the New York Federal Reserve and other regulators late last week show big banks as desperate to under-report their borrowing rates in 2007-2008 to appear stronger as the financial crisis worsened. Britain’s Barclays Plc agreed late last month to pay $453 million in fines for attempting to manipulate Libor.

“If the allegation of Libor manipulation by the largest banks is found to be true,” small banks need to consider “legal and all other means available,” said Daryll Lund, president of the Community Bankers of Wisconsin.

Some community bankers, though, are on the fence over whether to join the lawsuit.

Steve Gardner, president of Pacific Premier Bank of Costa Mesa, California, said he needed to learn more about the potential impact of rate manipulation on his bank before deciding whether to sue. The bank used Libor to set rates on a substantial number of loans, including to bakeries, manufacturers and accountants, he said.

Others said only a small portion of loans were linked to the benchmark, and they did not think it had a big impact on their business.

If a few customers borrowed at slightly lower rates, “it’s not going to cause any heartburn,” said Michael Kubacki, chief executive officer of Lake City Bank in Warsaw, Indiana.

Community Bank & Trust CEO Anthony Jovanovich seemed surprised that the law firm had named his company as the lead plaintiff, although he supported the lawsuit. He said his bank’s margins were squeezed by borrowers who wanted to switch to Libor-linked loans from those tied to other benchmarks because of the low rates.

For its part, the Independent Community Bankers of America trade group will keep its members informed of developments in the scandal, but said members should consult their own lawyers to decide if they should sue, said Chief Economist Paul Merski.

The Libor investigation is “just another example of the litany of scandals of the largest players that caused the financial crisis,” he said. “Community banks got caught in the aftershock of that.”

REGULATION OVERLOAD

Many community banks blame Wall Street for causing the financial crisis and the subsequent toughening of regulations that they say falls disproportionately on them.

Proving a Libor manipulation case could be difficult, though.

In a note to clients last week, Nomura analyst Glenn Schorr said it would be hard to quantify damages and to show that banks worked together to rig rates. He also said Libor set rates on very short-term loans, limiting the impact.

On Thursday, the community bank lawsuit was consolidated with three other proposed Libor class actions that accuse big banks of violating antitrust laws. U.S. District Judge Naomi Buchwald in Manhattan is overseeing the cases.

The other proposed classes would cover plaintiffs who purchased Libor-linked securities from the banks, those who traded Libor-linked securities on exchanges and those who invested in securities that paid interest based on Libor.

Legal experts expect many more proposed classes of plaintiffs to emerge.

“I actually think there will be a lot of piling on here,” said Duke Law School professor James Cox.

The government inquiry in the UK has unearthed a lot of information, he said. “It’s honey for the bears.”

One of the biggest challenges to new group cases will be proving far-flung plaintiffs have enough in common to form classes — a problem the community banks may face, he said.

Potential plaintiffs may opt to sue on their own, outside class actions. One municipality, New York’s Nassau County, said last week that it might have lost as much as $13 million over five years on Libor-linked transactions and was looking to bring its own case.

(Reporting by Tom Hals in Wilmington, Delaware; Additional reporting by William James in London; Editing by Martha Graybow, Martin Howell and Lisa Von Ahn)

DON’T MISS: Wells Fargo Is Paying $175 Million In The Second-Largest Fair Lending Deal Ever >

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Secret FDIC & JPMorgan Chase Bank 118 Page Purchase and Assumption Agreement for Washington Mutual Bank Uncovered

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Piggybankblog posted 06/22/12

Piggybankblog posted picture

Cross linked with victorychase.com

Smoking Gun or Another Murder of Crows? You be the judge.

QUESTION — Are the FDIC and JPMorgan Chase Bank and their attorneys keeping secrets and playing destructive games with the lives of good decent Americans across the land that results in their stealing homes and damaging forever lives and communities? Are they in fact hiding the true agreement (PAA) for the assets and liabilities of Washington Mutual Bank, the failed bank seized by the Office of Thrift Supervision and placed in Receivership with the FDIC who sold WAMU to JPMorgan Chase Bank NA on the very same day in September 2008?

Attorney Vernon Bradley of Sausalito, California, recently filed a lawsuit to stop a foreclosure action on behalf of the Plaintiff, Scott Call Jolley, against Chase et al in California Superior Court in Marin County, California and it is under appeal. This case and the revelations that have come to light through Appellant’s Opening Brief filed with the California Appellate Court points to the existence of a different “full copy” PAA that consists of 118 or so pages as revealed in the deposition and declaration of Jeffrey Thorpe, whose credentials make him a reliable witness. (see below excerpts from Appellant Brief.)

Appellant’s Opening Brief presents a strong argument that the FDIC and JPMorgan Chase Bank NA entered into an approximated 118 page “full ” Purchase and Assumption Agreement, rather than the “public” PAA being circulated through internet and the courts in foreclosure cases throughout the United States federal and state courts.

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If in fact this 118 page PAA exists, can one conclude that the Respondents and their attorneys have perpetrated a possible fraud on the court and that this possible fraud extends to foreclosure lawsuits (past, present, and future) throughout the United States? And if so, what can be done to help these homeowners who were possibly victimized by judges who unwittingly relied on the purported 39 page PAA to seize and sell their homes? What will these judges have to say about this serious misrepresentation of the PAA if found to be true? Will these victimized homeowners be recompensed for the damage caused to them financially and personally? Will the courts take another look?

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Below is information obtained through court proceedings. Please read this post in its entirety.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT, DIVISION TWO

SCOTT CALL JOLLEY, Plaintiff and Petitioner/Appellant vs. CHASE HOME FINANCE, LLC, a Delaware Limited Liability Corporation and successor in interest to WASHINGTON MUTUAL BANK, F.A., a Washington Corporation; CALIFORNIA RECONVEYANCE COMPANY, a California corporation, and DOES 1 through 100, inclusive, Defendants and Respondents. Appellate Docket No. A134019 Marin County Superior Court Case No. CIV1002039

APPEAL FROM THE JUDGMENT OF THE SUPERIOR COURT OF THE STATE OF CALIFORNIA, COUNTY OF MARIN Hon. Lynn Duryee, Judge Phone: (415) 444-7221

Appellant’s Opening Brief in Jolley vs. Chase Home Finance LLC et al filed by the Law Offices of Vernon Bradley in Marin County, California presents a strong argument that the FDIC and JPMorgan Chase Bank NA entered into an 118 page Purchase and Assumption Agreement, rather than the PAA being circulated through the courts in foreclosure cases throughout the United States federal and state courts.

The brief states:
“On April 19, 2010, Petitioner Scott Jolley‘s Complaint Case No. CIV1002039 was filed in the California Superior Court in Marin County, California. On April 20, 2010, Petitioner obtained a temporary restraining order prohibiting the scheduled trustee‘s sale and thereafter obtained a Preliminary Injunction continuing that relief upon posting a $50,000 bond with the Marin County Superior Court. Petitioner opposed a summary judgment motion brought by Chase and California Reconveyance. The Honorable Judge Duryee took the matter under submission after the hearing, on November 15, 2011, and grant summary judgment in favor of Defendants/Respondents on December 1, 2011. Judgment was entered the same day thereby immediately dissolving the preliminary injunction of August 20, 2011. On January 25, 2012, Petitioner filed this appeal along with a writ of supersedeas requesting an immediate stay to protect his real property against an impending foreclosure and trustee sale. Since the trial court seemed unreceptive to Petitioner’s need for a continued stay during the summary judgment hearing, Petitioner did not formally seek a stay from the trial court because such efforts were clearly futile and the law does not require a litigant to engage in such useless endeavors (please see the accompanying writ reply). Petitioner now files this opening brief along with a reply in support of the writ of supersedeas and stay.

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“Petitioner Jolley and Washington Mutual Bank (.WaMu.) entered into a construction loan agreement which expressly provided that the covenants and agreements of this Security Instrument shall bind the successors and assigns of Lender [WaMu].
“Surprisingly, Respondents now erroneously claim that Chase bears no successor liability for WaMu’s torts and contractual breaches arising from that agreement even though Chase continues to enjoy all of the associated benefits. Respondents mistakenly believe Chase is insulated from successor liability because WaMu subsequently went into FDIC receivership and Chase allegedly took all of WaMu’s assets from the FDIC under a Purchase and Assumption Agreement (PAA) that supposedly allowed Chase to reap all of WaMu’s benefits without bearing any of its burdens.

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“However, under California and federal authority Chase is legally required to step directly into the .shoes. of WaMu, to take the place of WaMu, and to remain fully liable for all torts, breaches of contract and other .sins. committed by WaMu for several reasons.

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“First, because the parties’ contract expressly provided that the covenants and agreements of this Security Instrument shall bind . . . the successors and assigns of Lender [WaMu]. and the FDIC was statutorily required to step directly into WaMu’s shoes, all of the FDIC’s .successors and assigns. were also obligated to take WaMu’s assets subject to its burdens since the FDIC failed to exercise its special rescission powers and never issued any rescission notice to Petitioner as required by law (see below). As explained in the declaration of Petitioner’s expert, Jeffrey Thorne, the FDIC had opened an escrow and were supposed to send out notices of repudiation/rescission to Petitioner and other borrowers within 90 days or another reasonable time, but the escrow closed so quickly that the notices were never sent by the FDIC. Therefore, as discussed below, the FDIC always remained subject to the terms and conditions of Petitioner’s loan contract, including the requirement that Chase, as the .successor and assign. of the FDIC/WaMu must be bound by the contract and .take the place of. the FDIC/WaMu to bear all associated burdens.”

Appellant’s brief further asserts the following:

“Second, according the compelling deposition testimony and declaration of Mr. Thorne, the actual, full and complete PAA (118 pages) makes Chase liable for all torts and contractual breaches by WaMu in stark contrast to the identically named public document (34 pages) posted on the internet.”

“The record is full of competent and convincing evidence to support this fact, including, without limitation, the deposition testimony of Mr. Thorne (Thorne Depo,. CT 69-88, Pgs. 37, 70-73 ) as well as his sworn declaration (Thorne Dec,. CT 53-59). This evidence cannot be lightly dismissed since Jeffrey Thorne is a highly credible expert witness who swears under penalty of perjury that he actually read the real PAA and it does not absolve Chase of liability for WaMu. More specifically, Mr. Thorne’s declaration reads, in pertinent part, as follows:

“1. Currently I am employed as an asset manager for the FDIC through a contractor for the FDIC, RSM McGladrey Inc. I am intimately familiar with the procedures for taking over a failed bank and the required notices that must be given to insulate the buying bank from liability for the original loans of the failed banks.

“2. When Washington Mutual failed, I was involved in the takeover of Washington Mutual by FDIC and the escrow that was opened to sell Washington Mutual to Chase Bank. I was uniquely positioned to be involved in what was known as .Bank No. 26 takeover. as I had previously worked for Washington Mutual, heading their Construction Lending Department for 38 states.”

“4. Within the takeover procedures by the FDIC, the FDIC will enter into an agreement with the succeeding bank. In this instance the FDIC entered into an agreement with Chase Bank. But because of the nature of the transaction, the FDIC guaranteed 80% of the loans, while Chase only assumed 20% of the potential losses on the loans. Pursuant to the public part of the agreement with the FDIC, of which were approximately 39 pages, the balance of the contract and the complete agreement with the FDIC and Chase bank is 118 pages long which has not been made public. I am familiar with this agreement, I have read it, I was involved in the takeover of WAMU with the FDIC, and the balance of the agreement imposes liability on Chase for ongoing contracts with WAMU. Chase took liability for the ongoing contracts in return for getting an 80% discount on the loan‘s principal owed. Essentially, Chase Bank traded their right to cut off all liability on WAMU‘s end for money and a good deal.

“5. Chase assumed the rights and benefits owing to WAMU under its outstanding contracts with its customers. Because of the favorable guarantee from the FDIC, they also agreed to assume the liabilities flowing from the WAMU contracts.

“6. From 2002 to 2006, I was senior loan consultant for WAMU.”
Furthermore Appellant’s Brief states the following:
“Mr. Thorne’s testimony is further bolstered by the FDIC’s tacit admission that the document exists, i.e., when Petitioner’s counsel sought the smoking gun document by subpoena, the FDIC’s agent told Petitioner’s counsel that the document could only be obtained after all parties and the trial judge executed a comprehensive stipulated confidentiality agreement and protective order barring dissemination outside of this case. That response indicates something is being hidden.

“More specifically, on or about November 7, 2011, a request of the full and complete PAA from responding party was made orally, responding party denied the existence of such document. On November 8, 2011, a request for the same document was requested from the FDIC. The FDIC refused to provide the document but alluded to its existence by requesting Petitioner provide for the specific portions in which he was seeking, and further advising that the FDIC would redact portions of this agreement. On or about November 8, 2011, a request by subpoena was made to the FDIC, and again the FDIC refused the request and asked Petitioner‘s Attorney to submit to a protective order with a stipulation from all parties. See emails C.T. 142 – 143. On November 9, 2011, Petitioner requested, in writing, the full 118 page contract from Responding party and asked Respondent’s counsel to sign the FDIC’s stipulation. These requests were immediately denied. Petitioner‘s Attorney was then forced to seek ex parte relief from Judge Duryee of the Marin County Superior Court to have all parties execute the stipulated protective order so that the true PAA could be obtained and to continue the jury trial until Petitioner had a fair chance to seek that dispositive evidence. Judge Duryee ignored these requests.

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“Perhaps because of Mr. Thorne’s unique qualifications and personal knowledge of the crucial facts, this is the very first case to bring this evidence to light. Previously, Chase mislead courts across the country with the abridged version of the PAA, so case law developed in reliance thereon cannot be deemed valid. It was also reversible error for Judge Duryee to accept the truth of matters asserted in the contested document, i.e., that Chase was absolved of liability. At the very least, Petitioner should be allowed a fair opportunity to finally overcome discovery stonewalling and obtain a copy of the document pursuant to CCP §437c(h), which reads: .If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication or both that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just. (emphasis added). Accordingly, it was reversible error to simply ignore Petitioner‘s request. Alternatively, Petitioner should have been allowed to have a jury of his peers evaluate the credibility of Mr. Thorne and Chase’s experts on this crucial factual issue.”

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Apppellant’s Brief argues the following:
“Alternatively, Chase’s successor tort liability also exists under the general rule that a purchaser assumes a seller’s liabilities when (1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts. Id. At 28. The .mere continuation. ground for liability exists due to Chase’s acquisition of all WaMu’s operating assets, its use of those assets and of WaMu’s former employees to maintain the same line of .financial products,. its holding itself out to customers and the public as a continuation of the same enterprise under a new name, its failure to provide:

“WaMu/FDIC with adequate consideration to meet claims of unsecured creditors (a factual determination subject to disputed material facts); the fact that one or more persons were officers, directors, or stockholders of both WaMu and Chase (a factual determination subject to disputed material facts).2 Id.
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“2 The last two facts are based on Appellant’s information and belief. Further expert analysis of the underlying transactions will be required to verify these allegations. However, since expert discovery had not closed before summary judgment, the disputed nature of these facts should have been ground for denial of summary judgment.

.”Moreover, the powerful deposition testimony and declaration of Jeffrey Thorne created triable issues of material fact as to whether Chase defrauded and deceived Appellant and the general public by concealing the true purchase and assumption agreement wherein Chase retained full liability for WaMu’s torts and contractual breaches in exchange for other favorable terms. Mr. Thorne is uniquely qualified to present evidence on this issue and he had personally read the .smoking gun. document so Appellant was entitled to have a jury evaluate credibility regarding this crucial fact, which would clearly preserve Chase’s liability for WaMu’s misconduct.

Link to related documents:
http://www.scribd.com/collections/3675055/Secret-FDIC-and-JPMorgan-Chase-Bank-118-Page-Purchase-and-Assumption-Agreement-for-Washington-Mutual-Bank
http://www.scribd.com/doc/97851793/6-Case-File-Montana-Paatalo-v-J-P-Morgan-Chase-Motion-to-Re-open-Discovery-Re-Inspection-of-118-Page-Wamu-PAA

This is compelling information. Anyone have further information about these assertions should contact Vernon Bradley, Esq. in Sausalito, California or email this author.

Excerpt from the Deposition of Jeffrey A. Thorne:

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Senate Banking CommitteeTestimony

Of JPMorgan CEO Jamie Dimon Described As “A Big Ass Grabbing Love Fest!”

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June 18th, 2012

Written by John Wright

Jamie Dimon, who is the Chief Executive Officer (CEO) of the JPMorgan Chase bank, testified on Capitol Hill last week before the Senate Banking Committee on June 13th, 2012. He testified in regards to the $2 billion dollars in trade loss that JPMorgan Chase experienced because of irresponsibility and risky bets back in March and early April of this year. He testified to the Banking Senate Committee that it was because “CIO’s traders did not have the requisite to understand the risks they took.” In other words, in short, it meant that they did not know what the fuck they were doing.

Now there were many who were shocked at the blatant public display of bravado and smugness that Jamie Dimon seemed to display before the Senate Banking Committee. There were even more people that were shocked and disgusted by the apparent “love fest” that was happening between some of the members of the Senate Banking Committee and the JPMorgan Chase CEO. This is because some of the Senators were caught on camera giving obvious “love stares” as they listened to Jamie Dimon answer their questions. For example, the youtube below will show you where one Senator starts by first lecturing Jamie Dimon by saying that he “understands the pressures” and he “is not labeling them or judging them” — but only feels that they are destroying Jamie’s potential. The Senator then tells Jamie that there are to be “no more shenanigans” and “no more tomfoolery” and “no more ballyhoo” — because he is not going to get off that easy. However, I want you to pay close attention to the readily apparent “love stares” that the Senator gives to Jamie when he tries to explain to the Senator just why he thinks he is this way.

Remember to look for the love stare.

(Please always watch the youtube attached because it is part of the story)

Okay, so that really was not the Senator or Jamie Dimon. However, I think you get the point.

Nobody should really be surprised that Jamie Dimon and the Senators acted this way though, after you consider that JPMorgan Chase has donated a substantial amount of money to at least six of the twenty two Senate Banking Committee members campaigns. This is including the Chairman of the Senate Banking Committee himself, Senator Tim Johnson from South Dakota. This is because it has been reported that JPMorgan has donated at least $80,000 to Senator Johnson since 1998 – but for the record — they have also donated $136,000 to the top Republican on the Committee, Senator Richard Shelby of Alabama. This might be why the Senate Banking Committee hearing ended up being nothing other than the usual ass grabbing and love stare looking event that we all witnessed happening between members of the Senate Banking Committee and the JPMorgan Chase CEO, Jamie Dimon.

I mean I don’t think I have seen such “love stares” since the BofA and Merrill Lynch CEO were together when BofA bought Merrill Lynch. Click youtube below pictures and listen while you view pictures.

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With that being said, there was one Senator who did challenge Jamie Dimon on the JPMorgan taxpayer Bailout issue. Senator Jeff Merkley (D-Oregon) pointed out to Jamie Dimond that JPMorgan:

1. Had benefited in Half a trillion dollars in low cost federal loans.
2. Had benefited in 25 billion dollars in TARP loans.
3. Had benefited from untold billions indirectly from the bailout of AIG — which helped address their massive exposure and repurchase agreements and derivatives. In other words, if the investors did not receive the insurance money because AIG went belly up – it is likely they would have sued JPMorgan Chase and the other banks for selling them loans that they had misrepresented as being stable. This is because, as we all know, the commercial banks originated loans with homeowners who could not afford the payments. This is because the loans were securitized or insured and, therefore, the banks did not give a shit because soon it would be someone else’s problem once they sold it.

Senator Jeff Merkley (D-Oregon) also implied to Jamie Dimon that JPMorgan would have gone down without the massive federal intervention that had come both directly and indirectly in 2008 and 2009. That is when a very potentially disgruntled and snarky Jamie Dimon told Senator Jeff Merkley that he was “misinformed.” This is because, according to Jamie Dimon, JPMorgan did not need the bailout money that was given to them at that point. He then goes on to explain to the Senator that they had only taken the money because former United States Treasury Secretary Hank Paulson asked them to. This is because Henry Paulson told them that they needed to take it to give to the other banks to save the entire American economy from collapsing. That might be why Jaime Dimon and the former CEO of Bank of Destroying The American Dream, Ken Lewis, think that you and I (the taxpayer) should thank JPMorgan and Bank of Defrauding America for being such great patriots by taking the bailout money to save the economy that they played a major role in ruining.

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Don’t worry Senator Merkley – I’ve got this one for you — because I have longer than five minutes to talk. I will tell America what you really wanted to say.

For example, I noticed that Jamie Dimon’s testimony neglected to mention that these INVESTMENT BANKS AND THE AMERICAN ECONOMY WERE COLLAPSING BECAUSE OF THE BAD HOME LOANS THAT JPMORGAN AND THE OTHER COMMERCIAL BANKS – SUCH AS BANK OF DESTROYING THE AMERICAN DREAM — HAD CREATED AND SOLD TO THE NOW COLLAPSING INVESTMENT BANKS.

The reality is that the investment banks were collapsing because — metaphorically speaking — the dope dealers (commercial banks) had made and sold a bad batch of crack (bad home loans) to their customers (the investment banks). I mean — of course the metaphoric drug dealers (the commercial banks) did not need the bailout money. That is because they had just made all that money selling that bad crack to their customers (the investment banks). However, the dope dealer’s customers (the investment banks) were all dying from buying and ingesting the bad batch of crack the dope dealers had just sold them. This would of course overload the hospital (AIG Insurance Company) with millions of overdosed crack victims (the investors) who had just ingested the bad crack (the bad loans). Unfortunately, the hospital (AIG insurance company) was not built to accommodate millions of overdosed crack victims (the investors) all at the same time. This resembled the investors making a run on the bank – or should I say – the insurance company. This would force the taxpayer (You) to give the hospital (AIG insurance company) a big fat taxpayer bailout. This would result in the drug users (the investors) not asking for a big fat refund from the bad crack (bad loans) that the drug dealers (commercial banks) had just sold them. Then the taxpayer (You) were forced to even give the dope dealers (commercial banks) a 16.6 TRILLION DOLLAR BAILOUT – just so the dope dealers (commercial banks) could buy back the entire batch of bad crack (bad loans) they had just made and sold to their customers (the investment banks such as Merrill Lynch) with taxpayer money. This is so the entire economy of the United States and the World would not eventually die from the bad crack (the bad home loans) that the drug dealers (commercial banks) had just sold them. This is because we were already seeing the effects of the bad crack (bad loans) that were sold to international investors – such as Greece. That is because the people of Greece (unlike the fat – dumb – and happy Americans who did nothing) were none too happy that their government wanted them to pay to save their investors by raising their taxes. Nevertheless, it seemed those chickens came home to roost for the dope dealers (the commercial banks) — because even the dope dealers had a problems now. This is because in 2009, nobody (meaning the investors) wanted to buy their bad crack (bad loans) anymore. What a dumb dope dealer to kill their customers with a bad batch of crack. However, the dope dealers (the commercial banks) could not help themselves because they were too greedy to stop long enough to see they were even killing themselves with the bad crack (bad loans). Now the dope dealers (the commercial banks) were about to also callapse – which incidentally – the United States economy was connected to both the good and the bad crack the drug dealers (commercial banks) had made. That is why the taxpayer (You) purchased Fannie and Freddie. That way Fannie and Freddie (the government) could stop the dope dealers (commercial banks) from collapsing — by buying up all the dope dealer’s (the commercial bank’s) bad crack they now had no customers (the investors) for anymore. Unfortunately, the result would be that Fannie and Freddie (the government and taxpayer) would now be the proud owner of bunch of bad crack (the bad loans). It is also why you actually have a zero balance with your lender — because the taxpayer paid off the loans to the banks. Nevertheless, in the meantime, the dope dealers (the commercial banks) realized that they now had a new customer that would continue to buy their bad crack (the bad loans). This new customer was way better than the old customer (the investment banks) — simply because this new customer would continue to buy their bad crack (the bad loans) even though they knew it was bad crack. The new customers were THE UNITED STATES GOVERNMENT. They knew that the United States government would continue to buy the bad crack in the form of bailouts – because like a junkie – the United States government needed the crack and the drug dealers to survive to get their fix that helped them survive too. There were also no laws to stop the drug dealers (the commercial banks) from making the bad crack (the bad loans). Well, I should say there used to be law against it, until the Clinton administration was able to get the Glass-Steagall Act repealed.

Now Jamie Dimon wants you to believe that they lost $2 billion dollars because the JPMorgan traders “did not have the requisite to understanding the risks they took.” However, in my opinion, Jamie Dimon and JPMorgan Chase are only trying to make one more last drug run before the drug is made illegal again.

That is why the American people will not be saying thank you for taking the bailout money, Mr. Dimon. Instead, the American people will be telling tell you to go fuck yourself!

See! I told you I got it Senator Merkley!

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Now does anyone here still wonder why Iran wants nothing to do with implementing the American system in their country? (tongue- in – cheek) Come on Iran!  It’s not so bad!  Don’t be a dummy!  Be a smarty!  Come and join our banking party!

Well look at bright side – which is that I guess we never have to worry about Iran destroying America with a nuclear weapon. Well look at the bright side –  which is that I guess we never have to worry about Iran destroying America with a nuclear weapon.  This is because the Senate Banking Committee will have already let JPMorgan Chase and Jamie Dimon totally destroy America by the time Iran has built one.  

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My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge John Wright has left The Courtroom of Public Opinion!

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My name is John Wright AND I AM FIGHTING BACK!

All Rise! The Honorable Judge John Wright has left The Courtroom of Public Opinion!

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1. On 06/18/12 In House Testimony, Dimon Sticks to Script

2. Full C-SPAN version Senate Banking Comimitee testimony

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House of Dimon Marred by CEO Complacency Over Unit’s Risk

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Piggybankblog posted 06/11/12

Piggybankblog posted picture

Cross linked story with Bloomberg.com

JPMorgan Chase & Co. (JPM) could have spotted trouble at its chief investment office long before traders there racked up at least $2 billion in losses. One reason it didn’t: Chief Executive Officer Jamie Dimon.

Dimon treated the CIO differently from other JPMorgandepartments, exempting it from the rigorous scrutiny he applied to risk management in the investment bank, according to two people who have worked at the highest executive levels of the firm and have direct knowledge of the matter. When some of his most senior advisers, including the heads of the investment bank, raised concerns about the lack of transparency and quality of internal controls in the CIO, Dimon brushed them off, said one of the people, who asked not to be identified because the discussions were private.

Dimon’s actions contrast with his reputation as a risk-averse manager who demands regular and exhaustive reviews of every corner of the bank. While Dimon has said he didn’t know how dangerous bets inside the CIO had become, the loss on those trades calls into question whether anyone can manage a financial empire as vast as JPMorgan, which became the biggest U.S. lender last year and now has more than $2.3 trillion in assets, larger than the economies of Brazil or the U.K.

“These institutions are too big to manage because even the bank that was considered to be the best-managed turns out to have had a significant glitch,” said Gary Stern, a former president and CEO of the Federal Reserve Bank of Minneapolis and co-author of the 2004 book “Too Big to Fail: The Hazards of Bank Bailouts.”

Testifying Tomorrow

The trading breakdown has undermined Dimon’s authority as a critic of regulatory efforts to curb speculation by deposit-taking banks, and triggered government probes in the U.S. and the U.K. It also cost Chief Investment Officer Ina R. Drew, one of the most powerful women on Wall Street, her job. JPMorgan shareholders have seen about $30.1 billion of market value wiped out since Dimon disclosed the loss.

Dimon may have to account for his decisions as soon as tomorrow, when he’s scheduled to testify about JPMorgan’s trading loss before a Senate committee in Washington. The senators, led by South Dakota Democrat Tim Johnson, may ask Dimon why he didn’t ensure that the chief investment office’s risk managers kept pace with the nature of the unit’s business.

Dimon, 56, declined to comment for this article.

The CIO’s mission includes investing deposits the bank hasn’t loaned. Over the past four years, assets controlled by the unit ballooned fivefold to $374.6 billion in the first quarter, making it one of the largest money managers on Wall Street. Yet the unit was ill-equipped to handle the size and complexity of its credit-derivative portfolio, according to two former CIO executives and one current executive.

Limits Ignored

As Dimon encouraged the CIO to take more risk in search of profits, the unit raised limits on positions and sometimes ignored them, the former executives said.

At the same time, the position of chief risk officer inside the CIO was a revolving door, with at least five executives holding the job in six years, according to people familiar with the matter. Irvin Goldman, appointed in February and replaced in May, had been fired in 2007 by brokerage Cantor Fitzgerald LP for money-losing bets that led to a regulatory sanction of the firm, said three people with knowledge of the matter. Goldman, 51, wasn’t directly accused of wrongdoing.

The division’s London team built up a book of credit derivatives beginning in 2008 that became so large by late 2010 that employees couldn’t unwind it without roiling the markets or incurring large losses, according to current and former executives.

London Whale

Risk management at the CIO was a world of its own: This year its traders valued some of their positions at prices that differed from the investment bank, people familiar with the situation have said. One trader built up positions in credit derivatives so large and market-moving he became known as the London Whale. It was those bets on credit-default swaps known as the Markit CDX North America Investment Grade Series 9 that backfired and forced JPMorgan to disclose the trading loss.

While Dimon allowed risks inside the CIO to mount, members of his board lacked the experience to police it. None of the three people on the board’s risk-policy committee has worked as a banker or had any experience on Wall Street in the past 25 years, and one is a museum director.

Dimon’s push to take greater risks in the chief investment office, first reported by Bloomberg News on April 13, began in 2005, not long after New York-based JPMorgan completed its acquisition of Bank One Corp. and he became CEO.

‘New Vision’

He created the CIO, elevated Drew from treasurer to chief investment officer, had her report directly to him and encouraged her department, which had invested mostly in government-backed securities, to seek profit by speculating on higher-yielding assets such as credit derivatives, according to more than half a dozen former executives. Sometimes Dimon suggested positions, such as directional bets on economic trends or asset classes, one current executive said.

“We want to ramp up the ability to generate profit for the firm,” David Olson, a former head of credit trading for the CIO in North America, recalled being told by two executives when he was hired in 2006. “This is Jamie’s new vision for the company.”

Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. (WFC), the next three largest U.S. banks, say their corporate investment offices follow more conservative strategies and don’t trade credit-default swaps or indexes linked to the health of companies, as JPMorgan is said to have done.

Surging Profits

In 2006, Drew hired Achilles Macris, 50, a former co-head of capital markets at Dresdner Kleinwort Wasserstein, to oversee trading in London and carry out Dimon’s mandate to generate greater profits, three former employees said. When JPMorgan acquired Bear Stearns Cos. and Washington Mutual Inc. at fire-sale prices in 2008 and with government support, the CIO’s portfolio more than doubled to $166.7 billion from $76.2 billion the previous year.

Profits surged as assets swelled. The group started making more exotic trades, betting against an index of subprime mortgage bonds in 2007 that resulted in a roughly $1 billion profit that year, according to one former CIO executive and another person briefed on the trade. The following year, the corporate division, which includes CIO and treasury results, earned $1.5 billion, compared with a net loss of $150 million in 2007. Net income for the division was $3.7 billion in 2009.

Earnings Impact

As large as those numbers were, they understated the CIO’s real profitability. Because Drew, 55, and her traders invested on behalf of JPMorgan’s deposit-taking businesses, some of the income they generated flowed to other departments, such as the retail bank. Macris’s team in London, running a portfolio of as much as $200 billion in trades, had a profit of $5 billion in 2010 alone, more than a quarter of JPMorgan’s net income that year, one former executive said.

The CIO may have contributed as much as 80 cents a share to the company’s earnings, according to estimates by Charles Peabody, an analyst at Portales Partners LLC in New York.

“The issue that is still being underestimated is how much of their core earnings power is going to be reduced by restructuring and reining in that CIO office,” he said in a June 4 interview on “Bloomberg Surveillance.”

In addition to making speculative bets, the CIO took on a bigger role after the financial crisis, hedging JPMorgan’s potential losses on loans and corporate bonds by taking positions in credit derivatives.

CIO Oversight

The question of CIO oversight arose in the months after the crisis, when top JPMorgan executives heard what Macris and his fellow traders in the London office were doing and raised concerns to Dimon that the unit’s risk management was inadequate, according to the two executives familiar with the conversations.

William Winters and Steven Black, co-heads of JPMorgan’s investment bank at the time, were among those who sought more information about the CIO’s changing risk profile, according to people who participated in or witnessed the conversations.

James “Jes” Staley, 55, who ran asset management at the time and now heads the investment bank, and John Hogan, then the investment bank’s chief risk officer, also questioned why risk controls inside the CIO weren’t as extensive or robust as in other departments.

Visibility Lacking

“That’s absurd,” said Kristin Lemkau, a spokeswoman for the bank. Winters, Black and Staley never complained about a specific risk in the CIO’s office, she said. If they had, Dimon’s protocol would have been to gather the relevant data, let them talk to Drew and return to him if they weren’t satisfied with her response, a bank executive said. The operating committee, on which they all sat, also could have reviewed the matter if they still had concerns, the person said.

It’s also “totally untrue” that Hogan questioned why the CIO didn’t have as effective or robust risk controls as other divisions, Lemkau said.

One sore spot for executives inside the investment bank was the lack of visibility into CIO positions, according to two people with direct knowledge of the matter. While the weekly risk-committee meetings held by the investment bank were open to members of senior management and were attended regularly by Macris and occasionally by Drew, parallel sessions run by the CIO were closed to anyone outside the unit, these people said.

Chinese Wall

Among the explanations offered for Drew’s autonomy: There was a so-called Chinese wall between the CIO and investment bank because Drew’s unit was also a client, according to one current and two former executives. The CIO used the investment bank to place and process trades. Drew didn’t trust that division to refrain from using the data to its advantage by offering non-competitive prices or by trading against her, according to a former executive who participated in those talks.

It also was widely known within the bank that Winters, 50, and Black, 60, didn’t get along with Drew, according to a current and a former executive.

A person close to the bank offered a different description of the circumstances: While Dimon didn’t adopt a double standard for Drew, he and other senior executives became complacent toward the CIO over time as a result of her track record as a consistent money maker, this person said.

Winters and Black proposed redefining the role of Ashley Bacon, then head of market risk for the investment bank, to extend his oversight to the CIO, a former bank official said. The executives also asked that CIO risks be disclosed in greater detail at review meetings and that other members of the bank’s operating committee be involved in assessing them.

Dimon’s Response

Dimon’s response, one of the people said, was that the situation was under control. It was an answer that one former executive said he got from Dimon again and again, as risks in the CIO grew to potentially perilous levels.

“You really need people who have a very broad view of things both quantitatively and with market knowledge and have the clout within the firm to actually be heard,” said Emanuel Derman, a former head of quantitative risk strategies at Goldman Sachs Group Inc. (GS), a professor at Columbia University and author of “My Life as a Quant” and “Models Behaving Badly.” “To say that it’s OK with the desk is not the right thing to do.”

In 2009, Dimon fired Winters and relieved Black of operating responsibility. Staley took over as head of the investment bank, and Mary Erdoes, 44, succeeded him at asset management. Winters, Staley and Hogan declined to comment on the discussions. Black didn’t return phone calls seeking comment.

‘Structural Deficiencies’

Dimon and what he called his “fortress balance sheet”meanwhile were being lauded by politicians and the media. He steered JPMorgan through the 2008 financial crisis without a single quarterly loss. New York magazine dubbed him “Good King Jamie,” while a biography by Duff McDonald was titled “Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase.”

“In the wake of the financial crisis, he came to represent this notion that, if well-managed, a bank didn’t need to be regulated all that heavily,” said Rakesh Khurana, a management professor at Harvard Business School in Cambridge, Massachusetts, and author of “Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs.” “That may have contributed to some structural deficiencies in governance and risk management. It probably created the benefit of the doubt to his direction in the board room and probably a lot of deference to his authority in day-to-day operations.”

Drew spent three decades at the firm and its predecessors, helping steer it through the Russian debt crisis and the collapse of hedge fund Long-Term Capital Management in 1998.

Longer Leash

At first, she maintained tight control over the CIO’s trades, former colleagues and employees said. She ran the group’s daily 7 a.m. meetings in a seventh-floor conference room at JPMorgan’s headquarters at 270 Park Ave. in Manhattan, according to former traders. She placed strict limits on how much an investment could lose or gain, and traders were required to exit positions if losses exceeded a certain amount, according to one former manager in London and several former traders.

Macris gave traders a longer leash and imposed fewer controls, according to three former executives. So-called stop-loss limits, which were supposed to trigger an internal review or require a trader to immediately exit a position if losses grew too large, weren’t always enforced, the executives said. Macris didn’t respond to e-mails or phone calls seeking comment.

The shift in risk appetite led to the departures in 2008 of some traders who specialized in more-liquid markets where risk was easier to measure, such as interest-rate products and foreign exchange, three other former CIO executives said. Under Macris, the CIO’s London office bought European mortgage-backed securities, structured credit and other assets that brought higher yields and more risks than the safest short-term Treasury bonds.

Boeing 747

Peter Weiland, who graduated from Princeton University with a degree in chemistry and had been overseeing risk for JPMorgan’s proprietary-trading group, was transferred in 2008 into the same role at the CIO. He immediately saw faults in the division’s risk-management system, said two former executives who worked with him.

While Drew hired traders and quantitative analysts needed for trading, she failed to add the staff, computer models or technology necessary to evaluate the new risks, a former and a current executive said. The risk-management systems and framework designed to spot potential pitfalls, especially in credit derivatives, didn’t keep pace with the portfolio’s expansion, the people said.

Changing VaR

Weiland became concerned that Bruno Iksil, the trader in Macris’s office now known as the London Whale, had amassed a complex and illiquid position, according to two former executives. Weiland, who declined to comment, warned Macris and Drew about the trades on numerous occasions beginning in 2010, the people said. It was a topic of frequent discussions in the CIO’s global weekly meetings, they said.

Weiland compared efforts to reduce Iksil’s outsized position to the difficulty of trying to safely land a Boeing 747 without flying lessons, one executive said. The position was so large and illiquid, Weiland said he couldn’t get the plane below 35,000 feet, the executive said.

By 2010 Iksil’s value-at-risk, or VaR — a formula used by banks to assess how much traders might lose in a day — already was $30 million to $40 million, a person with knowledge of the matter said. At times the figure surpassed $60 million, the person said, about as high as the level for the firm’s entire investment bank, which employs 26,000 people.

Too Illiquid

Drew, who resigned last month after the CIO losses were announced, was on sick leave for about six months in 2010, during which time Macris and Althea Duersten, head of the CIO for North America, ran the division. The daily meetings were moved to a larger conference room near their new offices on the 10th floor to accommodate about 40 people in attendance. Drew relocated to the executive suites, more than 30 floors higher, to be closer to Dimon.

Drew and Macris agreed to reduce Iksil’s positions and tried to do so beginning in early 2011, according to a current and two former executives. The plan was to work down the book gradually as they found opportunities to sell the assets, these people said. The problem: No one was buying. The position was too large and illiquid and couldn’t be reduced without a loss. Drew and Macris decided the bank could hold the trades to maturity and that the risk of being forced to liquidate them under duress was low, according to the former executives.

‘Risk 101’

Early this year, as the size and volatility of its trades were growing, the bank changed the computer-based mathematical formulas for calculating the chief investment office’s VaR. The new model had the effect of understating the risk of losses from Iksil’s trades: It showed an average daily VaR within the CIO of $67 million, about where it stood in the fourth quarter of 2011.

On May 10, when JPMorgan announced the loss, Dimon said the bank had reviewed the effectiveness of the new model, deemed it“inadequate” and decided to go back to the original model. On that basis, VaR doubled to $129 million. So far, the bank hasn’t disclosed how or when VaR for the CIO unit was changed while the model for the rest of the firm remained untouched. Nor has it explained who sought the change and who approved it.

Unable to unwind Iksil’s bets, the bank tried to hedge them this year with other trades, exacerbating the losses, Dimon said on May 10. Iksil had amassed positions in securities linked to the financial health of corporations that were so large he was driving price moves in the $10 trillion market.

Dimon later called it “a Risk 101 mistake.” Shares of the company have dropped 19 percent through yesterday since the losses were announced, and at least half a dozen agencies, including the U.S. Department of Justice and the Securities and Exchange Commission, are investigating.

‘Brightest Angel’

While Dimon hasn’t faced the same public scrutiny that rivals at Goldman Sachs and Bank of America endured after the 2008 credit crunch, the attention surrounding his testimony has echoes with the bank’s own history. In 1933, after Congress was shaken by another financial crisis, J.P. “Jack” Morgan, then CEO of the company, was summoned to testify about preferential treatment that JPMorgan gave certain clients.

The public reaction was “extreme disillusionment: the brightest angel on Wall Street had fallen,” Ron Chernow wrote in his 1990 book, “The House of Morgan.” The scandal “cast it in the mud with other banks.”

The embarrassing disclosures in those hearings led to theGlass-Steagall Act, which forced JPMorgan to split off its investment-banking business from its deposit-taking arm. Dimon’s testimony tomorrow may have a similar effect: Giving ammunition to those who would enforce stricter regulation of banks, including advocates of the Volcker rule, which would bar most proprietary trading by deposit-taking institutions and that the JPMorgan CEO has fought vociferously.

Psychiatrists

He has said former Fed Chairman Paul Volcker, for whom the rule is named, doesn’t understand capital markets. He quipped that bankers will need psychiatrists to evaluate whether their trades qualify as hedges. Last year he took on Fed Chairman Ben S. Bernanke in a public forum, blaming excessive regulation for slowing a U.S. economic recovery and asking whether anyone has“bothered to study the cumulative effect of all these things.”

Now, his own lapses may come back to haunt him.

“The risk management is as amateurish as you can get on Wall Street,” Nassim Taleb, a professor of risk engineering atNew York University and author of “The Black Swan: The Impact of the Highly Improbable,” said in a telephone interview about the bank’s loss. “JPMorgan is vastly more fragile today than it was five years ago, and the system is more fragile today with more too-big-to-fail banks with proven incompetence at their management level.”

To contact the reporters on this story:Erik Schatzker in New York at eschatzker@bloomberg.net; Dawn Kopecki in New York at dkopecki@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net or @liqquidity on Twitter

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net

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Big U.S. Banks Brace for Downgrades

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Piggybankblog posted 06/08/12

Piggybankblog posted picture

Cross linked story with wsj.com

By KELLY NOLAN, KIRSTEN GRIND and ANUSHA SHRIVASTAVA

Banks, bond issuers and investors are bracing for aftershocks from a wave of bank downgrades expected to hit the U.S. as soon as the coming week.

Moody’s Investors Service has said it is likely to reduce by the end of June credit ratings for 17 large global banks, including five of the six biggest U.S. financial firms by assets. The downgrades are expected to raise borrowing costs and crimp some lucrative trading businesses at the banks, including at J.P. Morgan ChaseJPM +2.65% & Co., Bank of America Corp., BAC +1.89%Citigroup Inc., C +3.20%Goldman Sachs Group Inc. GS +0.57% and Morgan StanleyMS +2.24% .

The ratings adjustments also could affect how municipalities raise money to provide services and build schools, how money-market funds invest cash from companies and savers, and how banks raise capital to support their lending and trading. Already, money-market funds are curbing some lending to banks, and cities and states are switching bankers.

The impending downgrades are adding to the unease already plaguing banks, investors and borrowers. Financial markets are on edge as the European debt crisis deepens and the likelihood grows of a Greek exit from the euro zone. Economies in the U.S. and China are showing signs of slowing.

Many debt investors have rushed into safe-haven assets such as U.S. Treasurys and are avoiding any investments that have even an inkling of risk.

The ratings action has been in the works since February, when the Moody’s Corp. unit said it would review the credit ratings of more than 100 banks around the world because of pressures on bank profits. Those threats include uneven economic growth, nervous financial markets and tighter regulations. A Moody’s spokesman declined to comment.

While banks and investors all anticipate downgrades in the coming week, many banks have lobbied Moody’s to limit the size of its cuts. The market has also had months of warning, potentially limiting the immediate impact of any downgrades.

The $2.6 trillion money-market-fund industry is likely to be particularly affected. Those funds are restricted by law in what they can buy, and typically must have the bulk of their holdings in the most highly rated short-term debt—rated Prime-1 by Moody’s. That includes everything from commercial paper sold by the world’s biggest banks to some forms of debt sold by municipalities.

Moody’s is considering lowering ratings on the short-term debt of the main banking units of companies such as Bank of America and Citigroup, from Prime-1 to a second-tier rating of Prime-2. That would make their debt less attractive, and in some cases off limits, to money funds.

“Every time Moody’s downgrades, it’s going to lower our universe of what we can buy,” said David Fishman, co-head of global liquidity management for Goldman Sachs Asset Management.

Money-market funds have become more reluctant recently to lend to banks in the U.S. and Europe. Many funds are only willing to lend on an overnight basis to banks on review for downgrade, and they are shunning banks that suffer large downgrades.

“Over the past few weeks, some investors have shortened the tenor of lending to banks both within and outside the euro zone,” said Chris Conetta, global head of commercial-paper trading at BarclaysBCS -0.67% PLC in New York. “Many who had been buying paper in the six-month area have recently focused their lending to three months and shorter.”

Overnight loans made up 31% of assets at U.S. prime-money-market funds at the end of April, according to Fitch Ratings. That is the highest percentage since Fitch began tracking such data in 2010, and up from 28.4% in March.

As money funds reduce their investments in commercial paper, banks lose a crucial form of funding. The loss could be offset by the fact that banks are flush with deposits and have been shifting their funding sources in anticipation of downgrades, market participants said. Many banks have also curtailed their short-term borrowing since the financial crisis.

Across the U.S., cities, states and other municipalities have been racing to avoid becoming collateral damage.

Bank of America, Citigroup and other banks are big backers of a kind of municipal debt known as variable-rate demand bonds. If those banks are downgraded, the bonds will be, too, pushing up interest costs and lowering the debt’s value. Spokesmen for Bank of America and Citigroup declined to comment.

In Cleveland the city’s debt manager, Betsy Hruby, raced to replace Bank of America as the backer of $90 million of water-department bonds. “We realized that might have an impact on the rate” of the bonds, she said.

Ms. Hruby turned to Bank of New York Mellon Corp., BK 0.00% which isn’t under Moody’s scrutiny.

Other municipalities are seeking additional ratings from other ratings companies such as Moody’s rivals Fitch or Standard & Poor’s, which aren’t planning to downgrade the banks anytime soon.

The Pittsburgh Water and Sewer Authority asked Fitch to rate about $73 million of variable-rate bonds it sold in 2008 backed by Bank of America, according to Stephen Simcic, acting co-executive director at Pittsburgh Water.

That gave the authority a third rating, along with S&P and Moody’s. The extra rating means the bonds now have at least two top short-term grades, offsetting any impact from a Moody’s downgrade.

Getting an extra rating “was one option we could pursue quickly without too much pain,” said Mr. Simcic. “We thought it was a prudent measure.”

Investors in such debt are preparing for the changes.

Craig Mauermann, who manages the $850 million BMO Tax-Free Money Market Fund, said he recently has been buying municipal bonds backed by banks “not under the gun,” while selling bonds in danger of being hit by a downgrade.

“We manage the most conservative type of investment there is in the world,” he said. “We continue to reduce risk in all ways we can.”

Some banks have estimated some of the direct costs of a Moody’s downgrade, such as additional collateral they would have to post or termination payments they would make.

In its first-quarter financial report, Morgan Stanley said it could pay as much as $9.6 billion for a three-notch downgrade by multiple rating agencies. Goldman Sachs said its costs could hit $2.2 billion for a two-notch reduction, and Bank of America said a one-notch downgrade could deliver a $2.7 billion hit.

The biggest impact could be to deprive some institutions of trading revenue. A three-notch downgrade of Morgan Stanley could slash demand for derivatives, a crucial business on Wall Street, by around 30%, estimates Alliance Bernstein analyst Brad Hintz.

The downgrades would mean that Moody’s ratings for the five U.S. banking giants are the lowest of the three major credit-rating firms. While Moody’s has given the market plenty of notice, some investors worry that action by Moody’s could precipitate downgrades by S&P and Fitch.

“The Moody’s action is concerning because it’s the beginning of what you might continue to see,” said James McCarthy, co-head of global liquidity management at Goldman Sachs Asset Management.

—Colin Barr and Jeannette Neumann contributed to this article.

Write to Kelly Nolan at kelly.nolan@dowjones.com, Kirsten Grind at kirsten.grind@wsj.com and Anusha Shrivastava at anusha.shrivastava@dowjones.com

A version of this article appeared June 9, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Big U.S. Banks Brace for Downgrades.

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America’s Biggest Banks, JPMorgan Trumps Bank Of America Again

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Piggybankblog posted 06/07/12

Piggybankblog posted picture

Cross linked story with forbes.com

There’s not much change on the latest list of the top 50 U.S. banks except that the nation’s biggest banks have become even bigger.

Sitting at the top for the last couple of quarters is JPMorgan Chase which took the #1 spot from Bank of America during the third quarter last year. With $2.3 trillion in assets and $1.1 trillion in deposits JPM is hanging on to a comfortable lead, according to the most recent ranking from SNL Financial.

Bank of America which led the big bank list since 2009 is now trailing JPM with its $2.2 trillion in assets and $1 trillion in deposits.

Citigroup remains in the number three slot with $1.9 trillion in assets and $906 billion in deposits. San Francisco-based Wells Fargo is a much farther number four with $1.3 trillion in assets but it does however top Citi’s deposit base with $930 billion.

More notably however is that all four of the nation’s biggest banks managed to increase both assets and deposits. JPM’s assets were up 2.7% and deposits made a small jump by .1%. At BofA assets were up 2.5% and deposits .8%.

At Citi assets rose 3.8% and deposits jumped higher by 4.6%. Wells meanwhile increased assets by 1.3% and deposits by 1.1%.

It also appears that HSBC North America is gaining market share as it moved to the number eight slot from nine last quarter with assets rising 3.8% to $298 billion.

Much of the change on SNL’s list of bank rankings is due regulatory changes. SNL explains, “On SNL’s previous rankings, some thrifts had to be ranked at the subsidiary level, since banking data was only available for the units, but now most holding companies previously regulated by the [now defunct Office of Thrift Supervision] have to file the same reports as bank holding companies, Form Y-9Cs.”

That means some companies were able to move up in the rankings like Charles Schwab which sits at number 19 with $111.5 billion in assets and $62 billion in deposits. Previously only Schwab’s subsidiary Charles Schwab bank was ranked and sat in the number 26 slot.

From SNL:

San Antonio-based United Services Automobile Association ranked at No. 20, while its subsidiary USAA FSB was 31st in the previous list. New York-based Deutsche Bank Trust Corp. landed at No. 30, while Deutsche Bank Trust Co. Americas was No. 32 in the previous list. New York-based E*TRADE Financial Corp. at No. 33 retained the ranking previously held by its subsidiary E*TRADE Bank, and IMB HoldCo LLC, parent of OneWest Bank FSB, now files data, though it has moved down to 43 from 41.

There were also a few newcomers who were able to enter the list thanks to recent acquisitions of depository institutions. Raymond James Financial premiered at number 46 thanks to its acquisition of Morgan Keegan. RFJ now has has $22 billion in assets.

See the full list from SNL Financial below:

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