dChan - Q Origins Project Archive

Using Bank Deposits, JPMorgan Chase Lost $3.2 Billion Trading Stocks and Credit Derivatives in First Quarter

Imagine if every bank customer was greeted this week with a big sign just inside their Chase Bank branch that said this: “Dear Customers: We lost $3.2 billion trading stocks and credit derivatives in the first quarter. We did that using your bank deposits. But don’t worry, that pales in comparison to the $6 billion we lost in 2012 in the London Whale mess.” JPMorgan Chase is the largest bank in the United States. Each and every week, millions of Americans write out a check on their account at one of the more than 5,000 branches of Chase Bank; or drop into a branch to open a savings account for a grandchild; or to put money into their own retirement account; or to seek financial advice.

According to the latest quarterly report from the Office of the Comptroller of the Currency (OCC), JPMorgan Chase lost $2.4 billion trading stocks (equities) and $822 million trading credit derivatives, giving it a net loss among all of its trading in cash instruments and derivatives of $940 million. This is not what happened in the whole sprawling trading octopus of JPMorgan Chase, it’s just what happened in the taxpayer-backstopped, federally-insured bank. For starters, Jamie Dimon was the Chairman and CEO of this bank during the financial crisis when there was an insider whistleblower holding a law license, Alayne Fleischmann, that testified to the U.S. Department of Justice that she had observed “a massive criminal securities fraud” inside the bank involving the bogus mortgages the bank had sold in the billions of dollars to investors. But instead of using that first-hand evidence to prosecute the bank, Obama’s Justice Department under Eric Holder used that information to extract a large fine from the bank with no charges brought.

Dimon is caught on camera on September 26, 2013 strolling into the offices of Eric Holder to personally negotiate the terms of the settlement. Less than two months later, the Justice Department announced the toothless settlement on behalf of itself and other regulators. Holder said this at the time: “The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.” But there was no accountability at all. Nobody went to jail and Jamie Dimon kept his job as Chairman and CEO. The Justice Department’s settlement with JPMorgan Chase for what was clearly fraudulent conduct came just eight months after the U.S. Senate’s Permanent Subcommittee on Investigations had released a 300-page report on the bank’s use of depositor money inside its federally-insured bank to gamble in exotic derivatives in London, leading to losses of at least $6.2 billion.

At the time of the London Whale report, Senator Carl Levin was Chair of the Subcommittee. He said this: “Our findings open a window into the hidden world of high stakes derivatives trading by big banks. 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.”The late Senator John McCain was Ranking Member of the Subcommittee at the time. He made this statement on the matter: “This case represents another shameful demonstration of a bank engaged in wildly risky behavior -but as usual dindu nuffin after making said statement The ‘London Whale’ incident matters to the federal government because the traders at JPMorgan were making risky bets using excess deposits, portions of which were federally insured. These excess deposits should have been used to provide loans for main-street businesses. Instead, JPMorgan used the money to bet on catastrophic risk.”

According to Bloomberg News, the bank itself is now under a criminal probe in the matter, making it at least the fourth criminal probe in the last seven years. On top of an unprecedented criminal past under the tenure of Jamie Dimon, last November we reported that the bank has the dubious distinction of being called out as the riskiest bank in the U.S. by one of its federal regulators. If this sounds more like the description of a bank in a banana republic rather than a U.S. bank holding $1.9 trillion in deposits for average Americans, public pension funds, as well as sophisticated investors, you are correct to be concerned.

Until tens of millions of Americans personally engage in demanding campaign finance reform, federal government reform, and the complete separation of banks holding deposits from the Wall Street casino banks, we’re all just one step away from the next banking collapse.

moar

https://wallstreetonparade.com/2020/07/using-bank-deposits-jpmorgan-chase-lost-3-2-billion-trading-stocks-and-credit-derivatives-in-first-quarter/