They are at it again...They've never stopped. The carpet bombing of opportunity leaves some gems on the surface that were once pigeonholed away in her basement. Instead of a fresh landscape unfolding with each new day they keep drawing our attention to a the past best left behind. In this way, fertile fields of new challenges, new conceptual and technological tools available in our toolboxes, and a gem or two on the surface all escape our sight.


Speaking of little gems, JPMorgan was a little sloppy on some of its paperwork. Corporate paper as they call it and lost 2 or 3 billion of it. They refer to it as "Investment Grade", that means its rated by someone they hire but it doesn't say how high :) Who wants to bet on a scale of 1 to 12, it was a 4,  like our mortgage instruments that went poof? Story goes they may have hedged this with securities they call High Yield. Sounds nice too huh? Another name for high yield Securities are also called junk bonds. They figured one would go up if the other went down.


They didn't. A hedge package like this sounds bad enough, but they didn't really hedge junk with junk with just fancy names. They insured it. Thats another name for a scrap of paper.  They trades these scraps of paper which they called insurance contracts. By themselves they are worth no more than your credit card contract, They are only secured by each other if they behave properly. Garbage stands behind junk and beckons to us to look at them as an investment.

• SENATOR MENENDEZ: Mr. Curry, I want to ask you about JP Morgan losing $2 billion and possibly more. Since the OCC, who is a primary regulator of JP Morgan and the OCC has a well-deserved reputation for being too cozy with the banks that it regulates, and I know that you just got to your new position so you have an opportunity here to decide what the OCC does in the future. 

• SENATOR MENENDEZ (at time code 00:00:34): What I don’t want to see is a repeat of 2008. I know that you know a free market is essential to our very economic vitality, but there’s a difference between a free market and free-for-all market. And in 2008 what we obviously came to the conclusion of was the consequences of a free-for-all market where the decisions of large financial institutions became the collective risk of an entire country even though they weren’t part of making those investments and other decisions and then all of us had to pay. Paramus Post 

The world shook and for a moment. As this announcement unfolded, 1 trillion dollars in market value was taken out of the world economy. How much was profit taking? Something sets it off every summer.

Within a week of the disclosure, the losses surged, surpassing the bank’s initial $2 billion estimate by at least $1 billion. The losses gained momentum as hedge funds and other investors took advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank. NYT 6/4/12
Now, after disclosing the trading loss and watching the bank’s market value drop by more than $25 billion, those officials are expected to follow one of the group’s recommendations, strengthening the board panel that oversees risk. NYT 6/4/12  New York Times/ JP Morgan 

$25 billion pops up a lot.  In 2008 JP received $25 billion under the federal bailout package.  In February 2012, Jp was party to a 26 billion dollar settlement for foreclosure abuse. People that lost their homes each receive $2000 dollars. Somehow they got a hold of MF Globals customers assets to the tune of  $1.6 billion. JPMorgan paid $1.9 billion to the F.D.I.C. to acquire all of Washinton Mutual.  According to Washington Mutual Inc.'s 2007 SEC filing, the holding company held assets valued at $327.9 billion. As if that wasn't a good enough deal they got to clear stock and bond holders from their liabilities column to the tune of $31 billion. And it was JP Morgan Chase that allowed Bernie Madoff to steal $18 billion. One one day alone. $313 million passed through JPMorgan Chase in the form of 318 sub  $1 million transactions. Bernie paid back JP almost about a quarter billion before his bust.
JP Morgan Chase is the pinnacle of American Banking. Our No.1. Who needs more bank regulation with white knights like JPMC leading us out of disasters of their own making? Not America and certainly not them, or so they say. 


A check of SEC enforcement actions shows they are still a decade behind. They seem to put together several busts a day but when you look at them its easy to see why Wall Street continues in its corruption. They are up against firms with a a hundred times more money. They are trying to hold back a high tides advance by kicking at the tops of the foam. New laws like Glass-Steagal, Dodd-Frank and Volker need passed and enforced now more than ever but without money for enforcement the SEC can only be washed out to sea. I would enjoy seeing some spent there.

From the SEC strategic plan:

   This Strategic Plan is ambitious. Through the activities described, we are committing ourselves to even stronger enforcement of our securities laws; even more focus on fair and transparent markets; even tougher oversight of those market participants that are registered with the Commission; even higher quality investor-oriented information; and even more effective use of our own resources. 

   Successful implementation of this Plan will require two things. First, internally, we must continue to drive ourselves as hard as possible. We must maintain our investor-first focus, and must continue to look for ways to build our expertise while also increasing our effectiveness. Second, we must have access to sufficient resources to hire the necessary staff, obtain the necessary expertise, and secure the necessary technology. As is more fully described in the “Resources” section of the Plan, adequate budgets, over the long run are essential.

   The Plan also outlines specific performance metrics. Many of the measures reflect new and innovative approaches for gauging how we are doing as an agency. Collectively, these measures take a much broader view of the work of the agency and the impact it has in fulfilling its mission. We will track our performance against these metrics, and report annually on how we are doing.

SEC strategic Plan



Perhaps the fines are inconvenient. For their involvement with Lehman $20 million.  Gas exploration 72 million. Iran, Cuba and Sudan trade sanction violations $88 million, $8 million for mixing funds in London. “JPMorgan breached the contract over and over again,” the arbitrators said in a 72-page decision. $384 million settlement. $74 million fine in Alabama for bribery. Several million dollar fines but my favorite is the 30,000 dollar fine for gasoline futures. They added 30% to the price of oil by making huge block trades to cover other parts of the business.  In essence they financed their mistakes with our gasoline.  Oil Futures Blocks

On Tuesday, the House Appropriations Committee released the Fiscal Year 2013 Financial Services and General Government Appropriations bill, which provides annual funding for various agencies, among them the Treasury Department, the Executive Office of the President, and the Securities and Exchange Commission. On Wednesday, during a “mark up” hearing, subcommittees agreed to regulator budget reductions with votes that divided along party lines.

The proposed bill, as initially filed, includes a total of $21.15 billion in funding for various government agencies, $376 million below last year's level.

For fiscal year 2013, the bill included $1.371 billion for the SEC --  SEC Budget Proposal

Meanwhile we strive for a cubicle, a machine or a cash registers within gasoline distance We hold our smartphones for relief and security and read headlines for signs of growth and opportunity, We scan for gems.

• "The legs of those who stood were like fence posts driven into a warm, squirming, 
  farting, sighing earth. The queer earth was a mosaic of sleepers who nestled like spoons."

• - Kurt Vonnegut, Slaughterhouse-Five, Chapter 3