J.P. Morgan Bank Faces Criminal Charges

I've been covering JP Morgan Chase Bank for a long time, and there is just so much wrong with the way they do business! But because CEO Jamie Dimon is slippery and charismatic, they have drifted along without legal consequences even while making shady deals (The London Whale) and losing tons of money for their investors.

Let's face it - we need accountability to have closure for what happened in 2008 when the stock market crashed. And these Wall Street banks are still playing fast and loose with OUR money! As Elizabeth Warren said, "Too big to fail has become too big for trial."

Previous Posts:
May 12, 2012: The London Whale
May 18, 2012: JP Morgan Fall-Out Continues
June 14, 2012: Dimon Cozies Up to Senate Banking Committee
March 17, 2013: Senate Grills JP Morgan Bank

Now JP Morgan is under criminal investigation from both Federal and State Officials:

From Huffington Post

The Justice Department told JPMorgan in May that prosecutors had “preliminarily concluded” that the bank violated civil securities laws related to mortgage securities it packaged and sold from 2005 to 2007, the bank disclosed in a quarterly securities filing. JPMorgan has already been sued over similar practices by Eric Schneiderman, New York attorney general, and has settled similar cases brought by the Securities and Exchange Commission.
. . . JPMorgan -- once a darling in Washington -- on Wednesday disclosed a raft of expected enforcement actions that have been broadly mentioned by the bank and its chief executive and chairman, Jamie Dimon, but never before in such detail. Once finalized, the enforcement orders may further damage the bank’s already-battered reputation and lead to heightened scrutiny of its practices.
The Consumer Financial Protection Bureau is investigating JPMorgan's collection and sale of delinquent consumer credit card debt, including its use of sworn documents to pursue bad debts. Kamala Harris, California attorney general, has sued the bank over similar practices.

From Reuters

One of the major criticisms by homeowners, investors and politicians is that federal and state investigators have failed to bring criminal charges against high-level executives over lending and securitization activities that contributed to the housing and financial crises. No top executives at large Wall Street or commercial banks have been convicted of criminal charges related to the crises.
"Criminal probes of banks over MBS have been exceedingly rare," said Adam Levitin, a professor at Georgetown Law.

Senator Elizabeth Warren Explains It All ~ Updated

Elizabeth Warren has had a great week!

Harry Reid broke the filibuster deadlock with Mitch McConnell so that Obama's nominees for various posts can finally be confirmed. One of those is Richard Cordray who will direct that Consumer Financial Protection Bureau, a brainchild of Warren's . She has tirelessly pushed for this vacancy to be filled and at last it is!








Next, Warren has banded together with Republican Sen. John McCain and Independent Sen. Angus King to come up with a new-improved version of the Glass-Steagall Bill which kept our banks from failing for 50 years after the Great Depression. Here she is on Morning Joe:



And last but not least, here is Senator Warren on CNBC, telling off some of the smarmy talking heads on a network famous as a mouthpiece for big business. When they ask with a cynical sneer "Why Try?" to resurrect Glass-Steagall what they are really expressing is fear that someone like Senator Warren has the guts to stand up to both them and the unfair top-heavy financial system. And she doesn't take any prisoners!

Give 'em Hell, Senator Warren!

UPDATE: MSNBC asked YouTube to remove the CNBC smackdown due to copyright - or was it? Many thought they were going after the viral video because it made the anchors of CNBC appear stupid or at least stubbornly ignorant. Jim Cramer of CNBC also tweeted about it, pointing out that clip is still available on their website, and I have replaced it below.

But the fact remains that Elizabeth Warren isn't going to play pattycake with CNBC when they try to shrug her off or say she will never get anything done. Heck, CNBC pretty much cheered when Warren dropped out of the running for Consumer Protection. They thought they had seen the last of her. Ha! Then they didn't believe she would run for Senate - wrong. And horrors! She certainly wouldn't win against Scott Brown . . . oh wait . . .

There is some weird strain of thought that CNBC got beaten by Senator Warren. I like the senator but she had NO impact. Sorry..

— Jim Cramer (@jimcramer) July 17, 2013

More from Policy Mic

In the video clip removed by CNBC, Warren effectively defends the merits of reviving the Glass-Steagall Act and taking steps to prevent something like the Great Recession of 2008 from happening again. Her main point was that banking regulation does in fact keep the financial system "steady and secure" and was crucial in eradicating the banking boom-and-bust cycle from 1933 to 1980s. She even went as far to professorially correct the anchors' knowledge of banking regulations since the Great Depression. In response to anchor Brian Sullivan's comment that "We should tell the American consumer that no matter what we do, there will be bank boom and bust cycles" Warren said "no, that is just wrong … look at the history."

Even though CNBC claimed to take down the video for copyright infringements, they did not take down other YouTube videos that use CNBC footage. It seems like CNBC got embarrassed because this specific video went viral and showed its anchors being schooled by Warren. And bad news for CNBC, there is a phenomenon called the Streisand effect whereby attempts to hide or remove information has the unintended consequence of publicizing the information more widely, especially on the internet. Just like Beyoncé and her Super Bowl pictures, CNBC should expect even more people see Warren educate its anchors on banking regulation history.

Elizabeth Warren Shames Bank Regulators

Senator Elizabeth Warren hit the ground running in her first Banking Committee Hearing. She wasted no time lambasting the spineless regulators who are letting off the big banks with fines and slaps on the wrist instead of taking them to trial. Her goal was to expose the weakness of regulators who see fines as enough penalty for the crimes committed, and she pointed out that when these cases aren't taken to trial then no testimony of wrongdoing is ever put down on the record. So in effect, the bankers get off scott-free without any new information that congress could use to improve the banking system.

Marketwatch

“I want to note that there are district attorneys and U.S. attorneys who are out there everyday squeezing ordinary citizens on sometimes very thin grounds and taking them to trial to ‘make an example,’ as they put it,” she told bank regulators testifying at a Senate Banking Committee hearing. “I am really concerned that too-big-to-fail has become too-big-for-trial.”

. . . Warren acknowledged that trials are expensive but she insisted that if an agency is unwilling to go to trial it is because they are “too timid” or lack resources. She said that the consequence is that if large financial institutions can break the law and “drag in billions” in profits and settle, then they don’t have much incentive to follow the law.

“Every time there is a settlement and not a trial, it means we didn’t have the days and days and days of testimony about what those financial institutions were up to,” Warren said.

Senator Elizabeth Warren at the Feb. 14, 2013 Banking Committee Hearing titled "Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections." The witnesses were: The Honorable Mary Miller, Under Secretary for Domestic Finance, U.S. Department of the Treasury; The Honorable Daniel Tarullo, Governor, Board of Governors of the Federal Reserve System; The Honorable Martin Gruenberg, Chairman, Federal Deposit Insurance Corporation; The Honorable Tom Curry, Comptroller, Office of the Comptroller of the Currency; The Honorable Richard Cordray, Director, Consumer Financial Protection Bureau; The Honorable Elisse Walter, Chairman, U.S. Securities and Exchange Commission; and The Honorable Gary Gensler, Chairman, U.S. Commodity Futures Trading Commission.

Elizabeth Warren Will Serve on Banking Committee

Sources told Huffington Post today that Senator Elizabeth Warren, D-MA, has been tapped to serve on the Banking Committee. This is happy news and a coup for Democrats since Warren, a consumer advocate and economics expert, was blocked by Republicans from serving as head of Consumer Financial Protection Bureau during Obama's first term.

From Wall Street Journal

Ms. Warren, who beat Republican Sen. Scott Brown for the Senate seat in November, emerged as a high-profile Wall Street critic after the financial crisis and hit on many of the same populist themes during her campaign. "Wall Street CEOs, the same ones who wrecked our economy...still strut around Congress...demanding favors," she said in her speech at the Democratic National Convention in September.

She embraced several policy positions that bankers dislike, including calling for a return to Glass-Steagall, the Depression-era law that separated commercial and investment banks.

. . . Several financial industry officials admit they're concerned about Ms. Warren being on the panel, given her policy positions and industry criticisms, but they said they don't know of any banks or lobbyists working against her selection.

With Ms. Warren on the banking panel, it may be harder for Republican critics of that agency and the banking industry to win any changes, such as replacing its director with a bipartisan commission structure.

Warnings About the Eurozone

The Republicans can blame President Obama or do-nothing Ben Bernanke for all the economic problems, but this mess in the Eurozone gets worse week after week, and while you can possibly put blame on the Bush Administration and Wall Street for starting the crisis in Europe, this is also a political problem that only those countries can solve. However, while we wait for that to happen, the angst and fear emanating from the Eurozone make the markets seem unstable even on a good day, and every weekend there is some dire warning just before the Monday opening. This week is no different.

A few weeks ago, Mario Draghi, European Central Bank President, made a speech promising to do "whatever it takes" to save the Euro. But his words didn't calm the markets, which instead reacted negatively. They just aren't buying what he is selling, so to speak. Then he spoke again last Thursday, to mixed reviews.

"It's pointless to bet against the Euro," he said.


Can Draghi Turn the EU Ship Around?

Draghi, when he spoke late last week in Frankfurt, did not step away from his sweeping “whatever it takes” reassurance of the week before. In fact, he reaffirmed that the ECB would enter the bond markets to keep sovereign borrowing rates down. And he put this every which way he could. The central bank would “undertake outright open-market operations of a size adequate to reach its objective.” Interest rates, he said later, “that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner.”

What changed? Nothing of consequence. Draghi spoke a little more technocratically, offering details and leaving behind the billboard headlines. He implicitly acknowledged a target yield on European sovereign debt. That amounts to another commitment to whatever it takes.

In the meantime, Germany’s central bank president, Jens Weidmann, repeated that Germany was against the ECB’s latest thinking about bond buying.

Meanwhile: Italy's President is in a panic, and sees the Euro collapsing:

Mario Monti Sees Euro Alliance Dissolving

Monti, in an interview with Germany’s Der Spiegel magazine published yesterday, said that disagreements within the 17- nation euro area are detracting from the policy response to the debt crisis and undermining the future of the European Union.

“The tensions that have accompanied the euro zone in the past years are already showing signs of a psychological dissolution of Europe,” Monti told Der Spiegel. While he backed the ECB’s willingness to address “severe malfunctioning” in the government bond market, Monti said the problems “have to be solved quickly now so that there’s no further uncertainty about the euro zone’s ability to overcome the crisis.”

. . . Monti told Spiegel that he intends to stay in office until April 2013, when Italy is due to hold elections, and he hopes he “can save Italy from financial ruin until then, with the moral support of some European friends, and Germany foremost. But I say very clearly: moral support, not financial.”

An article reprinted on CNBC from Financial Times hints that Spain might actually be leaving the Eurozone:

Wall Street Warned of Possible Euro Exit

The eurozone continues to be the predominant concern of US bank executives, ahead of the faltering US recovery. Last summer the worsening of the eurozone crisis produced wild swings in US banks’ stock prices and led the Securities and Exchange Commission to demand they provide more disclosure of assets in Spain, Greece, Italy, Ireland and Portugal.

. . . Last week the speculation on whether Mario Draghi, European Central Bank president, would take more aggressive action to tackle the crisis produced further gyrations in US stock prices.

One senior Wall Street executive said his bank was approaching derivatives counterparties to say: “‘We’ve got this contract, it’s in euros, what I want to know is in the event that Spain were to be redenominated are we going to end up being adversaries on this or can we just agree that this is a euro contact? Let’s just move it to London law so we each agree that we know where we stand.’

Romney's "Strange" Taxes "Push Envelope to the Edge"

These two pundits really nail Romney on his mysterious taxes. Sorry, Ann, this story isn't going away any time soon.

Steve Rattner on CNN

"If you say to your tax people, as he seems to have done, 'I want every trick in the book. I want to push this to the edge,'" Rattner said during an appearance on "Fareed Zakaria GPS" on CNN. "I will tell you that as a private equity guy, I'm familiar with many of the things that he did. And I know many people who have done many of the things that he did. I do not know anyone who did everything that he did."
"Some of what he did, like the IRA, I have asked fellow private equity guys," Rattner said, referencing the account in which Romney has stored up to $100 million tax-free. "None of us had even known this was a possible trick, if you will. He has pushed the envelope all the way to the edge, to his benefit, and I think that Americans would find that pretty distasteful."

Chris Hayes on MSNBC Via RealClearPolitics

"Look, the taxes of high -- of extremely wealthy people are bizarre, strange and alienating," MSNBC's Chris Hayes said on "The Last Word" tonight. "And the reason is that they pay people a lot of money to game the system. That's explicitly what it is. And the more of that you see -- literally if you chose someone with Mitt Romney's net worth at random and looked at their tax returns, they would look crazy. You wouldn't be able to understand them. They would have all sort of bizarrely constituted corporations incorporated in the Cayman Islands. They might have a Swiss bank account to bet against the dollar. They would have all these things."

"What's so remarkable to me about the story is that the embarrassment here isn't personal," Hayes observed. "The embarrassment is about what this says about how the entire system functions. This is how the system functions. We no longer have the ability in this country to really tax people at the top. And that is the existential statement about the strength of the American state which is: Can you actually tax the wealthiest people in your society? If you can't, if you can't like Greece couldn't, we see how that goes." "Societies that are in decline or low on the development index have a very hard time extracting money, taxing money from the elites in their society. And that is the direction which we are headed and that is what is represented in the Mitt Romney tax return," he concluded. "Okay, that is an officially brilliant observation about what's going on here and what's at stake," host Lawrence O'Donnell said.

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Obama Ad Tackles Romney's Offshore Accounts

This new ad is awesome! How many ordinary Americans know someone with offshore accounts? I would wager about One Percent of us do. ;) And in case you aren't familiar with the Cayman Islands, I've thrown in a video about them. "Service is excellent."

Romney Exposed by Vanity Fair

Vanity Fair has a bombshell investigative article on Mitt Romney's holdings in the Caymen Islands and elsewhere, as well as some explanation of how Bain Capital preyed on companies in order to raid their pension funds, which they would then roll into other sketchy investments.

Even though the reporters say several times that Bain isn't doing anything exactly illegal, I found the article quite disturbing. It's a must read!

Vanity Fair: Where the Money Lives

Something is fishy about all this - no pun intended. And I might add I normally wouldn't care, and most people in our country wouldn't care at all since we expect rich people to lie about their assets and hide them in shelters, but Mitt Romney is running for President! We have to hold him to some kind of standard. Remember how Hillary Clinton was dragged through the mud just for earning money on a legitimate investment? That was nothing compared to this.

The two paragraphs below were eye-opening. When is a "blind trust" not so blind?

Page One:

. . . there is a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., which has been described in securities filings as “a Bermuda corporation wholly owned by W. Mitt Romney.” It could be that Sankaty is an old vehicle with little importance, but Romney appears to have treated it rather carefully. He set it up in 1997, then transferred it to his wife’s newly created blind trust on January 1, 2003, the day before he was inaugurated as Massachusetts’s governor. The director and president of this entity is R. Bradford Malt, the trustee of the blind trust and Romney’s personal lawyer. Romney failed to list this entity on several financial disclosures, even though such a closely held entity would not qualify as an “excepted investment fund” that would not need to be on his disclosure forms. He finally included it on his 2010 tax return. Even after examining that return, we have no idea what is in this company, but it could be valuable, meaning that it is possible Romney’s wealth is even greater than previous estimates.

Page Two:

. . . All the assets on Mitt’s financial disclosures are in blind trusts or retirement accounts held by him and Ann. Blind trusts are designed to avoid conflicts of interest for those in public office by having politicians’ assets managed by independent trustees. The Romneys’ blind trust was created when Mitt was elected governor of Massachusetts. Curiously, the Romneys appointed Bradford Malt as their trustee. It’s certainly true that under Malt the trusts don’t appear to be as blind as they might be: for instance, in 2010 the Romneys invested $10 million in the start-up of the Solamere Founders Fund, co-founded by their eldest son, Tagg, and Spencer Zwick, Romney’s onetime top campaign fund-raiser; Solamere is now in the Ann Romney blind trust. Malt has said he invested in Solamere without consulting Mitt or Ann and explained he liked Solamere because of its diversified approach and because he knew the founders and had confidence in them

Economic News: Major Banks Downgraded as Stocks Fall

There is no good economic news. The only bright side is that people were too focused on the Supreme Court and the Sandusky Trial to let this bother them. *sigh* That is a sad state of affairs.
For the preoccupied, this is how it all unfolded over the past few days: Ben Bernanke, Head of the Federal Reserve, held a press conference on Wednesday in which he basically said our economy is going sideways and he's not going to do too much about it except keep the interest rates near zero. The Stock Market reacted today by going down . . . down . . . down. Then to top that off, Moodys announced late in the day that they were downgrading nearly every major bank In THE WORLD.

That can't be good.

About Bernanke, from Wall Street Journal:

During his press conference Wednesday, Federal Reserve Chairman Ben Bernanke said monetary policy had been helping the general public. In particular, borrowers are benefiting from extremely low interest rates.
. . . Policy makers hope cheap borrowing will spur businesses and consumers to finance big purchases to boost demand.
What tends to be glossed over is the flip side to the Fed’s zero-rate strategy: Savers are getting whacked. And while some portion of interest earned is left to accumulate in savings account, any loss of income is a drag on consumer spending and consumers’ sense of financial well-being.

Bernanke mainly said that the Fed would act more aggresively if things got worse, implying that the economy will certainly get worse. That was not the optimistic message that markets wanted to hear, according to Nasdaq:

"Growth in employment has slowed in recent months," the Fed said in its policy statement, adding that "household spending appears to be growing at a somewhat slower pace than earlier in the year" and that financial strains from overseas posed "significant downside risks to the economic outlook."
Investors were initially disappointed the Fed didn't take more aggressive action Wednesday. The Dow Jones Industrial Average finished the day down 12.94 points, or 0.1%, to 12824.39, after at one point dropping by nearly 100 points.

Bloomberg: Stocks Tumble Due to Global Slowdown

U.S. stocks tumbled, while commodities entered a bear market, after signals of a global slowdown in manufacturing added to disappointing housing and labor market data at the world’s largest economy.
Stocks from Hong Kong to London and Sao Paulo slumped on concern about a global slowdown. Data showed euro-area manufacturing shrank at the fastest pace in three years and a Chinese output gauge indicated contraction. More Americans than forecast filed claims for jobless benefits, manufacturing in the Philadelphia region shrank and sales of existing homes fell.
The reports came out a day after the Federal Reserve lowered its growth and employment estimates while signaling it may add to its record stimulus. The central bank yesterday extended its so-called Operation Twist program to replace short- term bonds with longer-term debt, disappointing some investors who expected more asset purchases. Former Fed Chairman Alan Greenspan today said the U.S. economy “looks very sluggish.”

Reuters: Moody's Downgrades 15 Banks

Financial markets have been bracing for the credit rating actions since February, when Moody's Investors Service said it had launched a review of 17 banks with global capital markets operations. These companies face diminished profitability and growth prospects due to difficult operating conditions, increased regulation and other factors, Moody's said.
. . . "The biggest surprise is the three-notch downgrade of Credit Suisse, which no one was looking for," said Mark Grant, managing director at Southwest Securities Inc. "In fact, it was Morgan Stanley that was supposed to be downgraded by that amount and Morgan received only two notches of cuts."
. . . Bank stocks fell on Thursday as investors prepared for an announcement, which leaked to the market as Moody's informed banks that it was coming, according to sources.
Morgan Stanley shares declined nearly 1.7 percent to $13.96 (8.94 pounds), while Bank of America shares fell nearly 4 percent to $7.82. The KBW Banks Index was down 2.3 percent.
But after suffering only a two-notch cut, instead of three as anticipated, Morgan Stanley shares rose about 3 percent in after-hours trade.

In addition to Morgan Stanley, downgraded by two notches were Barclays, BNP Paribas, Royal Bank of Canada, Citigroup, Goldman Sachs Group, JPMorgan Chase, Credit Agricole, Deutsche Bank, and UBS. Falling one notch were Bank of America, HSBC Holdings, Royal Bank of Scotland and Societe Generale.
Nomura and Macquarie were included in an original list of global banks, but have already been downgraded.

Greeks Go Conservative, May Stay in Eurozone

The Greek Elections are over now and the right-leaning New Democracy government won led by Antonis Samaras, who spoke of "a new national unity in a European direction." They still have to form a government and prove stability to the rest of Europe, but this is an encouraging outcome if Greece wants to remain in the Eurozone.




From MSNBC:

Sunday's vote was seen as crucial for Europe and the world, since it could determine whether Greece was forced to leave the joint euro currency, a move that could have potentially catastrophic consequences for other ailing European nations and the global economy. As central banks stood ready to intervene in case of financial turmoil, Greece held its second national election in six weeks after an inconclusive ballot on May 6.

The Eurozone's finance ministers said the outcome should allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth.

"The Eurogroup acknowledges the considerable efforts already made by the Greek citizens and is convinced that continued fiscal and structural reforms are Greece's best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area," the group said in a statement.

"We congratulate the Greek people on conducting their election in this difficult time," the White House said in a statement. "We hope this election will lead quickly to the formation of a new government that can make timely progress on the economic challenges facing the Greek people."