15 April 2016

Fed: JP Morgan Poses a 'Serious Adverse Effect To US Financial Stability' While Media Ignores

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

Upton Sinclair

"Hell is empty and all the devils are here."

William Shakespeare, The Tempest

And these days it is not always so obviously a question of salary. But it is often a question of access to the powerful, and the great favors, money, and privileges that they may grant as a reward.

There has been no meaningful and sufficient financial reform in the US, thanks in large part to the money power of the Banks and their faithful courtiers in the professional and political classes.

How can we not expect political failures in financial reform when almost fifty percent of Super Pac money comes from just 50 sources?

Do you reasonably expect any movement on changing this corrupt system from the establishment Republicans or the Wall Street Democrats?  They and their friends are doing very well financially as the data shows.

One of the reasons why the Fed is raising this alarm now is in part to the serious grilling that Senator Elizabeth Warren gave to Janet Yellen in a hearing last year, to which Janet had no good answers.

As JPM showed in their most recent financials, they are prospering once again while risking the rest of the US economy by their pursuit of greed and socialization of their losses.

And as we learned yesterday, Deutsche Bank admitted that they had been manipulating the prices of gold and silver in the world markets, and that they were certainly not alone in this fraudulent behaviour.  As I have asked so many times, if the Banks have been shown to have manipulated so many other markets of consequence, how can anyone be so skeptical when the evidence showed that they were doing the same thing in the gold and silver markets.

A rank amateur might not see it on the tape and the data, but any seasoned pro could not miss it unless they were wilfully blind.  Keep this sort of thing in mind as you take your pick of analysis and associated spinning of the facts.  I have seen a lot of nastiness on the Street over the past thirty five years, but this is one of the most rotten financial market climates that I can remember.  What used to be the exceptional misbehaviour seems to have become the accepted standard of doing business.  This is one of the most brutally cynical political and financial climates that I can remember and my memory of this goes all the way back to the early 1960's, to LBJ and Nixon.

The mainstream media continues to yawn, and when the next financial crisis comes, one well may ask 'why didn't anyone see it coming?'

The Fed Sends a Frightening Letter to JPMorgan and Corporate Media Yawns
By Pam Martens and Russ Martens
April 14, 2016

Yesterday the Federal Reserve released a 19-page letter that it and the FDIC had issued to Jamie Dimon, the Chairman and CEO of JPMorgan Chase, on April 12 as a result of its failure to present a credible plan for winding itself down if the bank failed. The letter carried frightening passages and large blocks of redacted material in critical areas, instilling in any careful reader a sense of panic about the U.S. financial system...

At the top of page 11, the Federal regulators reveal that they have “identified a deficiency” in JPMorgan’s wind-down plan which if not properly addressed could “pose serious adverse effects to the financial stability of the United States.”   Why didn’t JPMorgan’s Board of Directors or its legions of lawyers catch this?

It’s important to parse the phrasing of that sentence. The Federal regulators didn’t say JPMorgan could pose a threat to its shareholders or Wall Street or the markets. It said the potential threat was to “the financial stability of the United States.”

That statement should strike fear into even the likes of presidential candidate Hillary Clinton who has been tilting at the shadows in shadow banks while buying into the Paul Krugman nonsense that “Dodd-Frank Financial Reform Is Working” when it comes to the behemoth banks on Wall Street...

JPMorgan’s sprawling derivatives portfolio that encompasses $51 trillion notional amount as of December 31, 2015 is also causing angst at the Fed and FDIC. The regulators wanted more granular detail on what would happen if JPMorgan’s counterparties refused to continue doing business with it if rating agencies cut its credit ratings. The regulators asked for a “narrative describing at least one pathway” for winding down the derivatives portfolio, taking into account a number of factors, including “the costs and challenges of obtaining timely consents from counterparties and potential acquirers (step-in banks).”

Read the entire article here.