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These quotes from Jamie Dimon’s upcoming appearance this weekend on Meet the Press are a bit out of character:
David Gregory: Did the bank break any laws? Did it violate any accounting rules or SEC rules?
Jamie Dimon: So we’ve had audit, legal, risk, compliance, some of our best people looking at all of that. We know were sloppy. We know we were stupid. We know there was bad judgment. We don’t know if any of that’s true yet. Of course, regulators should look at something like this, that’s their job. We are totally open to regulators, and they will come to their own conclusions. But we intend to fix it, learn from it and be a better company when it’s done.
If you can find another CEO answer a point-blank question about whether or not their company broke the law with, essentially, “I don’t know, the regulators should come in and find out,” you win a cookie. That’s an especially interesting angle to take for Jamie Dimon, who has spent the last two years telling the regulators to get off the backs of the financial industry so they can go ahead and master the universe.
The legal issues stem from disclosures and statements made to investors about the “Fail Whale” trades before the inevitable admission of losses. They have little to do, as far as I can tell, with the trades themselves, which nobody contests are legal at the moment, and which sadly probably would be legal under the Proposed Volcker rule, which allows the very kind of portfolio hedging that the legislative history of the Volcker rule would seem to prevent.
Worse for JPMorgan Chase, the rating agencies have descended upon them.
JPMorgan Chase & Co. (JPM), the largest and most profitable U.S. bank, had its credit grade lowered one level by Fitch Ratings and Standard & Poor’s said it may follow after the bank revealed a $2 billion trading loss.
The lender’s long-term issuer default rating was cut to A+ from AA-, and the short-term grade was lowered to F1 from F1+, Fitch said yesterday in a statement. Fitch placed all parent and subsidiary long-term ratings on rating watch negative.
Standard & Poor’s cited the possibility of broader problems with JPMorgan’s hedging strategies, which the credit rater said isn’t “consistent with what we have viewed as the company’s sound risk-management practices.” A downgrade might result if the missteps prove to be wider, or if management “is pursuing a more aggressive investment strategy than we originally believed” and misses financial targets, according to an S&P statement. S&P affirmed JPMorgan’s A rating.
I’ve seen analysts call this a “Texas hedge,” making the point that it wasn’t really a hedge at all. It was an enormous bet on its own, called a hedge to make it look better to the regulators.
I’m pleased to see the pile-on against Dimon and in favor of actual constraints on the Wall Street casino, and so should anyone who doesn’t want to continue to finance a lavish lifestyle for the people who wrecked the economy.
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Politics. That’s all it is. Dimon is a Democrat, and it’s an election year. Good time to make it look like Obama’s non-reform financial reform actually has teeth. And because it actually doesn’t, he knows he can get away with saying this.
Just politics. And the rumors of him “courting” Romney are most likely bullshit. He’s a Democrat.
Who would want to be friends with this savvy jackass and his double speak ?
O, I don’t know.
David this is the most essential post to addressing the global economic meltdown. One has to wonder what the leverage was on “Whale Trade”. The fact that it was described as a Texas Hedge reflects it’s inordinate size. I think Yves might make some interesting details on where SEC and regulatory should be going in policy.
Most money gets so little interest that FED low rate interest policy has pushed it towards risk in the markets. In fact with inflation figured in you lose money in savings hence the drive to consume instead. Hope you follow up with Glass-Seagal details and what the difference is then and now. The TBTF banks were allowed to mix investor funds with deposits and leverage bets multiplying risks.
Excellent point about savings. I don’t recall another time in my lifetime that interest rates on savings has been so low.
The thing I don’t understand about it is this: Free marketeers are always talking about how the free market will set the right prices/interest etc. If the financial sector was really strapped for cash (as it is still claimed) then why isn’t the “free market” responding by paying extravagent interest rates to get folks to give them cash?
Just another, in a long list, bit of proof that the free market bullshit is just that, bullshit.
Dimon doesn’t know if JPM broke the law because Dimon doesn’t give a rat’s ass. Why should he? He knows his pal Obama won’t do sh*t about it.
How is it possible to be anti-Dimon and not anti-Obama? It’s Obama who’s provided Dimon his mandate. What the heck is going on at FDL?
“We are totally open to regulators, and they will come to their own conclusions. But we intend to fix it…”
Because Jamie Dimon already knows what the regulators’ conclusions will be, at least at the higher echelons, because, as Kafka said, he knows his pal Obama won’t do anything about it. Oh, the working stiffs at the SEC might actually do their jobs and come up with all sorts of evidence that Dimon committed, or at least allowed to be committed, all sorts of malfeasance.
Then JP Morgan will pay a fine equivalent to a parking ticket for me when you compare net wealth, not admit any criminal culpability, and go on its kleptocratic way.
But remember: “I know these guys. They’re friends of mine. They’re like baseball players. They’re savvy businessmen.”
–Barack Obama, referring to Jamie Dimon and others in his trade.
Like baseball players. What a contemptible lie.
Only a cookie? That’s all I get for finding another CEO who will trot out a laughable statement like this? Man, that would be like only getting a cookie for finding the lost continent of Atlantis.
Sloppy, stupid, and bad judgement, Jamie wins the Trifecta! I think this means BIG BIG BONUSES for Jamie and the JP Morgan Masters Of The World. These business leaders should use their talents to serve the American people, and they themselves should regulate their business. They umderstand it and no one else can, just as AIG and Goldman Sachs do a magnificent job of regulating themselves.
Obotics..
If JPM did break the law you can be assured that Congress and Obama will race to the rescue with a law creating retroactive immunity, i.e. the telecoms.
You’d best avoid TBogg’s posts. It’s like an Obama love fest there. They’ve even got an altar where they worship him.
In other news, Jon Corzine (and his beard) remain free, and are probably being lined up for presidential honours just to rub the noses of the serfs in some really smelly stuff.
No rules for plutocrats. Only for serfs. For serfs, it’s brutish, short and unpleasant. Got that?
do not forget that Jon Corzine’s beard is also a Democrat.
WTF? Of course Dimon haz a confused about JPMorgan. It’s in Dimon’s job description to be “confused” about “mistakes” and “sloppy work” like this.
Brother! Talk about not even throwing the 99% a bone. As far as I’m concerned, what Dimon is spewing forth amounts to: “I got mine! Eff the 99%.”
Bastards.
All the more reason to renounce any affiliation with the so-called “Democratic” party and refuse to vote for “Democrats” anymore.
What’s the point?
Indeed!
This guy is PBO’s Ken Lay. Only W at least had the good sense to pretend he never knew Lay.
Nothing wrong with your gut instict OFG, the purpose of low/no interest on savings is to force savers into the market as the sole vehicle for “growth.” It’s the undoing of money over time, the undoing of saving – and it makes that mattress look good again if you ask me.
The fuckery is that Ben and Tim are calling for keeping interest down in the near, medium and long term.
Taibbi also took a shot at Jamie yesterday.
And he’s got a long-form piece up on the systematic evisceration of Dodd-Frank. Good read…
Jamie Dimon is…
A couple of comments still speak of tweaking banking regulation ,giving D-F more teeth,empowering the SEC and other exercises in magical thinking that presuppose we have power over Dimon and the international banking cartel .WE don’t ,and there is not one shred of evidence to the contrary .How can we get our government back if denial prevents us from admitting we lost it to corporate monopolies ?
Quite agree. There is zero point any more. But you have to admit, Corzine’s beard is a magnificent creature. It just cries out “keep me free”. Kind of a rallying symbol for the 0.001% ‘ers – “keep Jon’s beard free” they’ll not be wearing on tee-shirts at protest rallies in solidarity – since he’ll never be indicted even though it appears quite blatant that he stole money and lied about it – even from just the public record…
Jamie by contrast has no beard. Perhaps he should grow one? It could be of course that he is so evil that no beard can grow on his face?
Alphaville at the Financial Times estimates the notional bet at around 150 billion. I spoke to a hedge fund trader in corporate CDS who made money off the Whale trade, and he said their losses could have been upwards of 10 billion if they actually unwound the trade. So right now JPM is sitting on a lot of further potential losses on that trade.
This isn’t over.
“If you can find another CEO answer a point-blank question about whether or not their company broke the law with, essentially, “I don’t know, the regulators should come in and find out,”
Thats actually NOT what he said at all. He completely, totally avoided answering the question. When Jamie Dimon refuses to answer the question “did JP Morgan break the law”, instead supplying a paragraph of disconnected, Rumsfeld babble, im strongly inclined to suspect that the answer is a GREAT BIG FAT, and very straightfoward, simple “yes”.