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Monday, October 24, 2016

Past and former executives of megabank JPMorgan Chase & Co. appeared before the Senate Permanent Subcommittee on Investigations Friday to respond to a report on the  so-called “Whale Trades” that racked up losses of $6.2 billion.

“The JPMorgan Chase whale trades provide a startling and instructive case history of how synthetic credit derivatives have become a multi-billion-dollar source of risk within the U.S. banking system,” the report found.

The chairman of the subcommittee, Senator Carl Levin (D-MI), blasted both the bank that “roiled the $27 trillion credit derivatives market” and the regulators in the OCC who “fell down on the job” and ignored warning signs.

The bank’s new leadership seemed eager to take its licks and accept responsibility in hopes of averting more action by the government.

“This whole thing is regrettable and unacceptable,” Ashley Bacon, acting chief risk officer of the bank, told the subcommittee. “The onus of proof is on us now to demonstrate how this can’t happen in other places, how we weathered the financial crisis well everywhere else, and how we can make the entire firm a safer place to the satisfaction of you, everybody else and our regulators.”

The report found JPMorgan Chase systematically worked to hide the loss in order to avoid this exact kind of scrutiny.

“Our findings open a window into the hidden world of high-stakes derivatives trading by big banks,” said Levin. “It exposes a derivatives-trading culture at JPMorgan that piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight and misinformed the public.”

Jamie Dimon, the CEO of JPMorgan Chase & Co, has been an extremely vocal critic of regulations passed after the TARP bailouts of 2008 and 2009, which his company participated in. Last year he said regulations cost the industry $1 billion, which is obviously a tiny fraction of the risks that come from unregulated trading.

The financial crisis is said to have cost a total of $12.8 trillion.

A movement to limit the size of “too big to fail” banks picked up steam last week when when Attorney General Eric Holder indicated that the size of financial institutions may prevent prosecutions for fear of shocking global markets.

Senator Sherrod Brown (D-OH) introduced the SAFE Act in 2010 to limit the size of financial institutions. He is currently working with Senator David Vitter (R-LA) to determine the costs to taxpayers of subsidizing banks that are bigger now than they were before the financial crisis.

Naked Capitalism‘s Yves Smith, who liveblogged the hearing, noted, “In all the post-crisis hearings I’ve watched, I’ve never seen such unanimity between the Democrats and the Republicans on the severity of the problem and the need for more regulation.”

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Copyright 2013 The National Memo
  • The greed, ineptitude, and illegal activities of JP Morgan Chase, and other financial institutions, deserve to be investigated and those found guilty for what brought our economy to its knees should serve time in jail. Millions of Americans, and people throughout the world, paid a heavy price for what these greedy bastards did. Many lost their houses, their jobs, endured personal pain, and lost hope for a better future. Moreover, our credibility as a nation of laws and effective regulations was affected by the actions of a few, at the expense of many.

    • nobsartist

      The greed, ineptitude, and illegal activities of “fill in the blanks”.

      This same phrase works well with Obama or anyone from the government in it in place of the banks that they work so hard to protect.

      After all, if Obama was really who he presented himself to be, he would have used the Sherman Act to break up the banks 5 years ago.

      • CPAinNewYork

        Amen to that. Obama talks a good game, but he’s short on results.

      • TheSkalawag929

        Considering that the Sherman Act deals with trade restraint between the states and foreign countries and monopolies how would you make a case that it is pertinent to the baking fiasco we currently face?

        And take into consideration the fact that after its passage in 1890 it was only invoked rarely and even then it was not very successfully.

      • Wasn’t it Bush that deregulated the banks and cut the inspectors, kind of like Iraq. Letting everyone do their own thing got us into this mess.

        • adriancrutch

          Clinton signed the repeal of the Glass-Stegall Act which open the door to destruction.

  • Mark Forsyth

    Why would any democracy loving American trust anything coming from J.P.Morgan.Those bastards showed their true colors as long ago as the F.D.R. administration when they tried to replace it with a fascist coup.They were shit back then and they are shit now and their entire enterprise should be dismantled and the guilty imprisoned.I hope Elizabeth Warren gives them a good reaming.

    • nobsartist

      Having levin representing me, the real question is, why would a democrat vote for that jive ass?

      It is real hard to figure out who the real bastards are. levins brother has a house on Martha’s Vineyard and carl is going to get a seat on the board of directors from a defense contractor that he gave plenty of no bid contracts to while supporting the wars that we were lied into.

      It is difficult for me to understand how a congressman can afford a house in his district and then another on martha’s.

      So who are the real bastards?

      • Mark Forsyth

        You will have to decide that for yourself.Is Levin a fascist? I know who my gun is pointed at.

      • CPAinNewYork

        Do you think that he may have done something illegal or unethical?

        • nobsartist

          At this point, the way they change the rules, its difficult to figure out what is unethical or illegal anymore.

          I have a hard time figuring out how an ex school teacher turned congressman is able to afford a couple of houses, one on Martha’s Vineyard.

          Just wondering….do you think anything illegal or unethical was involved in collapsing our economy?

          Do you see any pattern in those who were bailed out and those who were left to lose everything?

          Do you think it is time to remove the immunity protection from lawsuits that our government enjoys?

          How would the supreme joke react to that?

          • Mark Forsyth

            Well we don’t have to wonder how the fascism loving judges would react ,we already know.

      • CPAinNewYork

        Unfortunately for us, they’re all bastards.

      • TheSkalawag929

        Your argument is totally transparent.
        Since you can’t present any evidence that puts J.P. Morgan Chase in a good light you attack those in charge of the investigation with bogus and irrelevant claims about relatives, houses on Martha’s Vineyard and positions on a board of directors after he leaves office.
        Your difficulty with understanding can be summed up as your inability to focus on the task at hand.

  • nobsartist

    they talk the talk but they just cant walk the walk.

    Nothing but hot air and bullshit. Especially from levin.

    • CPAinNewYork

      Don’t forget Obama. His puppet Attorney General Holder refuses to indict these bank bastards, using the lame excuse that because successfully prosecuting fraud requires proving intent, it’s very hard to get a conviction.

      So it’s hard. So what? Indict the dirtbags. Let’s get them on the hotseat. Even if they slither out from under the conviction, the trial will have the benefit of exposing their crimes to the public.

      Remember the savings and loan scandals? I don’t recall anyone in either government or the savings and loan industry going to jail, but the hearings led to the public’s realization that the government regulatory agency “Fizzlick” was in fact “in bed” with the industry.

      There was one additional benefit: it showed that Senator John McCain was one of the corrupt “Keating Five.” You don’t know about the “Keating Five”? Google it and see just how ethical John McCain is.

      • Their crimes are already exposed to the public! I want them in jail!! If I robbed a bank and only got $1000, I would certainly be in jail! They stole millions!!

        • nobsartist


      • nobsartist

        one of the bush crime family was prosecuted but they passed on mccain.

        yet mccain is still a senator

  • CPAinNewYork

    Very good article. So, why hasn’t Jamie Dimon been indicted?

  • These hearings are all for show! Nothing ever comes of them, no one goes to jail and no money is given up! What is the point! We all know they are crooks. So what? There’s nothing we can do about it! In the end, they will meet in the hallway and ask each other why they were so hard on each other! What a farce!

  • JDavidS

    The sleaze and ineptitude of Wall Street and the big banks can be summed up in one name…Jamie Dimon.

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