Category Archives: Banking industry

The Real Bombshell in the MF Global Post Mortem

The report that John Giddens, the bankruptcy trustee in MF Global, released Monday is thorough and confirms many of the observations made in journalistic accounts of the firm’s collapse, particularly regarding inadequate risk and accounting controls, JP Morgan’s aggressive posture greatly increasing the liquidity squeeze. But a stunning revelation that comes early in the account and is central to the failure of the firm does not get the emphasis that it warrants.

The FDIC Continues to Promote the Fantasy That It Can Resolve Megabanks

Due to being a bit under the gun before taking off for our holiday (I hope you all enjoyed the posts from Matt Stoller, Lambert, and the other guest writers), we didn’t address a May 10 speech by the acting FDIC chairman, Martin Gruenberg, on the FDIC’s current thinking on how to resolve so called systemically important financial institutions, or SIFIs. I’m turning to this despite the delay because I see some people who ought to know better, such as the normally solid John Hussmann, taking the FDIC”s claims at face value.

Barney Frank: Obama Rejected Bush Administration Concession to Write Down Mortgages

Here’s Barney Frank, in an exit interview recently in New York Magazine, revealing unwittingly that Obama during the transition rejected a Bush administration concession to write down mortgages. Here’s what Barney said.

The mortgage crisis was worsened this past time because critical decisions were made during the transition between Bush and Obama. We voted the TARP out. The TARP was basically being administered by Hank Paulson as the last man home in a lame duck, and I was disappointed. I tried to get them to use the TARP to put some leverage on the banks to do more about mortgages, and Paulson at first resisted that, he just wanted to get the money out. And after he got the first chunk of money out, he would have had to ask for a second chunk, he said, all right, I’ll tell you what, I’ll ask for that second chunk and I’ll use some of that as leverage on mortgages, but I’m not going to do that unless Obama asks for it. This is now December, so we tried to get the Obama people to ask him and they wouldn’t do it.

Occupy Wall Street Alternative Banking Group Files Amicus Brief on Side of Judge Rakoff in SEC v. Citigroup

Below you’ll find the amicus brief filed by the Alternative Banking Group on May 21 in support of Judge Jed Rakoff’s ruling questioning a proposed $285 million settlement in the SEC v. Citigroup Capital Markets (ruing here, summary and discussion here).

Tom Ferguson: Senate Banking Chair Calls Jamie Dimon to Testify -– But JP Morgan Chase is His Biggest Contributor!

By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow at the Roosevelt Institute. Cross posted from Alternet

It’s good that the watchdog is barking, but we’d all better watch closely to see if it will bite.

Europe is Falling Apart

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from http://www.macrobusiness.com.au/2012/05/europes-problems-multiply/“>MacroBusiness.

It feels as if Europe has rolled the clocks back to 2011 as the effects of the ECB’s LTRO have now well and truly warn off and the markets appear to have reconnected with idea that the fundamental issues of the Eurozone have never been addressed.

More Evidence of Lax Oversight of JP Morgan Chief Investment Office

As reporters keep digging into the “London Whale” story, the picture that emerges about the caliber of risk controls and management supervision at JP Morgan only look worse and worse.

Recovery Begins When Addiction Ends: An Open Letter to Jamie Dimon

By the Alternative Banking Working Group of Occupy Wall Street

Dear Jamie Dimon:

We, the Alternative Banking Working Group of Occupy Wall Street, are staging an intervention on your behalf.

Michael Crimmins: Why the Cops Should be Knocking on Jamie Dimon’s Door Soon

By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks

The scandal surrounding JP Morgan’s losses in its Chief Investment Office is not going away, and for good reason. Its trading book continues to lose money at an astounding rate. The most recent report estimates that the losses have increased by at least 50% more than the bank’s original loss estimates. The total damage is anyone’s guess at this point.

This fiasco is beginning to look a lot like accounting control fraud.

Mirabile Dictu! The SEC Finally Investigates Magnetar

More than four years after Serena Ng and Carrick Mollencamp of the Wall Street Journal first took notice of the highly destructive ways of the Chicago hedge fund Magnetar, which created a series of toxic CDOs, the SEC finally appears to be taking a serious look at some of their deals.

Abigail Field: Jamie Dimon’s Hedge Fund

By Abigail Caplovitz Field, a freelance writer and attorney. Cross posted from Reality Check

Jamie Dimon, John Stumpf, and to a lesser extent, Vikram Pandit and Bryan Moynihan, are running massive hedge funds. They’re placing enormous, incredibly risky bets.

So Much for Schneiderman Being Tough on Wall Street

As regular readers no doubt recall, Eric Schneiderman abandoned the dissident state attorney general effort to get a better mortgage settlement, assuring the Administration a win on this sellout to the banks. The bright shiny prize Schneiderman got in return for his betrayal was serving as one of five co-chairmen on a Federal mortgage task force, which appears to have gotten close to nada in resources beyond the staff in various Federal agencies who were already working on mortgage investigations. And given that were are now close to a full five years past the origination of toxic subprime deals, those existing investigations don’t exactly look to have been pursued with much in the way of vigor.

Mark Ames: Failing Up With Citigroup’s Dick Parsons

Last month, shareholders finally rebelled against Citigroup, the worst of the Too Big To Fail bailout disasters, by filing a lawsuit against outgoing chairman Dick Parsons and handful of executives for stuffing their pockets while running the bank into the ground.

Anyone familiar with Dick Parsons’ past could have told you his term as Citigroup’s chairman would end like this: Shareholder lawsuits, executive pay scandals, and corporate failure on a colossal scale.

“What Scares Me Isn’t $2 Billion Loss JP Morgan Made, What Scares Me is the Record $19 Billion in Profits”

Even with all the focus on JP Morgan’s loss bomb in the past few days, some critical elements of the story have not gotten the scrutiny they deserve, and Amar Bhide fills those gaps.