This is a great short film by Ed Asner, reminiscent of the simplistic Schoolhouse Rock vids from the 1970s, explaining the stock market crash of 2008 in terms of the greedy 1% versus the struggling 99%. We need more clear explanations like this to give everyone some perspective - especially folks who vote against their own self-interests time after time. It's obvious to the Democrats that the super-wealthy just need to pay more taxes and honor the social contract, but it will take years to reverse the damage done by the Tea Party and Grover Norquist.
Still - this is an educational and well-done video. Thanks, Mr. Asner ~ Lou Grant would be proud! :)
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."
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.
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.
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..
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."
The saga of the JP Morgan Bank "London Whale" disaster continued last week with the release of a major Senate report and public hearings on Capital Hill.
During a press briefing Thursday, Levin said the investigation of 90,000 documents, and more than 200 phone conversation and instant messages, showed how the bank "ignored limits on risk taking, dodged oversight and misinformed the public."
But the report also criticized regulators at the Office of the Comptroller of the Currency for not following up on red flags.
Senator Carl Levin, at a hearing on JPMorgan's ill-fated "whale" trades, slammed the bank's trading operation that lost $6.2 billion over just a few months in 2012 as a "runaway train barreling through every risk limit."
"Derivative values that can't be trusted are a serious risk to our financial system," said Levin, the chairman of the Senate subcommittee on investigations.
The incident is a "reminder you just can't rely on a major bank... without a strong regulator looking over," Levin added.
A 300-page report by the subcommittee said that JPMorgan kept adding risky bets on top of earlier ones, hid losses, disregarded its own rules for risk limits, avoided oversight by its regulator and "misinformed" investors, regulators and the public.
Former and current JPMorgan executives testifying at the Senate hearing painted a picture of confusion and disbelief over the scale of the losses, which blindsided the Wall Street powerhouse in the first quarter of last year.
Ina Drew, JPMorgan's chief investment officer at the time with responsibility for the London trading operation which racked up the losses, admitted errors even as she pointed the finger at others.
"I was, and I remain, deeply disappointed and saddened that such significant losses occurred in the business unit I oversaw," said Drew, who resigned last year to take responsibility for the debacle, according to her prepared testimony.
But Drew also pointed a finger at London employees that she said misled her on the scale of the problem and "let me, and the company, down."
Ah, Elizabeth Warren - a true hero for the Left! Remember that during a hearing recently she said she worried that "too big to fail had become too big for trial."
Then last week, Att. General Eric Holder basically confirmed her worst fear by making one of his usual matter-of-fact milquetoast statement that in actuality was a bit scary, explaining why he just couldn't let prosecutors go after Banks that had destroyed our economy and ripped people off for millions of dollars. Well, if he can't do it, who can?
...Eric Holder made this rather startling confession in testimony before the Senate Judiciary Committee on Wednesday, The Hill reports. It could be a key moment in the debate over whether to do something about the size and complexity of our biggest banks, which have only gotten bigger and more systemically important since the financial crisis.
"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," Holder said, according to The Hill. "And I think that is a function of the fact that some of these institutions have become too large."
Holder's comments don't come as a total surprise. His underlings had already made similar confessions to The New York Times last year, after they declined to prosecute HSBC for flagrant, years-long violations of money-laundering laws, out of fear that doing so would hurt the global economy. Lanny Breuer, formerly in charge of doling out the Justice Department's wrist slaps to banks, told Frontline as much in the documentary "The Untouchables," which aired in January.
Warren demanded answers from a panel of federal regulators as to why the multinational bank HSBC got off with a fine for money laundering for Mexican drug cartels — along with violating international sanctions against several countries, including Iran and Libya — when people caught with drugs go to jail for life.
“No one individual went to trial, no individual was banned from banking and there was no hearing to consider shutting down HSBC’s activities here in the United States,” Warren said. “So … what does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
When her questions were repeatedly dodged by Treasury’s overseer of financial crimes David Cohen and Federal Reserve governor Jerome Powell, it set her off.
“If you’re caught with an ounce of cocaine, the chances are good you’re going to go to jail. If it happens repeatedly, you may go to jail for the rest of your life,” Warren said. “But evidently, if you launder nearly a billion dollars for drug cartels and violate international sanctions, your company pays a fine and you go home and sleep in your own bed at night — every single individual associated with this. I just — I think that’s fundamentally wrong.”
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.
“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.
Unions representing civil servants in Scranton, Pa., filed suit Tuesday after the mayor cut pay for police, firefighters, garbage collectors and other public workers to minimum wage, saying that was all the city could afford. Unions representing police, fire and public workers in the city of 76,000 filed three lawsuits after the city defied a judge's order and issued paychecks Friday that paid 398 city employees at the minimum wage of $7.25 an hour, according to the Scranton Times-Tribune.
The lawsuits against Mayor Chris Doherty include one filed in federal court under the Fair Labor Standards Act accusing the city of failing to pay wages on time and failing to pay overtime. Another lawsuit seeks to hold the mayor in contempt for violating a judges order. Yet another alleges that benefits for disabled police and firefighters were cut without a hearing.
Bloomberg Interview with Warren BuffetHe says Euro will fail without rule changes in European banking: "It can't survive with the present rules - that's what they're learning. So the question is, can seventeen countries get together in a way to essentially re-do something in some fundamental ways that require much closer cooperation when they're individual conditions are so different."
On the Supreme Court Health Care Ruling: "A lot of businessmen complain about corporate taxes. Corporate taxes are less than 2% of GDP. So if you eliminated all of corporate taxes, you've got seven points against you on health care. It's the tapeworm essentially of the American economy and we've not dealt with that yet. Obamacare is a step in the right direction."
Many More Quotes from Buffett on CNBC
. . . We trust that the banking system is setting today’s rate based on its best guess about the future worth of the money. And we assume that guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for the dough. But suppose our assumption is wrong. Suppose the bankers are manipulating the interest rate so they can place bets with the money you lend or repay them . . .
. . . Sad to say, there’s reason to believe this has been going on, or something very much like it. This is what the emerging scandal over “Libor” (short for “London interbank offered rate”) is all about. Libor is the benchmark for trillions of dollars of loans worldwide – mortgage loans, small-business loans, personal loans. It’s compiled by averaging the rates at which the major banks say they borrow.
So far, the scandal has been limited to Barclay’s, a big London-based bank that just paid $453 million to U.S. and British bank regulators, whose top executives have been forced to resign, and whose traders’ emails give a chilling picture of how easily they got their colleagues to rig interest rates in order to make big bucks. (Robert Diamond, Jr., the former Barclay CEO who was forced to resign, said the emails made him “physically ill” – perhaps because they so patently reveal the corruption.)
But Wall Street has almost surely been involved in the same practice, including the usual suspects — JPMorgan Chase, Citigroup, and Bank of America – because every major bank participates in setting the Libor rate, and Barclay’s couldn’t have rigged it without their witting involvement. In fact, Barclay’s defense has been that every major bank was fixing Libor in the same way, and for the same reason. And Barclays is “cooperating” (i.e., giving damning evidence about other big banks) with the Justice Department and other regulators in order to avoid steeper penalties or criminal prosecutions, so the fireworks have just begun. ~ more at link~
Bruno Iksil, the JPMorgan Chase trader known as the "London Whale" has left the bank in the wake of a trading scandal, a person familiar with the situation said. Iksil's departure had been widely expected after he became the focus of attention in the trading scandal, because of the huge positions he took in credit markets. Achilles Macris, who headed CIO in Europe, and a third colleague, Martin Javier-Artajo, were also no longer listed in the company's internal employment database as of Thursday, the Wall Street Journal reported earlier on Friday.
Overall, the bank's second-quarter earnings fell 8.7% from the year-ago quarter, as the bank saw a 16% decline in revenue. J.P. Morgan has been in the spotlight since early April as its outsized, complex trades on derivatives tied to corporate bonds came under intense scrutiny. The Justice Department and the Securities and Exchange Commission are investigating the trading loss, which has played into the Washington political and policy battle over the shape of financial overhaul. Just prior to releasing its results early Friday, the bank said it would reduce its previously reported first-quarter profit by 8.5%, or $459 million, on valuations of certain positions in the chief investment office's synthetic credit portfolio. It said there was "a material weakness" in its internal control over financial reporting for the first quarter, and its internal review is continuing.
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.
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.
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.”
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.
JP Morgan CEO Jamie Dimon got a warm and fuzzy welcome from the Senate Banking Committee. In fact, they rolled out the red carpet for the notorious banker who just lost billions due to the "London Whale" hedge fund debacle now being investigated by the FBI. Senators were falling all over themselves asking softball questions, while Dimon sailed calmly through it and offered only non-apology apologies while his stock rose on Wall Street.
He knew he didn't have to show any real remorse because JP Morgan was a donor to everyone in the room including the Banking Committee Chairman. They are all in bed together.
New York Post called this The Cozy and the Clueless:
“We have let a lot of people down, and we are sorry for it,” Dimon told the committee, which says it wants to know if the company is taking abnormal risk that could come back to bite taxpayers.
In other words, was JPMorgan gambling instead of simply investing when one of its employees — nicknamed the “London Whale” by Wall Street — made trades Dimon said were originally meant as portfolio insurance but turned into something else?
I think it’s telling that this guy was known as a “whale.” That’s what casino high rollers are called in the gambling world. It’s fitting that the folks who were trading against the London Whale knew that he was a gambler but that senators, who have been stalling for years on reforming regulations in the financial industry, are clueless.
Yesterday’s hearing reminded me of when Captain Renault in the movie “Casablanca” goes into Rick’s and feigns shock at what’s going on.
“I’m shocked, shocked to find that gambling is going on here,” Renault says, you’ll recall.
On Huffington Post, Bill Moyers called this "Jamie Dimon's 'Family Reunion' With the Senate Banking Committee." His point was that all of the people on both sides of the aisle had either worked for Jamie Dimon or were looking forward to working for him someday. On his PBS Show he said: "This wasn't a hearing, it was a reunion of the Gambino family." LOL
As I wrote a few weeks ago, even if the Germans kick Greece out of the Eurozone and they go back to the drachma and a future of austerity, there are other countries in the same shape waiting in the wings. Spain, Portugal, Italy, Ireland . . . know one really knows where the ripples with stop. It's a dangerous time for the world economy. Yesterday the markets seemed happy that Spain will get a $125 billion bail-out - today, not so much.
Spain, Italy in market storm ahead of Greek vote
12 June 2012 | 14:45 | FOCUS News Agency
Madrid. Investors pounded Spanish and Italian debt on Tuesday, beset by grave doubts over a Spanish banking rescue and fears of a looming Greek exit from the eurozone, AFP reported.
Despite eurozone powers striking a deal Saturday to extend Spain a banking sector rescue loan of up 100 billion euros ($125 billion), the alarm gripping bond markets showed no sign of relaxing.
Two major concerns stood out: doubts over Spain's outlook even with the mega-loan and this Sunday's Greek elections, which in a worst-case scenario could send Athens back to the drachma.
It was impossible to say how things may turn out, said Edward Hugh, an independent economist based in Barcelona.
Considering some of the Greek-bashing going on in Europe, you wouldn't know that other countries such as France, Spain, Portugal, Italy, and Ireland might have lots of trouble if Greece makes a disorderly exit from the Euro. Who will the pundits blame when Greece is no longer the scapegoat?
Last week Christine Lagarde, the International Monetary Fund chief, insulted the Greeks by implying they were all tax dodgers. She told Guardian UK:
"Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax."
Even more than she thinks about all those now struggling to survive without jobs or public services?
"I think of them equally. And I think they should also help themselves collectively."
How?
"By all paying their tax. Yeah."
It sounds as if she's essentially saying to the Greeks and others in Europe, you've had a nice time and now it's payback time.
"That's right." She nods calmly. "Yeah."
That statement brought an onslaught of criticism to Lagarde's Facebook Page where she later posted an apology:
As I have said many times before, I am very sympathetic to the Greek people and the challenges they are facing. . . . An important part of this effort is that everyone should carry their fair share of the burden, especially the most privileged and especially in terms of paying their taxes. . . .
Bill Mitchell, an Australian economist saw Lagarde's statement as more European bullying towards the Greek people, especially from the IMF. He wrote in his blog:
. . . the European banking system interacted with the bailout funds to benefit the German banks. The benefits dwarf the amount of funds Greece has received.
So when Lagarde talks about payback time it is clear that she is continuing the IMF tradition of bullying the weak and vulnerable to benefit the rich and strong.
. . . Remember, that Greece was not in crisis before the Euro was imposed. Its crisis is the result of lax regulation by EU officials interacting with a flawed monetary system design.
Unfortunately, other Europeans continue to enjoy some Greek bashing, like this so-called "Wealth Manager" Nick Dewhirst from Integral Asset Management who echoed Lagarde's condescending judgment when interviewed by CNBC today (my transcript):
Dewhirst: I think the easiest way to understand it is at the ordinary human level. Nations are just very large numbers of human beings. And it's like a club, so I was down at my Sailing Club . . . talking to a few friendly Greeks among others and the attitude is very simple. As a club member you have to obey by certain rules. Lots of people cheat a little bit. They get away with it. Some people cheat a helluva lot. They get away with it until everybody notices. And that's the key difference between now and a couple of years ago. Every German voter, every Slovak, Finn, and every other savings nation voter now knows that cheating is not just the occasional email joke he's got about Greece, but a way of life.
Question: What's the real impact of Greece leaving the eurozone as you say on June 18th?
Dewhirst: Probably like Y2K. A lot less than everybody thinks.
Question: But there are so many unknown unknown-unknowns...
Dewhirst: Um, I don't think so. I wrote a piece in December 2010 predicting this would happen and predicting how it would happen. We would have a bank holiday . . . and during that period they would have to pass a simple law amending one clause of the European treaties they signed. And then your accounts would be frozen. And everyone would come in on Monday and say 'they've stolen my money - they can't do that!' But they can! They've just done it and it's been done before. It was done in Argentina in 2001.
Question: But isn't the concern here the knock on impact through the banking system, because there would be quite significant implications for the Greek banks? The European financial system is very interconnected . . . Banks are holding some debt as well.... Question: Because if the new currency in Greece devalues 50-70% and they've lost that amoung of their wealth, why wouldn't every person in Spain, in Italy, or anywhere else that this could potentially happen and put it into a safer currency, thus perpetuating the bank runs?
Dewhirst: Um, that's very sensible, and indeed, I think about 30% of the Greek bank deposits have all ready disappeared that way. And 8% of those in other countries have done the same sort of thing. That's true.
Dewhirst was also quoted by CNBC as saying:
“The euro zone is a club but you get cheaters who get away with it until everyone finds out and at that point you need to remove them otherwise everyone will cheat. It’s better for Greece to leave," . . .
“The basic question is that a German has to increase working from 65 to 67 and that is to pay for Greeks retiring at 50. The 17th of June is the perfect opportunity to say either 'we’ll behave' or 'we’ll carry on cheating.
And Dewhirst continues his undiplomatic rant with a flippant joke:
“Greeks would no longer be able to afford German cars and Germans would be able to buy Greek villas and the young unemployed in Greece would have jobs as tourism booms. The best thing would be that they [Greeks] could blame the foreigners."
Unbelievable, and it's no wonder they left that last bit out of the video below. Let's hope Mr. Dewhirst never makes a bad investment or loses his wealth (*cough* JP Morgan *cough*). Woe betide him if he's ever part of the 99% in any country. He might be hungry enough to eat his words.
Facebook shareholders have filed a lawsuit against the social network, CEO Mark Zuckerberg and a number of banks, alleging that crucial information was concealed ahead of Facebook's IPO. The lawsuit, filed in the U.S. District Court in Manhattan on Wednesday morning, charges the defendants with failing to disclose in the critical days leading up to Friday's initial public offering "a severe and pronounced reduction."
Facebook defended themselves on Wednesday saying they "believe the lawsuit is without merit and will defend ourselves vigorously."
The report, and now the lawsuit, raises questions about whether Morgan Stanley, one of the underwriter companies that handled Facebook's IPO, or other banks knowingly offered certain investors privileged information that should have been made public. Other underwriters targeted by the lawsuit include Barclays Capital, Goldman Sachs, JPMorgan Chase and Merrill Lynch, a unit of Bank of America.
And Morgan Stanley Bank is adjusting prices for some investors in case they paid too much for Facebook stock! As the used-car-salesman father exclaimed in the movie Breaking Away: Refunds?!!! OMG.
In a memo sent Wednesday to the nearly 17,200 financial advisers of its Morgan Stanley Smith Barney retail brokerage joint venture, the firm says "in order to ensure best execution, we expect there will be a number of price adjustments." The securities firm said, "the largest adjustments will be processed over the next several days and the remaining adjustments will be completed as quickly and as thoroughly as possible."
In the memo Wednesday, Morgan Stanley said "many of the remaining executions have been processed and are now appearing in clients' accounts," though the firm said a "very limited number of orders are pending" and it's still reviewing the appropriate action with its trading partners. Morgan Stanley didn't specify how many orders haven't been executed or how many are still pending.
Label me underwhelmed by all the hype surrounding the Facebook IPO which started trading Friday on the Nasdaq. Built up into the Holy Grail of IPOs by the media analyists, they had to back-peddle by Friday afternoon when the stock didn't live to expectations. Duh - even a lay-person like me could have predicted that. Sure, investors still made billions, but as we see with Morgan Stanley, wax on, wax off - they can turn around and lose billions, too. And the only reason the price stayed above $38 a share was that the "underwriters" (banks) propped them up by buying their own product. So the whole thing feels rather shaky, and I wonder how strong the selling will be on Monday?
From Wall Street Journal:
The stock had been widely predicted to soar on its first day. Instead, up until the closing moments of the trading session, Facebook's underwriters battled to keep the stock from slipping below its offering price of $38 a share. Such a stumble would have been a significant embarrassment, particularly for a prominent new issue like Facebook, the most heavily traded IPO of all time.
In the end, the bankers succeeded. When trading on Nasdaq ended at 4 p.m., the social network's stock was up just a hair, 0.6%, at $38.23.
. . .
Facebook's price began falling almost immediately after shares began trading. It is unclear exactly when Morgan Stanley stepped in, but traders said that the price movements throughout the day, with the shares occasionally touching the IPO price but never crossing below it, suggested the firm was active throughout much of the session.
David Callahan of Demos points out in the following video that while Facebook is generating lots of money, it is not generating lots of jobs. The wealth from the FB IPO is going to be held by the 1% and not spread around to the 99%. Yes, the Henry Ford assembly-line days are gone, as Maria Bartiromo squeaks with mock-outrage, but that doesn't change the fact that billionaires could find ways to spread the wealth around more effectively (if they cared, and there's no evidence that Zuckerberg cares about society at all).
I guess I'm cynical, but I see the IPO moment as the beginning of the end for FB. Rumor is that eventually Zuckerberg wants to charge people for business related pages and "extra security" that is sadly lacking now. As Netflix ticked off loyal users, so does Facebook, which touts security then nags people in a creepy way to share everything from phone numbers to geographical location. Zuckerberg apparently just wants to data-mine the world and then sell the details of our lives to the highest bidder. Plus, everyone knows that employers, schools, and even the police are using FB as a way to spy on people or play gotcha, so people constantly try to decide whether to keep pages open or close them down, and it's really not worth it.
In my opinion, and I'm not an economist but just an observer of human nature, this IPO may be happening just a little too late. Yes, there will be billionaires who build fortunes by selling out quickly, but some people - probably the small investors again, *sigh* - are going to lose a mint.
Talking Points Memo caught the Roller Coaster Feeling on Friday
On April 30, associates who were gathered in a conference room handed Mr. Dimon summaries and analyses of the losses. But there were no details about the trades themselves. "I want to see the positions!" he barked, throwing down the papers, according to attendees. "Now! I want to see everything!"
When Mr. Dimon saw the numbers, these people say, he couldn't breathe.
. . .Mr. Dimon publicly disclosed the losses in a conference call on May 10. Afterward, he told Mr. Lee: "Maybe I can sleep tonight," according to a person familiar with the conversation.
At home with his wife that evening, he confided to her: "I missed something bad."
A separate source familiar with the FBI probe, opened by the agency's New York office, described it as preliminary. The probe was seen in some quarters as a necessary public step, given the ongoing debate in Washington about bank regulation, and one expert said it raised the level of concern around what happened.
"The FBI looks for evidence of crimes and goes after people who it alleges are criminals. They want to send people to jail. The SEC pursues all sorts of wrongdoing, imposes fines and is half as scary as the FBI," said Erik Gordon, a professor in the law and business schools at the University of Michigan.
The bank's trading losses have also drawn the attention of the U.S. Securities and Exchange Commission and the Federal Reserve, both of which have opened inquiries.
Some are seeking investigations, with Senator Mike Crapo of Wyoming among those calling on JP Morgan Chairman and Chief Executive Officer Jamie Dimon to testify, which he has agreed to do. Senator Richard Shelby, the Banking Committee’s top Republican, said the loss emphasizes the need for capital standards for banks tougher than what the overhaul requires. Senator Lamar Alexander of Tennessee says Congress has no business getting involved.
...As Republican lawmakers split over their response to the JPMorgan loss, Democrats are unified on their message: that the trading loss underscores the need for tougher regulation of banks.
“It’s one of those things that’s clear that they were betting like you would do at the crap table in Las Vegas and they bet the wrong way,” Senate Majority Leader Harry Reid, a Nevada Democrat, said of the company’s loss this week. “That’s fine if they did it with their own money, but the problem is, the way Wall Street’s been working, is that heads they win, tails we lose.”
The Senate Banking Committee on Monday announced hearings to look into the trading losses from a regulatory angle. At the time, lawmakers said they planned to question regulators, not JPMorgan officials.
But on Thursday, Johnson announced he intended to invite Dimon to speak some time after the two hearings with regulators, which are scheduled for May 22 and June 6. A Banking Committee spokesman said the hearing at which Dimon will testify has not yet been scheduled.
"I encourage all of my colleagues on the Banking Committee to participate in these three critically important and timely hearings, so we can all better understand the facts," Johnson said.
...there is one aspect which does not surprise rivals, instead generating a weary sigh of recognition: The investment dilemma JPMorgan found itself in in recent years. Notably, it seems one key reason why the CIO office was engaging in funky derivatives trades was that the wider climate made it so difficult for any firm to produce safe returns without taking outlandish bets. And doing this in a “hedged” way has become doubly difficult if you are a behemoth with $360 billion of cash.
Part of the problem lies with the ultra-low interest rate climate. This week the 10-year Treasury yield fell yet again, as the euro zone’s woes intensified.
According to the May 12th New York Times, JPMorgan decided to make a bet on a very obscure corner of the derivatives market. And due to the scale of JPMorgan’s trading, hedge funds figured out its identity and placed bets against the bank that are continuing to make profits for them at JPMorgan’s expense.
GREGORY ZUCKERMAN:His name is Bruno Iksil. He's an interesting guy. He lives in Paris, but he commutes to London. Wears a lot of black. Informal dresser. He comes home, (unintelligible) from his home in Paris on Fridays, the rest of the week is in London. And he is one of a group - it's a group called the CIO group, and frankly, when I started reporting on this, analysts and investors didn't really know much about this group. And the more I uncovered it the more fascinating it became. They're a group that ostensibly hedges the positions of the banks. So the bank does all these loans and other kinds of things, and the group is charged with protecting and hedging the bank by doing various trades. But it also is charged with making money. So it does things that can potentially be risky at the same time.
The bank JPMorgan announced last night that it had lost $2bn in trading on credit derivitives, through what chief executive Jamie Dimon called "errors, sloppiness, and bad judgment" and a "bad strategy, badly executed and poorly monitored".
The loss was made by the bank's chief investment office, which is under the aegis of Bruno Iskil, who earned the nickname "London Whale" earlier this year following accusations that his oversized bets on credit derivatives, one said to be as large as $100bn, were skewing the market.
A graduate in engineering from the École Centrale in Paris 20 years ago, Iksil had become so well known in the opaque $10tn market for credit default swaps – a complex type of insurance product – that he was nicknamed the "London Whale" and also known as Voldemort, after Harry Potter's nemesis.
Iksil is thought to be one of the highest-paid bankers in London and his New York-based boss, Ina Drew, whose pay has to be published, received $14m last year.
. . . Reports of Iksil's risky transactions surfaced in the US a month ago, but were dismissed by Dimon as "a complete tempest in a teapot". But in a hastily arranged conference call to investors on Thursday night he said: "The portfolio has proved to be riskier, more volatile and less effective as an economic hedge than we thought. There were many errors, sloppiness and bad judgment."
"I believe that we need to know the answers to the following questions: 1. Are we confident that taxpayers are fully protected from losses at major financial institutions?," Corker continues in the letter. "Were these bona fide hedging transactions, or were these poorly managed proprietary trades? And what, precisely, is the distinction?"
"This has permeated to the wider market as investors assess the possible systemic risk, adding another layer of caution to the fragile trading environment," said Jordan Lambert, a trader at Spreadex.
"When such shocks occur, it is wise to err on the side of caution and consider whether it is a possible 'tip of the iceberg' scenario, especially when one contemplates the interconnectedness of the banking system," he said.
