Elizabeth Warren Calls on JP Morgan Chief to Resign from NY Federal Reserve Bank Board

[Ichingcarpenter]

BOSTON, MA - In the wake of $2 billion in losses at JP Morgan Chase due to risky trading, Elizabeth Warren, the architect of the Consumer Financial Protection Bureau, today called on Jamie Dimon, JP Morgan's CEO, to resign from his position on the Board of Directors of the New York Federal Reserve Bank as a first step to signal to the American people that Wall Street understands the need for greater responsibility and accountability.

"Wall Street banks continue to have fundamental problems, and tough oversight and accountability are urgently needed. Jamie Dimon deserves credit for taking public responsibility for $2 billion in losses based on a trading strategy he called 'poorly reviewed,' 'poorly monitored,' and even 'sloppy.' But Dimon is not only the CEO of JP Morgan, he is also a member of the Board of Directors of the New York Federal Reserve Bank, where he advises the Federal Reserve on the oversight of the financial industry," Warren said.

"After the biggest financial crisis in generations, the American people are frustrated that Wall Street has still not been held accountable and does not appear to consider itself responsible. Dimon should resign from his post at the New York Fed to send a signal to the American people that Wall Street bankers get it and to show that they understand the need for responsibility and accountability," Warren said.

Dimon has fought against Wall Street reform regulations, including the Volcker Rule, which restricts certain kinds of speculative trades that increase risk in the banking system. Dimon also serves as a member of the Board of Directors of the New York Federal Reserve Bank. Among other things, board members are involved in overseeing the Reserve Bank, participating in the development of credit and monetary policies, and ensuring effective internal auditing systems.

http://elizabethwarren.com/news/press-releases/elizabeth-warren-calls-on-jp-morgan-chief-to-resign

[lonestarnot]

1. Good!

[Ichingcarpenter]

2. JP Morgan's $2 Billion Loss Was 4X the Alleged Cost of Financial Regulation

Here is Barney Frank's statement on JP Morgan's of $2 billion loss in derivatives:

This regrettable news from JPMorgan Chase obviously goes counter to the bank's narrative blaming excessive regulation for the woes of financial institutions. Interestingly, in the Economist's long attack on the financial reform bill, one of their leading examples of the harm the bill is doing was JPMorgan Chase's assertion that complying with the new rules will cost $400 to $600 million at the outset (a number which will obviously go down as compliance processes are set in place). In other words, JP Morgan Chase, entirely without any help from the government has lost, in this one set of transactions, five times the amount they claim financial regulation is costing them.
Here is the quote Frank is referring to :

Jamie Dimon, JPMorgan Chase's boss, reckons the direct costs to his bank, America's largest, will be $400m-600m annually. "Additional regulations resulting from the Dodd-Frank act may materially adversely affect BB&T's business, financial condition or results of operations," said one regional bank in its recent annual filing to the SEC. Other institutions are said to be in the process of drafting similar statements, or, at the least, planning to acknowledge the costs in the conference calls that surround quarterly earnings.







http://www.theatlantic.com/business/archive/2012/05/jp-morgans-2-billion-loss-was-4x-the-alleged-cost-of-financial-regulation/257093/

[Ichingcarpenter]

3. JPMorgan Chase Executive Admits that Bailout Will Be Used Not To Make New Loans But to Buy Other Com

or those who opposed the massive bailout, a report in the New York Times may be little surprise. A reporter was able to get into a telephone conference call with JPMorgan Chase to hear executives discuss the $25 billion it received from Congress. Just four days after the bailout, JPMorgan Chase’s chief executive, Jamie Dimon held the conference call during which an executive admitted that Chase has no intention to use the money to make new loans but instead will use it to try to take over other companies.

The critical moment on the Oct. 17th call came when someone asked “Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?”

Here is the response:
“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase. What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”
I feel much better.

http://jonathanturley.org/2008/10/28/jpmorgan-chase-executive-admits-that-bailout-will-be-used-not-to-make-new-loans-but-to-buy-other-companies/

[Ichingcarpenter]

4. What the $2 Billion Dollar Fail Reveals About Our Banking System- Robert Reich

J.P. Morgan Chase & Co., the nation’s largest bank, whose chief executive, Jamie Dimon, has lead Wall Street’s war against regulation, announced Thursday it had lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses, due to excessively risky bets.


The bets were “poorly executed” and “poorly monitored,” said Dimon, a result of “many errors, “sloppiness,” and “bad judgment.” But not to worry. “We will admit it, we will fix it and move on.”




Move on? Word on the Street is that J.P. Morgan’s exposure is so large that it can’t dump these bad bets without affecting the market and losing even more money. And given its mammoth size and interlinked connections with every other financial institution, anything that shakes J.P. Morgan is likely to rock the rest of the Street.


Ever since the start of the banking crisis in 2008, Dimon has been arguing that more government regulation of Wall Street is unnecessary. Last year he vehemently and loudly opposed the so-called Volcker rule, itself a watered-down version of the old Glass-Steagall Act that used to separate commercial from investment banking before it was repealed in 1999, saying it would unnecessarily impinge on derivative trading (the lucrative practice of making bets on bets) and hedging (using some bets to offset the risks of other bets).


Since then, J.P. Morgan’s lobbyists and lawyers have done everything in their power to eviscerate the Volcker rule — creating exceptions, exemptions, and loopholes that effectively allow any big bank to go on doing most of the derivative trading it was doing before the near-meltdown.


http://www.alternet.org/economy/155392/what_jamie_dimon%27s_%242_billion_dollar_fail_reveals_about_our_banking_system/?page=entire

[polichick]

6. Until people start going to jail, nothing will change with these guys.

[Ichingcarpenter]

7. Holder must go after this election plus the FBI chief.

Plus Obama's Chicago economics crew.

Oh, well.. I can dream, but maybe it will CHANGE.

[kentuck]

8. Unfortunately, you are right on!

There is not a shovel big enough to clean up this mess. But there is a jail big enough.

When the dust settles, we will probably discover that JPMorgan Chase was very close to the financial dealings of the Greek government? Jamie Dimon is right about one thing - there is no excuse.

[polichick]

5. Excellent!