I enjoyed Bloomberg’s story about how the SEC was pestering JPMorgan to better disclose its proprietary trading activities well in advance of the London Whale fiasco. If you just read the headline you’d be all “oh look how prescient the SEC was,” but if you read the actual letters, not so much. Here is my favorite exchange:
SEC: Identify the trading desks and other related business units that participate in activities you believe meet the definition of proprietary trading. Identify where these activities are located in terms of your segment breakdowns. Quantify the gross revenues and operating margin from each of these units. We note your disclosure on page 59 of your Form 10-K for the year ended December 31, 2010 that you have liquidated your positions within Principal Strategies in your former Equities operating segment. It is not clear if this was the extent of your proprietary trading business. Please clarify if there are other proprietary trading businesses. If there are, please clearly identify the extent to which such activities or business units have been terminated or disposed of as well as the steps you plan to take to terminate or dispose of the rest of these components.
JPMorgan:1 … The Firm believes that the Staff’s comment regarding the disclosure on page 59 relates to the Form 10-K filed by a registrant other than JPMorgan Chase.
Hahahahaha true, it’s Goldman Sachs. Read more »
NFLX is up 75% year to date so you probably assumed that Whitney Tilson had gotten rid of it sometime last year. You were not alone: Read more »
Apparently Gary Foster “used his knowledge of bank operations” to get the job done. Read more »
If so, no one ever told Perry Gruss. Read more »
Kevin Connors, co-head of global G10 FX sales, is “leaving” the bank following “a breach of internal compliance procedures.” [Bloomberg]
Just one, not all. Start small. Read more »
Last week, we reported that UBS had been kicked off the General Motors IPO as a result of a senior high-yield analyst sending out a note to a bunch of clients that included his musings on the valuation ahead of the IPO. In a filing today, GM confirms our story. Read more »
JPMorgan Chase last night alerted attorneys that employees in its foreclosure operations unit may have signed affidavits without personally reviewing the documents, the same issue that has recently plagued GMAC Mortgage, according to a memo obtained by HousingWire…Chase is requesting that the courts not enter judgments on pending foreclosure cases until it completes the review in the next few weeks. [HW via BI]
Method actors at the boy's department's jackets that love them.
Yesterday we mentioned that thespian, Level III CFA candidate and noted stock picker Shia LaBeouf had been talking up InterOil, an oil and natural gas exploration company. “IOC’s momentum is major, and it will surprise to the upside,” LaBeouf said in a text message to the GQ article’s author, Adam Sachs, who wrote about ShiLa’s new hobby (making it rain all from the comfort of his boxers) for the magazine’s April issue. But where did the master trader get the idea? Sure he meets with Goldman Sachs execs on the reg and is thisclose to becoming a CFA but is he really that good? I’d like to give him the benefit of the doubt (he’s going to be running one of the most powerful hedge funds in the world one day so trying to stay on his good side and all that) but others are thinking the budding BSD had some help from his friends at John Thomas Financial (the people who brought you the pride rally and breasts as napkins). Read more »
Alan Greenspan has written a book report that he will present at the Brookings Institution tomorrow. Some are calling it his “most detailed examination of the causes of the financial crisis.” Does he lay out his patented 3-Step Guide For Being Fed Chair (1. Talk like you know your shit, even when you don’t. 2. Cut rates like a Thai hooker with the clap 3. When in doubt, print it out), which may have helped get us into the financial shit-storm du-jour? Not explicitly, no. (Does Coke just up and give out its secret recipe for free? That’s what I thought.) Seven Piña coladas into happy hour in the Maldives, however, he did decide to say this:
We never had a sufficiently strong conviction about the risks that could lie ahead. As I noted earlier, we had been lulled into a state of complacency by the only modestly negative economic aftermaths of the stock market crash of 1987 and the dot-com boom. Given history, we believed that any declines in home prices would be gradual. Destabilizing debt problems were not perceived to arise under those conditions.
Threw this in there too:
For years the Federal Reserve had been concerned about the ever larger size of our financial institutions. Federal Reserve research had been unable to find economies of scale in banking beyond a modest-sized institution. A decade ago, citing such evidence, I noted that “megabanks being formed by growth and consolidation are increasingly complex entities that create the potential for unusually large systemic risks in the national and international economy should they fail.” Regrettably, we did little to address the problem.
The believers of Fed “easy money” policy as the root of the housing bubble correctly note that a low fed fund rate (at only 1% between mid-2003 and mid-2004) lowered interest rates for adjustable rate mortgages (ARM). That in turn, they claim, increased demand for homes financed by ARMs and hence were an important contributor to the emergence of the bubble.
Having said all that? Lest any of you pipsqueaks (Benji) even think about daring to pin one iota of blame for all this shit on him? THINK AGAIN. There was nothing that could’ve been do done. Read more »
GE CEO Jeffrey Immelt said today that while he did indeed have a discussion with Hank Paulson in September 2008, it had nothing to do with his irm’s commercial paper woes, as the former Treasury Secretary claims in his new book.
Rather than get defensive about the whole thing, Hank, through his publicist, said that he was merely “relying on memories,” and he was under so much stress that he’s not really sure they were accurate at this point.
“To write this book, I called on the memories of many of the people who were with me during these events. Given the high degree of stress during this time and the extraordinary number of problems I was juggling in a single day, and often in a single hour, I am sure there are many details I will never recall.”
So there you have it. You should expect he got some stuff wrong. Hope that helped cleared things up.