Banking CEO James Dimon Details JPMorgan Chase Loss
WASHINGTON, DC
Wednesday, June 13, 2012
Wednesday, June 13, 2012
JPMorgan Chase CEO James 'Jamie' Dimon goes before the Senate Banking, Housing and Urban Affairs Committee Wednesday to provide a better understanding of the company’s recent massive trading loss.
On May 10, JPMorgan Chase announced approximately $2 billion in trading losses from a complex trading strategy. The FBI and other government agencies are investigating the matter....
An unbalanced portfolio with sparse supervision including Dimon is the word today. I think I guessed that much. It is the shoulda, woulda, coulda that needs to be legislated.
It is more than obvious Mr. Dimon does not want the US Federal authority regulating JP Morgan. His opinion in that respect is understandable, JP Morgan is well managed by their Risk Committee. It was the only bank, no different than Ford was the only company not requiring bailout funds. JP Morgan was required to participate and have paid back the loans as soon as possible.
However, he is also a politician and makes the statement "...loans are their greatest risk." The Tennessee committee member stated, $800 billion worth of loans. Loans are not his greatest risk. If loans were his greatest risk, "Proprietary Property/Assets," the $2 billion would not have happened. So, both he and the Senator from Tennessee are manipulating the words emphasized in the exchange.
Additionally, loans are not JP Morgan's greatest risk because loans are backed either by surety bonds, insurance or loan guarantees.
Mr. Dimon is probably the best banker in the business and JP Morgan the most stable, that is obvious, however, that doesn't mean what is occurring in JP Morgan does not effect the stability of governments and even governments much smaller than the USA as they are in Europe.
While Mr. Dimon has a job to do, it is also the job of the USA government to be sure Mr. Dimon and his peers are not endangering the stability of the USA economy and their allies. To that end, the Volcker Rule has to be well written, implemented with strong oversight.
End of discussion as the Right Wing likes to 'dummy down' the laws of the USA of which even a CEO such as Dimon is more than willing to let happen.
-------------------------------
The banking collapse occurred. There were signs leading up to it. A company like Morgan knew there were signs leading up to it. They carry their own insurance against a negative balance that would destroy the bank and make it insolvent through liquidity available to them. To put it plainly, Morgan could take a substantial financial loss without it disrupting their 'daily business capital.' That is very smart management.
I think Jamie Dimon was very smart to go pubic with this loss, because, regardless of the disappointment it might have raised with shareholders, the questions would come anyway and it would look as though he was covering up more than actually happened.
While mortgages are a commodity that can be secured with assets, in 2008 the amount of land being traded was too large and the failures too many to secure away from the disaster of insolvency for the majority of banks because they over leveraged and created all kinds of fancy mechanisms to try to protect themselves from the disaster.
The housing bubble occurred because of legislation in 2002, which is entered on this blog post collapse, encouraged by the idea owning a home would solve all peoples problems. That wasn't the case. The banking system accommodated the idea because it was the backbone of American fiscal stability on a personal and government level (Government is land and people.), but, it also allowed too much recognition by the financial markets that if they were in trouble only a government would have the capital to cover their losses. That is not a good precedent.
The Republicans are to blame here. They are a party of wealthy backers, in many ways like Wall Street. The wealthy in the USA receive recognition for extraordinary lifestyle very few can afford. Their justification for that wealth is the idea they worked hard. They seek more wealth by driving down labor costs and demonizing organizers of unions that would seek the Middle Class stable and growing. Those 'mind speak' dynamics are as wrong as the idea Morgan and its peers can exist without regulation.
The markets are open in a sort of democratic way, so long as a purchaser has the money necessary to trade within that structure. It is for that reason no legislator should apologize for regulations to protect the USA from fiscal collapse. When Dimon goes into the market to balance the fiscal stability of Morgan he is vulnerable and that is obvious. It is a very safe statement to say Morgan is in a class by itself, that still doesn't exempt the company from regulation stabilizing the overall dynamic. Actually, the regulation will probably weed out the contenders more than not.
Americans are unique people in that what is the focus of success for one is not the same for the next. Some people like making money and some people like dancing Swan Lake. For many Americans both are as equally talented in different ways and should have the same equity in the real world when it comes to fiscal stability and political power. Hence, the USA. All aspects of the USA are not equally as lucrative even though there is this equality of importance in a well balanced society with joyful life experiences.
The Republicans have a problem in getting elected to office in the USA, they have to appear not to favor only the wealthy and make example of opportunity to all Americans through what might be the best government program ever conceived allowing all Americans to enjoy the quality of life of the wealthiest of their citizens. The housing bubble resulted in many ways because Republicans convinced themselves if everyone had a job and had the opportunity to purchase a house, life would take care of itself. What resulted caused a great deal of strife in the USA that hasn't yet resolved.
Romney stated the best way for Americans to manage the education of their children is to be allowed to put them in private schools called Charter schools while receiving vouchers and ultimately eliminating pubic education. So, now we'll see the education bubble and the remains of its collapse are far more human than any housing bubble could be.
It is more than obvious Mr. Dimon does not want the US Federal authority regulating JP Morgan. His opinion in that respect is understandable, JP Morgan is well managed by their Risk Committee. It was the only bank, no different than Ford was the only company not requiring bailout funds. JP Morgan was required to participate and have paid back the loans as soon as possible.
However, he is also a politician and makes the statement "...loans are their greatest risk." The Tennessee committee member stated, $800 billion worth of loans. Loans are not his greatest risk. If loans were his greatest risk, "Proprietary Property/Assets," the $2 billion would not have happened. So, both he and the Senator from Tennessee are manipulating the words emphasized in the exchange.
Additionally, loans are not JP Morgan's greatest risk because loans are backed either by surety bonds, insurance or loan guarantees.
Mr. Dimon is probably the best banker in the business and JP Morgan the most stable, that is obvious, however, that doesn't mean what is occurring in JP Morgan does not effect the stability of governments and even governments much smaller than the USA as they are in Europe.
While Mr. Dimon has a job to do, it is also the job of the USA government to be sure Mr. Dimon and his peers are not endangering the stability of the USA economy and their allies. To that end, the Volcker Rule has to be well written, implemented with strong oversight.
End of discussion as the Right Wing likes to 'dummy down' the laws of the USA of which even a CEO such as Dimon is more than willing to let happen.
-------------------------------
The banking collapse occurred. There were signs leading up to it. A company like Morgan knew there were signs leading up to it. They carry their own insurance against a negative balance that would destroy the bank and make it insolvent through liquidity available to them. To put it plainly, Morgan could take a substantial financial loss without it disrupting their 'daily business capital.' That is very smart management.
I think Jamie Dimon was very smart to go pubic with this loss, because, regardless of the disappointment it might have raised with shareholders, the questions would come anyway and it would look as though he was covering up more than actually happened.
While mortgages are a commodity that can be secured with assets, in 2008 the amount of land being traded was too large and the failures too many to secure away from the disaster of insolvency for the majority of banks because they over leveraged and created all kinds of fancy mechanisms to try to protect themselves from the disaster.
The housing bubble occurred because of legislation in 2002, which is entered on this blog post collapse, encouraged by the idea owning a home would solve all peoples problems. That wasn't the case. The banking system accommodated the idea because it was the backbone of American fiscal stability on a personal and government level (Government is land and people.), but, it also allowed too much recognition by the financial markets that if they were in trouble only a government would have the capital to cover their losses. That is not a good precedent.
The Republicans are to blame here. They are a party of wealthy backers, in many ways like Wall Street. The wealthy in the USA receive recognition for extraordinary lifestyle very few can afford. Their justification for that wealth is the idea they worked hard. They seek more wealth by driving down labor costs and demonizing organizers of unions that would seek the Middle Class stable and growing. Those 'mind speak' dynamics are as wrong as the idea Morgan and its peers can exist without regulation.
The markets are open in a sort of democratic way, so long as a purchaser has the money necessary to trade within that structure. It is for that reason no legislator should apologize for regulations to protect the USA from fiscal collapse. When Dimon goes into the market to balance the fiscal stability of Morgan he is vulnerable and that is obvious. It is a very safe statement to say Morgan is in a class by itself, that still doesn't exempt the company from regulation stabilizing the overall dynamic. Actually, the regulation will probably weed out the contenders more than not.
Americans are unique people in that what is the focus of success for one is not the same for the next. Some people like making money and some people like dancing Swan Lake. For many Americans both are as equally talented in different ways and should have the same equity in the real world when it comes to fiscal stability and political power. Hence, the USA. All aspects of the USA are not equally as lucrative even though there is this equality of importance in a well balanced society with joyful life experiences.
The Republicans have a problem in getting elected to office in the USA, they have to appear not to favor only the wealthy and make example of opportunity to all Americans through what might be the best government program ever conceived allowing all Americans to enjoy the quality of life of the wealthiest of their citizens. The housing bubble resulted in many ways because Republicans convinced themselves if everyone had a job and had the opportunity to purchase a house, life would take care of itself. What resulted caused a great deal of strife in the USA that hasn't yet resolved.
Romney stated the best way for Americans to manage the education of their children is to be allowed to put them in private schools called Charter schools while receiving vouchers and ultimately eliminating pubic education. So, now we'll see the education bubble and the remains of its collapse are far more human than any housing bubble could be.
If only eveyone was a millionaire the USA would be perfect. Well, the Republicans have to come to terms with the fact the Federal Reserve can't continually print money to make everyone a millionaire if they expect the financial markets actually have value.
Morgan is a well run institution with longevity, I would like to think the USA and its departments of government would seek to maintain the same integrity.
