JPMorgan

  • 24 Jan 2013 at 6:10 PM
  • Banks

JPMorgan Sees No Need To Appoint Committee To Break Up JPMorgan

Do you have an opinion on whether JPMorgan is too big to manage and should be broken into its constituent bits? You do? Hey, that’s great, good for you. Here’s what you can do about it, in roughly descending order of effectiveness:

  • Be Jamie Dimon, do what you want.
  • Be a board member, try to convince others to do what you want.
  • Be a big activist1 hedge fund, call up the board and management and try to make them do what you want.1
  • Be a sell-side analyst, regulator, politician, former bank CEO, pundit, blogger, or person; write down what you want JPMorgan to do and why you want them to do it; and hope that they read it.
  • Same, but with Twitter.
  • Keep it to yourself and go about your business like a human.
  • Be a troublemaking shareholder activist2 and submit a shareholder proposal asking the board to include in the proxy an advisory vote on whether JPMorgan should form a committee to look into doing the thing you want or something else like it or not like it.

This is sort of a non-thing: Read more »

  • 23 Jan 2013 at 1:32 PM
  • Banks

Bank Investors Push For Change Via Strongly Worded Poll Responses

I feel like this exchange did not go well for Jamie Dimon:

[Elliott Capital's Paul] Singer said the unfathomable nature of banks’ public accounts made it impossible to know which were “actually risky or sound”. … Mr Singer noted that derivatives positions, in particular, were difficult for outside investors to parse and worried that banks did not always collateralise their positions. Mr Dimon said the bank did for all “major” clients. Mr Singer retorted: “Well, we’re a minor client then.”

Whoops! Guess someone else doesn’t know what positions banks collateralize. I suspect someone at Elliott is already on the phone with JPMorgan to renegotiate their CSA. Also so many other people; I count about $50 billion of uncollateralized (fair value) derivative exposure at JPMorgan, suggesting that it fully collateralizes a little under two-thirds of its trades.1 Perhaps those are the two-thirds with the major clients, but if so that seems a little irrelevant. That’s a lot of minor-client money.

Why does Singer care? Well I guess he wants better collateral terms from JPMorgan? More seriously … there is whatever incentive to say things that always exists at Davos sessions, which I guess is a thing, ugh.2 Then there is the broad question of whether banks are too opaque to invest in. Singer is not alone in thinking that the answer is no; we talked a while back about how a lot of smart people get kind of freaked out by bank financial statements; derivatives, as well as other buzzwords like prop trading and opacity, play a role in their conclusions as well. Also here is a funny article about how 60% of Bloomberg subscribers are basically commie anarchists: Read more »

“At first I thought it was a friend of mine pulling a prank. I thought it was Lloyd Blankfein,” Jamie Dimon said yesterday in Germany, re: the time Tom Brady called to cheer him up about JPMorgan’s $6.2 billion trading loss. He didn’t elaborate but it’s pretty obvious that the day Goldman was sued over Abacus, Dimon called over to GS pretending to be Aretha Franklin, telling Lloyd “no one’s got any R-E-S-P-E-C-T for clever investment products,” while months after JPMorgan bought Bear Stears, JD received a call from someone claiming to be “Jimmy Cayne” calling from the lobby with a sample of 90210 kush  that he insisted Dimon had to come down and try but “A-SAP, ’cause Big J had to double park his truck.”  [Bloomberg]

  • 16 Jan 2013 at 1:41 PM
  • Banks

JPMorgan Dissects A Whale Carcass

How should one read JPMorgan’s Whale Report? I suppose “not” is an acceptable answer; the Whale’s credit derivatives losses at JPMorgan’s Chief Investment Office are old news by now, though perhaps his bones point us to the future. One way to read it is as a depressing story about measurement. There were some people and whales, and there was a pot of stuff, and the people and whales sat around looking at the stuff and asking themselves, and each other, “what is up with that stuff?” The stuff was in some important ways unknowable: you could list what the stuff was, if you had a big enough piece of paper, but it was hard to get a handle on what it would do. But that was their job. And the way you normally get such a handle, at a bank, is with a number, or numbers, and so everyone grasped at a number.

The problems were (1) the numbers sort of sucked and (2) everyone used a different number. Here I drew you a picture:1

Everyone tried to understand the pool of stuff through one or two or three numbers, and everyone failed dismally through some combination of myopia and the fact that each of those numbers was sort of horrible or tampered or both, each in its own special way. Starting with:

VaR: Value-at-risk is the #1 thing that people talk about when they want to talk about measuring risk. To the point that, if you want to be all “don’t look at one number to measure risk, you jerks,” VaR is the one number you tell the jerks not to look at. Read more »

  • 14 Jan 2013 at 6:33 PM

Regulators Close Aquarium Door Behind Escaped Whale

Once upon a time there was a whale, and he had a synthetic credit portfolio, and one day he did terrible terrible things with that synthetic credit portfolio, and the next day he woke up and realized he had lost $5.8 billion, and he was sad. The question for you is: was that a disaster? I think a sensible answer is:

  • Well, for the whale, yes.1
  • For, like, the human race, nah.2

Having a sense of proportionality here is a good idea. For one trader, losing six billion dollars, give or take, really is in the far left tail of Worst Things You Can Do, and so the whale himself was fired in infamy, though an infamy mixed with a certain envy. For his direct manager and that manager’s manager, it is probably even worse, since failing to prevent your direct report’s $6 billion loss lacks the “wow-that-takes-balls” element of actually going out there and losing six billion dollars like a whale. So they were fired too. For the bank … meh. For the Second Bank of North-Central Indiana, I’m sure losing six billion dollars would be the sort of existential disaster that would require firing the CEO, tearing down the building, and salting the earth on which it stood, but there’s a reason this didn’t happen at the Second Bank of North-Central Indiana. It happened at JPMorgan. For which it wasn’t all that much of a disaster.3

What about for JPMorgan’s regulators? I go with, like, our financial system is still here, not really any the worse for wear, but others disagree, and regulators don’t have the same “well we were profitable for the quarter” defense that JPM had.4 And so today the Fed and OCC engaged in a well-lawyered barn-door-closing exercise, issuing consent orders to JPMorgan that basically say (1) you done fucked up, but (2) you fixed it, so (3) keep doing what you’re doing. Here is the Fed: Read more »

  • 07 Jan 2013 at 6:08 PM

Banks Lobbying, Capitalizing Like It’s 2007

They may still be too big and fragile, but banks are throwing their considerable weight around and getting their way. Read more »

…a growing number of self-flagellating New Yorkers who treat — then beat — themselves post-holidays by temporarily giving up vices such as alcohol and sweets, sometimes replacing them with liquid diets (blue-green algae juice and garlic-oregano shots, among them). According to Denise Mari, owner of Organic Avenue, the uber-popular NYC-based juicing mecca, business has doubled year over year since 2006, with an explosion in volume in 2012. And there’s always a spike in sales this time of year with those desperate to cleanse away their sins. “People tend to go extreme — they need to be kicked in the ass,” says Danielle Pashko, a longtime NYC nutritionist who guides high-rollers from Citibank, J.P. Morgan and Merrill Lynch. “It’s kind of like a bipolar attitude — splurging with mayhem and nonstop debauchery for weeks, and then total self-deprivation.” “These people are highly successful, competitive and stressed out. They’re cosmopolitan and social and mostly men,” says Pashko…John Cholish may look like any other ripped stud to an outsider: The smoking-hot energy options broker who boasts 6 percent body fat could intimidate most superheroes. “I’ve always been competitive, and like to challenge myself,” says the 29-year-old from Long Island City who has detoxed regularly for more than a decade. But he’s no match for his 110-pound feather of a girlfriend, Brianna Cole, 24. “My girlfriend and I will do a little competition, but she tends to beat me; I’m probably 0 for 4,” he admits sheepishly of their fasts — during which they give up sugar, caffeine, alcohol and simple carbs for a minimum of several days. [NYP]