JPMorgan

  • 02 Aug 2012 at 1:13 PM
  • Banks

Shadow Banking Is Just Like Regular Banking, Only Darker

It feels virtuous every so often to take glance over at the triparty repo market. You get a nice dose of horrified vertigo and then go back to your life and don’t think about it for a while and that always feels better. Now is a good time to get back to it, what with continued worrying about money-market funds – a core player in the market – and two interesting things this week about triparty repo: this testimony from Matthew Eichner of the Fed to a Senate subcommittee, and this report from Fitch.

Here is how I imagine triparty repo:

  • A bunch of money market funds and other cash investors keep $1.8 billion of cash at JPMorgan and Bank of New York Mellon, the “clearing banks” in the triparty system.
  • A bunch of securities dealers keep a pile of securities – worth, on a good day, more than $1.8bn – to JPM and BoNY Mellon.
  • The dealers need money to fund those securities, because what are they going to do, pay for them themselves?
  • Every afternoon, the cash investors and the securities dealers frantically negotiate which dealers swap their securities (at negotiated haircuts) for which cash investors’ cash.
  • Every night, the cash sleeps in the (notional) arms of the securities dealers, while the securities (and a promise to buy them back in the morning) sleep in the (notional) arms of the cash investors.
  • Every morning, the cash wakes up and springs from the dealers’ beds back into the waiting arms of the cash investors, and vice versa etc.
  • Which means that the dealers need to borrow cash to be able to give it back to the investors. Where do they get the money?
  • Well, from JPMorgan or BoNY.
  • Where do JPM and BoNY get the money?
  • Well, from deposits.
  • Whose deposits?
  • Well, the deposits of the cash investors.

More or less, right? Read more »

  • 30 Jul 2012 at 4:55 PM

Bonus Watch ’12: JPMorgan

Li’l Dimons started receiving numbers today. Read more »

In spite of JPMorgan Chase’s well-publicized loss of more than $5 billion, just 14 percent of Americans polled correctly identified C.E.O. Jamie Dimon as a New York banker. Sixty-six percent say they don’t know who he is, while 9 percent believe he’s a Texas congressman, 7 percent think he’s an X Games skateboarder, and just 4 percent believe he’s a daredevil motorcyclist. [VanityFair]

Jefferies set aside $870 million in the first six months of its fiscal year, enough to pay its 3,809 employees an average of $228,407. Goldman Sachs set aside $225,789 for each of its 32,300 workers. Average pay for the 26,553 people in JPMorgan’s investment bank was $184,989, or at least 18 percent less than Jefferies’s and Goldman Sachs’s reported figures. It was 10 percent less than both in fiscal 2011…Goldman Sachs, run by Chief Executive Officer Lloyd C. Blankfein, 57, includes consultants and temporary staff when reporting headcount. Jefferies, which has been luring talent from larger rivals to expand in the wake of 2008’s credit crisis, tallies only full-time workers in its disclosures. Jefferies’s reported headcount would expand by 10 percent to 15 percent if the firm included temporary workers, said a person with direct knowledge of the figures who requested anonymity because the information isn’t public. While that would place the firm’s average pay per employee below Goldman Sachs’s, it still exceeds JPMorgan’s and Morgan Stanley’s.  [Bloomberg]

JPMorgan Whale Isn’t Finished Here

JPMorgan’s chief investment office has lost $5.8 billion on the trades so far, and that figure may grow by $1.7 billion in a worst-case scenario, Dimon, the bank’s chairman and chief executive officer, said today. [Bloomberg, related]

Who wins the call-the-Whale-close? The headline number is a $4.4 billion loss this quarter but that is lower than it could have been because those losses propagated backwards through time:

JPMorgan Chase & Co. (NYSE: JPM) today reported that it will restate its previously-filed interim financial statements for the first quarter of 2012. The restatement will have no effect on total earnings or revenues for the company year-to-date.*

The restatement announced today will reduce the firm’s previously-reported net income for the 2012 first quarter by $459 million. The restatement relates to valuations of certain positions in the synthetic credit portfolio in the firm’s Chief Investment Office (CIO).

The total loss in the first quarter is now $1,378mm for Q1 (footnote 3 of page 14 here); add $4,409mm for Q2 (page 3 here) and you get a total final official loss of $5,787mm. So far.**

The restatement is fascinating, and Dimon is proud of it: “This is what the SEC chairwoman herself would have done if she had seen all the same facts at the same time.” Okay! But she probably wouldn’t have done this: Read more »

  • 12 Jul 2012 at 1:21 PM

Call The JPMorgan (Whale Loss) Close (Updated)

Update: And the winner is HHFM, with -$5.75 billion! Get in touch to collect your prize.

Did Bruno Iksil make the bank -$2 billion? -$9 billion? -$20 billion? Was this all just a hoax and he actually didn’t lose any money at all? JPMorgan will let us know tomorrow at 7AM. Read more »