As you may have heard, the last number of months have not been so great for JP Morgan, legally-speaking. In addition to the London Whale fiasco, which the bank is still literally and figuratively paying for, there have been allegations of, well, take your pick: energy market manipulation, bribes for hires, playing it fast and loose with risky mortgage securities, and so on and so forth. The firm, which as of August 26th was cooperating with “at least seven separate probes” by the Justice Department, has stated that “future legal losses could be as much as $6.8 billion above its existing reserves,” and last month, the guy tasked with handling “all litigation and government investigations” threw up his hands and said “Fuck it, I can’t do this anymore.”
To that end, earlier today, CEO Jamie Dimon sent out a memo to employees detailing the “unprecedented effort” the bank is going to right past wrongs, but warned them that they weren’t out of the woods just yet.
“We are all well aware of the news around the legal and regulatory issues facing our company, and in the coming weeks and months we need to be braced for more to come,” Dimon said today in an e-mail to JPMorgan’s more than 250,000 employees.
JPMorgan, the largest U.S. lender, increased spending on internal controls by about $1 billion this year and dedicated more than $750 million “to address several of our consent orders,” Dimon said. At least 5,000 people at the New York-based company have been assigned to compliance, he said. The bank will pay at least $750 million to close regulatory investigations into its record London Whale trading loss last year, people familiar with the matter said this week. JPMorgan is operating under consent orders for previous violations that involved municipal bond trading, foreclosures, anti-money laundering practices and internal controls.
Obviously for legal reasons Dimon couldn’t get into what sort of surprises are around the corner re: “legal and regulatory issues.” But if the past is any indication, the sky’s the limit and one cannot entirely rule out the possibility of: Read more »
One of the pleasures of every JPMorgan quarterly earnings call is hearing Jamie Dimon’s, and now Marianne Lake’s, authoritative-sounding pronouncements on proposed regulations. You sometimes get the sense that regulations can’t be adopted without Dimon’s approval, so his views on these calls provide some sort of indicator of which of the proposals might actually happen. Plus, general amusing orneriness.
So how’d everyone do? Well, they think Nouveau Glass-Steagall is pretty silly, for one thing: in response to an analyst question about it, Lake said “we don’t spend much time thinking about it.”1 Oof! Get outta here with your Glass-Steagalls.
But the theme of the call was mostly “could you tell us more about your leverage ratio?” Here, JPMorgan is not so fond of the new Basel III leverage ratio proposals. The earnings deck walks through how JPMorgan will comply with the new U.S. leverage ratio rules, but it does not do any math on the effects of the new Basel proposals to do creepy things like disallow derivatives collateral netting. When asked to quantify the leverage under those proposals, Lake and Dimon declined, saying that there are “fundamental problems” with those proposals. So they have chosen to ignore them and, presumably, they will go away. Read more »
The House of Morgan is about to have to have some pissed off people in upstate New York and the west coast of Florida on its hands. Read more »
Shut Your Piehole And Listen To Jamie Dimon When He Says That He Is FINISHED With The Losing-Of-$6 Billion-And-Then-Some ConversationBy Bess Levin
Capiche? Read more »
Dimon has also been a fierce critic of President Obama’s economic policies, including parts of the Dodd-Frank banking reform bill. Many union pension funds as well as public officials running large pension funds have vocally supported the president’s economic and regulatory policies, and the recent shareholder vote was designed to quash Dimon’s public criticism of these policies, people inside JP Morgan say.
That’s from Charlie Gasparino’s report today that the House Financial Services Subcommittee is going to hold a hearing “into whether proxy advisory firms are pushing political agendas rather than serving shareholder interests,” which I guess is no sillier a hearing than most other hearings. More things:
Executives at many companies have complained to Congress that such battles are fraught with politics, with advisory firms often pushing the political agendas of some of their biggest shareholder clients at union and public pension funds.