WTF! FEDERAL RESERVE issues Cease and Desist orders against JP MORGAN! Calling the Silver Liberation Army
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01/14/2013 11:25 PM
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Re: WTF! FEDERAL RESERVE issues Cease and Desist orders against JP MORGAN! Calling the Silver Liberation Army
Quoting: Anonymous Coward 31346699
I fully agree that the Big Five are basically in partnership with the Fed, each of these banks have representatives on various Fed Boards, and they do basically regulate themselves.
But as an executive, board member, and officer of a bank for right at nine years there's one thing I realize, there is constant backstabbing and infighting among these guys. They are always jockying for position.
I think the J.P. Morgan Chase's Memorandum of Understanding is more of a slap at Jamie Dimon than a real regulatory slap.
Dimon, and the London CIS office, thought they could skim a little profit from knowing that several of the super-large banks around Europe and the USA would be unwinding a relatively small percentage of their trash derivative portfolio's. And they decided they would buy a huge percentage of a particular trash CDO market. At first it worked like a charm, they were making a lot of money from other banks dumping their positions at a discount, but then they inadvertantly cornered that particular market because demand in that market dried up (in other words, they owned so much of the market they basically became the only players). Other banks realized this, and they quit buying anything in that market, leaving J.P. Morgan holding the bag, and knowing with Basel III slated to be coming out on Jan 1 (they postponed it until March) that they would be forced to dump a huge amount of positions to get within the leverage levels that the Basel III world wide banking agreement prescribed.
In other words they got hung out owning a bunch of trash whose market had dried up because everyone was trying to wind down their positions in the discount derivative markets, because Basel III was (is) coming down the pike, and they have to decrease their leverage.
Now the reason Dimon is getting a slap for this is because the Fed had promised the big five if they would wind down a percentage of their positions in the trash CDO & CDS derivative markets, that the Fed would cover their losses by buying up trash Mortgage Backed Securities from these banks on the other end...profit to offset the losses. Dimon, in classic banker fashion, tried to game the system, and got caught with his ass exposed.
Now they're lining up to break it off in him. It's almost a ritual with these guys.
That's all this is...
Last Edited by Saddletramp on 01/14/2013 11:38 PM
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