Tag Archives: JPMorgan Chase

White House Moving to Wall Street

04 Tuesday Jan 2011

Posted by in economy, Goldman Sachs, Obama, Obama administration, Politics, special interests, Wall Street

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Breaking news: In order to cut down on travel time through the revolving door for President Obama’s outgoing and incoming team of  advisers, the White House is moving from 1600 Pennsylvania Avenue. Here’s the new location:


Might as well be:

“President Barack Obama is considering naming William Daley, a JPMorgan Chase & Co. executive and former U.S. Commerce secretary, to a high-level administration post, possibly White House chief of staff, people familiar with the matter said.

[…]

After serving as president of SBC Communications for more than two years, he joined New York-based JPMorgan, the second- biggest U.S. bank by assets, in 2004, serving as Midwest chairman and the bank’s head of corporate responsibility.”

Corporate responsibility. Like a 25% increase in outsourcing to India in 2009. Like using the $25 billion in bailout money that was intended to loosen up lending to become “more active on the acquisition side.” That kind of “corporate responsibility?”

Oxy (clap clap clap) moron (clap clap clap). Oxy (clap clap clap) moron (clap clap clap).

Why Daley?

“The administration is seeking to repair relations with the business community after coming under fire from industry groups, including the U.S. Chamber of Commerce. The nation’s biggest business lobbying group opposed Obama’s health-care and financial-regulatory overhauls and committed $75 million to political ads in the midterm congressional elections, mainly directed against Democrats.

…Obama is generating more optimism among corporate executives after a series of actions and overtures, including a deal to extend the Bush-era tax cuts, efforts to boost exports such as a U.S.-South Korea free-trade agreement, and a loosening of controls on some technology sales.”

Well isn’t that just wonderful. Makes me feel all warm inside.

Then there’s the search for someone to replace Larry Summers as head of the National Economic Council (NEC):

“…it seems that the shortlist to replace Larry Summers at the NEC has been whittled down to three men — Gene Sperling, Roger Altman, and Richard Levin…The…notable characteristic of the three is that they’re all multi-millionaires with close ties to Wall Street. None more than Altman, of course, who has his own bank. But Levin is on the board of American Express, which paid him $181,362 in 2009, and where he has shares and “share equivalent units” worth $539,000.”

That leaves Gene Sperling, currently one of Geithner’s underlings, and the person who is reportedly the leading candidate for the job:

“Goldman Sachs paid Sperling $887,727 for advice on its charitable giving. That made the bank his highest-paying employer. Even Geithner’s chief of staff Patterson, who was a full-time lobbyist at the firm, did not make as much as Sperling did on a part-time basis. Patterson reported earning $637,492 from Goldman Sachs [in 2008].”

Ezra Klein:

“It is very hard to believe that Goldman Sachs wasn’t attempting to buy influence with a politically savvy economist who had good relations — and would later go to work for — the incoming Democratic administration.”

More on Sperling:

“…he has played key roles crafting the administration’s economic policies, most recently in forging Obama’s compromise with Republican leaders to extend the 2001 and 2003 income tax cuts.”

Just peachy.

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Social Security Cuts Straight Ahead

04 Sunday Jul 2010

Posted by in budget, Congress, economy, Obama, Obama administration, Politics, Wall Street

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Reading the road signs along the highway that leads to cutting or privatizing Social Security:

In December Blue Dog Jim Cooper, said a report which showed “that the governments unfunded liabilities are roughly $56 trillion” was “shocking.”  He called for a commission to address it.”

In January the White House signed on:

“[President] Obama said that he has made clear to his advisers that some of the difficult choices–particularly in regards to entitlement programs like Social Security and Medicare – should be made on his watch. “We’ve kicked this can down the road and now we are at the end of the road,” he said.”

In February, Jane Hamsher at Firedog lake reported that:

“…people who have been briefed on the administration’s plans indicate that things like raising the retirement age and cutting benefits are under consideration.”

The president then packed the Debt Commission “with members who have an overwhelming history of support for both benefit cuts and privatization of Social Security.”

Among those are the chairman of the commission, Erskine Bowles, who sits on the board at Morgan Stanley, and whose wife sits on the board at JPMorgan Chase. Can you say conflict of interest? Seems to me both those firms stand to benefit handsomely if Wall Street gets its grubby fingers in the Social Security trust fund.

The rules are that the commission recommendation must be approves by 14 of the 18 members:

“There are certainly enough votes on the right to block any significant tax increase proposals. There certainly aren’t enough votes anywhere to propose deep spending cuts in the bloated military budget. The only real question is whether there are five votes — enough to block passage — against cutting social programs, particularly Social Security.”

And in what’s becoming a pattern in this administration, much of the commission’s work is behind closed doors. Openness and transparency, anyone?

Then last Thursday Speaker Pelosi, under the cover of funding for Afghanistan, sneaked in language calling for an up or down vote on the commission’s recommendation, by a lame duck Congress in December.

Now comes this from Crooks and Liars:

“It’s a cynical political strategy almost beyond belief, but it’s becoming obvious that President Obama and the Democratic leaders plan to let the Republicans do what they’ve tried to do since the days of FDR: Cut Social Security.

[…]

When I wrote about this last week, some readers insisted it would “never” happen, and questioned whether there was any logical reason Obama would support benefit cuts. So I talked to a couple of D.C. Social Security activists this week and posed that very question. I was told that Obama’s reelection strategy was based on allowing Social Security cuts to win over independent voters. (Apparently it polls well with the Tea Party crowd.)”

[…]

Now, seriously. How can any intelligent person convince themselves that the Obama administration isn’t backing this? The commission is stacked with deficit hawks; the national deficit is on track to be more fiscally sound if they let the Bush tax cuts expire; and Social Security, which is a tax-transfer program, doesn’t have a damned thing to do with the deficit.”

One solution I don’t see from the Debt Commission—lifting the Social Security earnings cap. According to John Irons of the Economic Policy Institute, “eliminating the cap on taxable earnings would be sufficient to fully close the projected shortfall.”

And it would only affect about 6% of the population. But then again, those are the 6% who sit on these useless (for everyone but the elites) bi-partisan commissions and who write large checks to those in Congress who vote on their recommendations.

The Most Dangerous Man in the World

20 Tuesday Apr 2010

Posted by in bailout, economy, financial reform, financial regulation, Obama, Politics, too big to fail, Wall Street

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In an April 3 post at Baseline Scenario, Simon Johnson called JPMorgan Chase CEO Jamie Dimon “The Most Dangerous Man in America.” Johnson wrote:

“There are two kinds of bankers to fear.  The first is incompetent and runs a big bank.  This includes such people as Chuck Prince (formerly of Citigroup) and Ken Lewis (Bank of America).  These people run their banks onto the rocks – and end up costing the taxpayer a great deal of money.  But, on the other hand, you can see them coming and, if we ever get the politics of bank regulation straightened out again, work hard to contain the problems they present.

The second type of banker is much more dangerous.  This person understands how to control risk within a massive organization, manage political relationships across the political spectrum, and generate the right kind of public relations.  When all is said and done, this banker runs a big bank and – here’s the danger – makes it even bigger.

Jamie Dimon is by far the most dangerous American banker of this or any other recent generation.”

Following an interview with German newspaper Welt am Sonntag on Sunday, that should be amended to read “the most dangerous man in the world” as Dimon issued this not-so-veiled threat on the possibility of stricter bank regulations:

“When profits fall too sharply then capital will move somewhere else, where there is more money to be earned, for example non-regulated markets. The question is, is that what regulators want?”

Blackmail, anyone?

“[Dimon] also said the banking industry could do with more influence on politicians.”

More influence? According to the White House log, since October 30, 2009 Mr. Dimon has made 8, count ‘em 8, visits. What do you want to do, Jamie? Move in?

Jail the Banksters!

14 Wednesday Apr 2010

Posted by in bailout, economy, Financial Crisis, financial reform, Politics, too big to fail, Wall Street

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The recent revelations about the goings-on at Washington Mutual bring back an old question about our friends the banksters. When is somebody going to jail? How about just charged and indicted? Something.

“Officials at the failed banking operations of Washington Mutual Inc. securitized substantial volumes of risky, fraudulent loans in the run-up to the financial meltdown despite repeated internal warning signs, according to a Senate probe.

The subcommittee has obtained documents showing that “at a critical point Washington Mutual included loans in its securities because they were likely to suffer a high rate of default, and they failed to disclose that to the buyers,” Sen. Levin said. “They also allowed loans that had been identified as fraudulent to be sold to buyers, again without alerting buyers when the fraud was discovered.”

Isn’t fraud a crime? Why are these executives testifying before Congress and not in a court of law? But then again, where else but the Wall Street bizarro world is this possible ?:

“March 26 (Bloomberg) — JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and UBS AG were among more than a dozen Wall Street firms involved in a conspiracy to pay below-market interest rates to U.S. state and local governments on investments, according to documents filed in a U.S. Justice Department criminal antitrust case.

A government list of previously unidentified “co- conspirators” contains more than two dozen bankers at firms also including Bank of America Corp., Bear Stearns Cos., Societe Generale, two of General Electric Co.’s financial businesses and Salomon Smith Barney, the former unit of Citigroup Inc., according to documents filed in U.S. District Court in Manhattan on March 24.

…None of the firms or individuals named on the list has been charged with wrongdoing.”

Or what about this at Lehman Brothers?

“In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books.

The firm, called Hudson Castle, played a crucial, behind-the-scenes role at Lehman, according to an internal Lehman document and interviews with former employees. The relationship raises new questions about the extent to which Lehman obscured its financial condition before it plunged into bankruptcy.”

Isn’t that pretty much what Lay, Skilling, and Fastow were doing at Enron? So why no perp walks yet for the former execs at Lehman?

In the JPMorgan–Jefferson County scam, the crooked politicians went to jail, the banksters took the money and ran. Somebody say double standard?

Karl Denninger at Market Ticker nails it:

“The only deterrent available is to start throwing the scammers in prison.  All of them.  We can start with the people at WaMu and Lehman, then go down the list and for each and every firm that cooked its balance sheet, nailing them under SarBox  [Sarbanes-Oxley] as well.  While we’re at it jail every bank executive involved in crooked derivatives deals with municipal and state governments, starting with Jefferson County in Alabama.”

Amen.

The Case of JPMorgan and Jefferson County, Alabama

02 Friday Apr 2010

Posted by in bailout, economy, Financial Crisis, financial reform, financial regulation, Goldman Sachs, Politics, Wall Street

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In a March 26 letter to shareholders Jamie Dimon, CEO of JPMorgan Chase, wrote:

“The crisis of the past couple of years has had far-reaching consequences, among them the declining public image of banks and bankers…[W]hen we vilify whole industries…we are denigrating ourselves and much of what made this country successful…We also should refrain from indiscriminate blame of any whole group of people…While JPMorgan Chase certainly made its share of mistakes in this tumultuous time, our firm always has remained focused on the fundamentals of banking and the part we can play to support our clients and communities.”

One example of JPMorgan’s “support” for their “clients and communities” and a reason for the “declining public image of banks and bankers” can be found in another in a long line of excellent pieces by Matt Taibbi at Rolling Stone, entitled “Looting Main Street: How the nation’s biggest banks are ripping off American cities with the same predatory deals that brought down Greece”

The article is lengthy, but a must-read, in my opinion. It’s the story of bribery, corruption, and fraud in Jefferson County, Alabama. Briefly (or maybe not so briefly), it goes like this.

In the early 90’s the EPA sued the county in order to bring its antiquated sewer system into compliance with the Clean Water Act. In 1996 county commissioners decided to build the “Taj Mahal of sewage treatment plants” with cost estimates of $250 million. Taibbi:

“But in a wondrous demonstration of the possibilities of small-town graft and contract-padding, the price tag quickly swelled to more than $3 billion. County commissioners were literally pocketing wads of cash from builders and engineers and other contractors eager to get in on the project, while the county was forced to borrow obscene sums to pay for the rapidly spiraling costs.”

Originally the plan was to pay for the project by increasing sewer rates. But as costs continued to escalate county commissioners knew that sooner or later customers would revolt over the ever-increasing rates, so they started looking for “creative financing.” That’s music to the banksters ears and, true to form, they came riding to the rescue with their gobbledegook of variable rate refinancing and “swaps.”

Here’s where local JPMorgan rep Charles LeCroy meets crooked politician, with local “wheeler-dealer” Bill Blount as the middle man:

“LeCroy paid Blount millions of dollars, and Blount turned around and used the money to buy lavish gifts for his close friend Larry Langford, who at the time had just been elected president of the county commission…Langford then signed off on one after another of the deadly swap deals being pushed by LeCroy. Every time the county refinanced its sewer debt, JP Morgan made millions of dollars in fees.

Even more lucrative, each of the swap contracts contained clauses that mandated all sorts of penalties and payments in the event that something went wrong with the deal. In the mortgage business, this process is known as churning: You keep coming back over and over to refinance, and they keep “churning” you for more and more fees.”

But unbeknownst to LeCroy, Blount had a another suitor, Goldman Sachs. So:

“JP Morgan cut a separate deal with Goldman, paying the bank $3 million to [go away], with Blount taking a $300,000 cut of the side deal.”

The payoff for JPMorgan?:

“The deals wound up being the largest swap agreements in JP Morgan’s history. Making matters worse, the payoffs didn’t even wind up costing the bank a dime. As the SEC explained in a statement on the scam, JP Morgan “passed on the cost of the unlawful payments by charging the county higher interest rates on the swap transactions.”

In other words, not only did the bank bribe local politicians to take the [lousy] deal, they got local taxpayers to pay for the bribes. And because Jefferson County had no idea what kind of deal it was getting on the swaps, JP Morgan could basically charge whatever it wanted. According to an analysis of the swap deals commissioned by the county in 2007, taxpayers had been overcharged at least $93 million on the transactions.”

As happens  sooner or later with all Wall Street scams, the whole thing collapsed in early 2008. And as also happens with Wall Street scams, the banksters got the gold mine and the taxpayers of Jefferson County got the shaft.

But don’t think this is an isolated incident. Taibbi concludes:

“The destruction of Jefferson County reveals the basic battle plan of these modern barbarians, the way that banks like JP Morgan and Goldman Sachs have systematically set out to pillage towns and cities from Pittsburgh to Athens. These guys aren’t number-crunching whizzes making smart investments; what they do is find suckers in some municipal-finance department, corner them in complex lose-lose deals and flay them alive. In a complete subversion of free-market principles, they take no risk, score deals based on political influence rather than competition, keep consumers in the dark — and walk away with big money.”

Any questions about that “declining public image” of banks and bankers, Mr. Dimon?