enlarge

Via New York Magazine, a tale of woe and regret, tinged with more than a little bitterness:

To comply with the looming regulations, banks have begun stripping themselves of the pistons that powered their profits: leverage and proprietary trading. In the wake of the crash, Morgan Stanley and Goldman Sachs converted to bank holding companies to tap the “discount window,” the Fed’s pipeline of cheap funds that gave the banks an emergency source of liquidity. That move seemed smart then, but the stricter standards required of banks have now left them boxed in.

With all the major banks unable to wager their own funds on big bets, there’s a growing sense that the money that was being made during the Bush boom won’t be back. “The government has strangled the financial system,” banking analyst Dick Bove told me recently. “We’ve basically castrated these companies. They can’t borrow as much as they used to borrow.”

Dawwww. Poor babies. Do you have the sense that they still aren't living in reality? You'd be right. They're not.

Continue reading »

enlarge

Federal Reserve Headquarters (Eccles Building), Washington DC

It took the journalists at Bloomberg News two years - and presumably lots of legal fees - to pry information out of the Federal Reserve that should have been made public long ago. We now know that the Fed's secret $7.7 trillion lending program wasn't just the most massive bank bailout ever seen, and it wasn't just free money for mega-bankers - though it was certainly both of those things. It was also the greatest hoax in stock market history.

No, scratch that. It was the greatest hoax in the history of money. And it was built on lies. How many? Let us count the ways.

Here's the first one: The banks paid back all the money back that they were given. No, they didn't. They paid back the principal on these loans. But by obtaining loans at rates far below market value, we now know they received the equivalent of $13 billion in cash giveaways.

Here's another lie: Fed economists support a free-market economy.

Ben Bernanke is a conservative economist who claims to support a free-market system. But we now know that the Federal Reserve lent astonishing sums to US banks in secret, and Bernanke fought with all the resources at his disposal to ensure that this information didn't become public. He didn't just want it to be held back to avoid a panic during the crisis. He wanted it kept secret forever.

I don't know what you call somebody like that, but I know what you don't call him: A capitalist. Free markets need transparency, so that investors and customers can make informed decisions and 'the wisdom of the market' can prevail. Nobody wanted the market to do its job. When it came to banks, they wanted it to be blind, deaf, and dumb, unable to make sound judgments about their financial soundness.

They still want it that way. They don't want investors to know how badly Wall Street executives failed at their jobs. They don't want the free market to do what it does best - thin the herd so it's free of incompetent managers like the executives who still run our largest banks.

You can believe in the free market, ur you can believe in today's Wall Street. But you can't do both.

Here's another lie, one that's spread by Dimon and others: Giant banks are more efficient. Size brings efficiency in other kinds of business, but these banks needed massive help. America's six largest banks accounted on any given day for an average of 63 percent of the debt on these loans. The only thing they're more efficient at is wringing free money out of government-created institutions.

And, wow. Jamie Dimon sure is a hypocrite. As Bloomberg noted:

JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed's Term Auction Facility "at the request of the Federal Reserve to help motivate others to use the system." He didn't say that the New York-based bank's total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program's creation.

He also didn't mention that these favorable loans gave his bank nearly half a billion dollars in cash it otherwise wouldn't have had. Know what's convenient about that? It helps make up for the three-quarters of a billion Dimon's bank gave up to settle charges of bribery and corruption in Jefferson County, Alabama.

Chase borrowed massive sums of money, either because it was in bigger trouble than it has admitted or because it was bleeding an emergency public program out of greed. Either way, they weren't doing anybody a favor except themselves. How big a favor? Chase netted $457.9 million.

Citigroup's an even more extreme example. Once our largest bank (until continued mismanagement led to ongoing shrinkage). It only exists because Robert Rubin and other officials in the Clinton Administration,cleared the way for the largest merger in history with the enthusiastic support of the Republicans. That merger combined a bank with an insurance company, a harbinger of bad things to come in the risk area.

Citigroup's got the equivalent of a $1.8 billion gift, courtesy of Uncle Sam.

Bank of America CEO Brian Moynihan sneers at his critics, especially those who think you shouldn't foreclose on families without obtaining proof that you own their mortgage. "Oh, sure," he said in response to government demands, "we'll do our homework."

Bank of America's gift came to $1.5 billion.

Goldman Sachs shouldn't have been eligible for any Fed giveaways because it wasn't a commercial bank. But a special "waiver" allowed Goldman allowed to become commercial bank so it could be rescued from actions it took before it was a commercial bank. Before that it was an investment bank. Yet, strangely, it seems to have kept operating as an investment bank even after the transition, too, even though commercial banks aren't allowed to do that.

Understand that? Don't take it personally if you don't. You're not supposed to.

Goldman Sachs's take? Just under $1 billion.

Washington's always telling us that bankers may have done naughty things, but they weren't illegal things. That gets us to our next lie: There's no evidence that bank executives have committed crimes. Thanks to Massachusetts Attorney General Martha Coakley, we may be about to discover whether that's true regarding foreclosures and mortgage filings. But when it comes to stock fraud, the evidence is already piling up.

Continue reading »

enlarge

What a lovely, thoughtful thing to do, to make such a public minded gift. Of course, the more cynical among us might suspect Jamie Dimon simply hired the NYPD as his company's own special rent-a-cops. Via Odd Man Out:

JPMorgan Chase recently donated an unprecedented $4.6 million to the New York City Police Foundation. The gift was the largest in the history of the foundation and will enable the New York City Police Department to strengthen security in the Big Apple. The money will pay for 1,000 new patrol car laptops, as well as security monitoring software in the NYPD’s main data center.

New York City Police Commissioner Raymond Kelly sent CEO and Chairman Jamie Dimon a note expressing “profound gratitude” for the company’s donation.

“These officers put their lives on the line every day to keep us safe,” Dimon said. “We’re incredibly proud to help them build this program and let them know how much we value their hard work.”

From Naked Capitalism:

Now readers can point out that this gift is bupkis relative to the budget of the police department, which is close to $4 billion. But looking at it on a mathematical basis likely misses the incentives at work. Dimon is one of the most powerful and connected corporate leaders in Gotham City. If he thinks the police donation was worthwhile, he might encourage other bank and big company CEOs to make large donations.

And what sort of benefits might JPM get? It is unlikely that there would be anything as crass as an explicit quid pro quo. But it certainly is useful to be confident that the police are on your side, say if an executive or worse an entire desk is caught in a sex or drugs scandal. Recall that Charles Ferguson in Inside Job alleged that the use of hookers is pervasive on Wall Street (duh) and is invoiced to the banks.

Or the police might be extra protective of your interests. Today, OccupyWallStreet decided to march across the Brooklyn Bridge (a proud New York tradition) to Chase Manhattan Plaza in Brooklyn. Reports in the media indicate that the police at first seemed to be encouraging the protestors not only to cross the bridge, but were walking in front of the crowd, seemingly escorting them across.

The wee problem is that the police are in the street, and part of the crowd is also on the street (others are on a pedestrian walkway that is above street level). That puts them in violation of NYC rules that against interfering with traffic. Note the protesters were aware of the rules; they were careful to stay on the sidewalk on the way to the bridge.

Over 700 of the marchers were arrested, and the media has a rather amusing “he said, she said” account, with OccupyWallStreet claiming entrapment and the cops batting their baby blues and trying to look innocent.

Nothing as crass as an explicit quid pro quo! Just a little something to remind the cops that some people deserve more protection than others, and are likely to be very grateful for it. More here.

So it appears Tim Geithner is leaving soon. Well, his free market principles have hurt job creation and hurt progressive economics so I'm glad he's going, but guess whose name is being bandied around?

Jamie Dimon, Whiner-in-Chief.

FALL EXIT? Treasury Secretary Timothy Geithner would like to leave the Obama administration this fall if economic conditions are stronger and the debt ceiling debate is resolved in a timely manner, according to a person familiar with his thinking.

Possible replacements to be President Barack Obama’s top economic adviser, according to a senior administration official, include Erskine Bowles, White House chief of staff under President Bill Clinton, and Roger Altman, a prominent investment banker and former deputy Treasury secretary.

Jamie Dimon, chief executive of JPMorgan Chase, is considered a strong dark-horse candidate. Dimon has said he is not interested in public office but many on Wall Street believe he would accept the job if asked by Obama. But the White House will have to decide whether Dimon, who leads the most successful bank in the U.S., is too closely aligned with Wall Street.

The news of Geithner leaving has been on the blogs for a few days day and as a joke, guess what came up?

Atrios For Treasury Secretary I promise to hurt Jamie Dimon's feefees regularly and to not establish a government-endorsed predatory lending program.

Let's take a look at Dimon since Obama was elected.

— Jamie Dimon, chief executive of JPMorgan Chase, lived up to his reputation as a fierce defender of his profession on Thursday when he told listeners in Davos, including the president of France, that he was fed up with banker bashing.

Mr. Dimon said at the World Economic Forum that he was sick of “this constant refrain — bankers, bankers, bankers.”

And there's these fine moments of whinery:

Jamie Dimon: Don't be hatin' on bankers when it's all YOUR fault!

You've got to be kidding me, right? Bank CEO wants more politicians in their pockets

Did he really say that?

Wall Street Masters still Whining about Obama's words even after the bail out. It's all GOP for them now

As Digby says;

Yesterday a bunch of us were joking about Jamie Dimon becoming the new treasury secretary when Timothy Geithner departs. It was a lot of fun. Hahaha, how ridiculous would that be?

Very ridiculous.

DOWNLOADS: (620)

PLAYS: (2792)

Embed

Jamie Dimon kicked off his Sunday morning appearance on Fareed Zakaria's show with a bit of whine about how mean, mean, mean we all are to bankers. He kicks things right off by blaming the victims:

DIMON: OK. In the United States of America, only one-third of credit is provided by banks. Bank lending actually went up after Lehman Brothers failed, not down. It's a huge misconception. Two- thirds of credit is provided by individuals, corporations, pension plans, you know, et cetera. The huge reduction in credit supplied was the credit supplied in directly to the marketplace. In fact, if you go to any place around the world, you ask people, did you do something more conservative with your money after Lehman went down? Which everyone says, yes.

I would say, well, you caused the crisis. You got scared. You ran. It's perfectly legitimate as an individual protecting yourself. And JPMorgan last year lent or financed $1.4 trillion for corporations, individual around the world, up pretty substantially from the year before and I believe substantially from the year before that.

Really, Jamie Dimon? REALLY? We caused the crisis how? Were we the ones playing high stakes games with mortgages, lending money to people based on fraudulent, jacked up valuations and credit histories and then selling them off to the likes of YOU to gamble? Um no. Not so much.

Funny how the story changes. When he testified before the Financial Crisis Inquiry Commission, he said this:

"Reflecting on the causes of the crisis, Jamie Dimon, CEO of JPMorgan testified to the FCIC, "I blame the management teams 100% and...no one else. (Page 18)"

Or here, where he realizes what gambling with those brokered subprime loans cost JP Morgan (Page 91):

"JP Morgan CEO Jamie Dimon testified to the FCIC that his firm eventually ended its [mortgage] broker-originated business in 2009 after discovering the loans had more than twice the losses of the loans that JP Morgan itself originated."

Of course, 2009 was too late. Everything had gone to hell in handbasket by then, so rippy-rah-hoo for Jamie Dimon's stellar fiduciary standards.

Or here, where he's talking about how they were shocked -- SHOCKED -- to discover that home prices just don't keep rising when markets collapse (Page 111):

Continue reading »

(Limbaugh once again blames mortgage collapse on the government)

Ever since Wall Street was bailed out and the anger rose in the public's mind over what they did to the global economy, CEO's and other big time moneymakers have been acting like they live on another planet. It's hard living on millions of dollars a year, isn't it? The latest poutage is coming from The head of JPMorgan Chase & Co.

This might be the stupidest thing I've heard from the real entitlement society so far.

"When profits fall too sharply then capital will move somewhere else, where there is more money to be earned, for example non-regulated markets," Chief Executive Jamie Dimon said in the German mass circulation Sunday paper Welt am Sonntag.

"The question is, is that what regulators want?," said Dimon who heads the second-largest U.S. bank.

Dimon has been an outspoken critic of the Obama administration's proposed financial regulatory reforms, particularly of a proposed bailout fee on big banks which he has called a "punitive bank tax.

In the German interview, he also said the banking industry could do with more influence on politicians.

Both the industry and government wanted what was best for their country and the economic system but there were areas where the banks lacked possibilities to demonstrate their arguments to politicians and supply them with the right facts, he said.

This almost left me speechless. Do I really need to give you guys context and demonstrate how the Senate lives to fulfill all of their needs?

Let's take a look at Jamie Dimon and JP Morgan via the AFL-CIO:

In February 2010, Dimon received nearly $8 million in restricted stock units as part of his 2009 annual compensation. In addition to this stock award for 2009, he also received an additional $6,244,300 in special stock appreciation rights that vest over five years.[3]

--

According to the Los Angeles Times, JPMorgan Chase spent more than any other bank on lobbying in 2009. JPMorgan Chase boosted its lobbying expenses 13 percent in 2009 to $6.2 million, enough to pay for more than 30 lobbyists.[5]

And JP Morgan spent the most via the LA Times:

Even as the financial industry has sought to keep a low public profile, some of the country's largest banks have ramped up their spending on lobbying to fight off some of the stiffest regulatory proposals pending in Congress.

Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress.

The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.

"I have never seen such a scrum of bank lobbyists as I have in the last year -- and I've worked on quite a few bank issues over the years," said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. "It seems like everybody is out of work except for bank lobbyists."

Prometheus 6: It doesn't take much to make me happy

Bay Area Houston: Take a shotgun to a hearing in the Texas Capitol

Matthew Yglesias: The Battle Lines

OurFuture: The Case Against Jamie Dimon: Oligopoly, Pain and Systemic Risk in Five Slides

Petrelis Files: The organization behind a Palin speech got $3 million in government grants

Back Of Town: Time To Grieve

Apparently our president doesn't begrudge the Wall Streeters for making big bonuses. After all, Derek Jeter makes a lot of cash too.

The lead story on Bloomberg right now contains excerpts from an interview with Business Week which tells us:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

The point is that these bank executives are not free agents who are earning big bucks in fair competition; they run companies that are essentially wards of the state. There’s good reason to feel outraged at the growing appearance that we’re running a system of lemon socialism, in which losses are public but gains are private. And at the very least, you would think that Obama would understand the importance of acknowledging public anger over what’s happening.

But no. If the Bloomberg story is to be believed, Obama thinks his key to electoral success is to trumpet “the influence corporate leaders have had on his economic policies.”

We’re doomed.

Apparently Obama wanted to make sure the CEOs know he's on their side too. I mean, the poor CEOs have had their itty-bitty feelings hurt so much lately. Will you shed a tear with me in honor of the hard work these Wall Streeters do for the country even if we have to bail them out when they screw it up on a cataclysmic scale?

Joe. My. God.: True face of the 'Christian' right

The Bobblespeak Translations: Sabbath gasbags decoded

Words of Power: Ruminations on Zinn, Salinger, Obama, Pakistan, and the planet

Sensen No Sen: No One Is Responsible

Wall St. Cheat Sheet: Building a legal business empire on lies. Where is the MSM reporting on the fraud that led to the crash?

Rumproast: Why they're called 'wingnuts'