The Tarnished Record of JP Morgan

December 22nd, 2013
in Op Ed

I Don’t Usually Reply To Comments, But…

by Shah Gilani, Money Morning

Wall Street Insights & Indictments isn’t just my forum, it’s a forum for everyone to join in the conversation.

Of course I read all your comments, every last one, and I love them all.

When you don’t agree with me, you tell me. I appreciate that. It makes me think twice.

I don’t usually reply to comments, not because I don’t have an answer, or because I don’t want to thank you for your inspiration, or because I don’t want to address your differences of opinion. It’s simply because it’s not fair to address some comments and not others.

Follow up:

Today, I apologize to all of you who would like to have had me reply to your comments because I’m going to reply to one particularly pointed comment by one gentleman. He penned the comment below, and in the holiday spirit of giving back, I will reply.

Shah Gilani obviously has no idea about JP Morgan and what transpired during the financial crisis. I have challenged his articles in the past with no response. It appears to me that he is a puppet for this corrupt Obama Administration. JP Morgan did not want any money from the Fed, but were requested to take $40 billion to stabilize the banking system and not have all the depositors transfer their deposits. The government also begged JPM to take over Bear Sterns and Washington Mutual to help stabilize the financial system. Without JP Morgan’s assistance, the FDIC would have lost hundreds of billions of dollars, all the depositors at these banks would have lost billions of dollars, and thousands of jobs would have been lost. I cannot believe that Money Map condones your misinformation. The $6 billion London Whale was a certainly a mistake by employees. But the actual loss impacted JPM investors, not the government. I would fire Shah Gilani if I were Money Map. HOW ABOUT A RESPONSE THIS TIME? He seems to like negative propaganda, but not accurate and fair analysis. ~ Fred Johns

Thank you for your comment. By the good graces of Money Map, I’m still here to reply to you.

So here’s the response you shouted for…

Dear Mr. Johns,

First, I don’t know what your experience is on Wall Street or if you’ve worked for any of the world’s largest banks, but I have 30 years of experience on Wall Street and ran the futures and options hedging business for the government bond desk, the currency desk, and the derivatives desk in the Treasury (where trades for the bank’s account and customers are made), at Lloyds Bank, one of the largest banks in the world. So, I have an idea of what transpired during the financial crisis.

You say JPMorgan didn’t want any money from the Fed. But as the world now knows, thanks to Bloomberg Markets demanding a look at “secret” Fed documents in 2011, JPMorgan got $60 billion in undisclosed loans from the Fed through its various liquidity provision programs. That backstopping doesn’t include the additional hundreds of billions JPMorgan benefited from on account of its counterparties being backstopped.

The Treasury wanted JPM to take $25 billion – not $40 billion – which it took. Of course they were saying they didn’t need it. All the big banks were on the edge of insolvency (Citi, in particular, actually was). They all lied, but they all came to the trough and drank.

As far as buying Bear Stearns, JPM stole it. Not only did they get what they wanted from the buyout, they got the government to backstop $29.9 billion in soured assets that they didn’t want to take the hit on. Buying Bear was a great deal for JPM.

And Washington Mutual? The purchase of WaMu from the FDIC for $1.9 billion launched JPM from fourth place in the country to first place in terms of branches and deposits. JPM was not in California or Florida. Not only did they get WaMu’s $307 billion in assets, they got 700 branches in California and 250 branches in Florida, two states they were desperate to get into. WaMu wasn’t a good deal for JPM. It was a great deal.

And the losses on both WaMu’s and Bear’s bad assets give JPM untold billions in write-offs for years to come.

The FDIC would have split up WaMu and divided assets and depositors’ liabilities up across as many banks as they needed to, but they had a better plan in the shadows. They were going to run it themselves. In the end, no depositors would have lost their money, the government would not have let that happen, never. They couldn’t have let it happen because it would have caused a final run on all of America’s banks. It would have been game over.

And the London Whale? Jamie Dimon lied to Congress about the trades, calling them hedges and a tempest in a teapot. If you are such a Jamie Dimon fan, you probably know all the crimes his bank is guilty of and how many tens of billions they have paid to settle their schemes. Dimon himself, you probably know, bought $11 million of his stock in 2009 when no one else knew the bank had gotten $60 billion from the Fed.

He’s such a good manager and such a nice guy, isn’t he?

Lastly, the idea that I’m a puppet for the corrupt Obama Administration is actually funny. In case you haven’t been reading most of what I write about Obamarama, saying I’m not a fan of his is like calling the Grand Canyon a ditch.

While I welcome your comment, Mr. Johns, it might be incumbent upon you to know at least a smattering of facts before you level your charges against me and shill for a criminal enterprise like JPMorgan Chase.

Thank you for the opportunity to address your comments. I hope you keep writing in. After all, this is America and freedom of speech applies equally to you as it does to me.

Happy Holidays!


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