JPMorgan Chase: 50 Shades of Shit

It’s Now Official: The Financial House that Jamie Dimon Built Is the Riskiest Bank in the United States

By Pam Martens and Russ Martens: June 16, 2021 ~

Corporate media outlets like Bloomberg News, the CBS news program 60 Minutes, and CNBC have been seduced into obsequious behavior when it comes to Jamie Dimon, the Chairman and CEO of JPMorgan Chase, despite the fact that Dimon has presided over the most unparalleled crime spree in the history of U.S. banking. Between 2014 and September of last year, JPMorgan Chase has been charged with five criminal felony counts by the U.S. Department of Justice. The bank admitted to all five counts. (See the bank’s detailed rap sheet here.)

Despite this crime spree and endless probation periods followed by more crime, Dimon has further seduced federal bank regulators into allowing his unrepentant behemoth to become the most systemically risky bank in America. That assessment is not our opinion. It is the assessment of the federal government based on hard data.

The National Information Center is a repository of bank data collected by the Federal Reserve. It is part of the Federal Financial Institutions Examination Council (FFIEC), which was created by federal legislation to create uniformity in the examination of U.S. financial institutions by the various banking regulators.

Each year the National Information Center creates a graphic profile of banks measured by 12 systemic risk indicators. The data used to create these graphics come from the “Systemic Risk Report” or form FR Y-15 that banks are required to file with the Federal Reserve. To measure the systemic risk that a particular bank poses to the stability of the U.S. financial system, the data is broken down into five categories of system risk: size, interconnectedness, substitutability, complexity, and cross-jurisdictional activity. Those measurements consist of 12 pieces of financial information that banks have to provide on their Y-15 forms.

The most recent data for the period ending December 31, 2019 indicates that in 8 out of 12 measurements – or two-thirds of all systemic risk measurements – JPMorgan Chase ranks at the top for having the riskiest footprint among its peer banks.

To put it another way, the largest bank in the United States with an apparent insatiable appetite to commit felonies is also the riskiest bank based on other key metrics.

One of the 12 financial metrics is based on the Intra-Financial System Liabilities of each bank. This shows how much money a particular bank has at risk at other banks by using inputs such as how much of its funds it has on deposit with, or has lent to, other financial institutions; the unused portion of any credit lines it has committed to other financial institutions; and its holdings of debt, equity, commercial paper, etc. of other financial institutions. The idea, obviously, is to understand the interconnectivity of systemically-risky banks and whether one could cause a daisy-chain of contagion with other banks. (Think Lehman Brothers and Citigroup in 2008.)

JPMorgan Chase looks particularly dicey in terms of its Intra-Financial System Liabilities. The 2019 data indicate that JPMorgan Chase has $394.86 billion exposure in that category, which is $143 billion more than the next riskiest bank in that category, the Bank of New York Mellon.

Source: National Information Center

Equally unnerving, JPMorgan Chase ranks number one in the instruments that assisted mightily in blowing up Wall Street in 2008 – OTC (Over-the-Counter) derivatives. These are private contracts between two parties and lack the transparency or protections of being traded on an exchange. This means if the counterparty defaults and the exposure is large enough, it could put a federally-insured bank at risk. This is not a hypothetical outcome. The giant insurer, AIG, blew itself up in 2008 because it was holding tens of billions of dollars in OTC derivative contracts for the biggest banks on Wall Street that it could not pay its obligations on. The U.S. government was forced to nationalize AIG and paid more than $90 billion to the banks for their AIG derivative contracts and securities lending obligations that AIG could not make good on.

Among the biggest banks on Wall Street, JPMorgan Chase has the largest exposure to OTC derivatives, with $43.5 trillion exposure, according to the National Information Center data.

Source: National Information Center

As you might recall, the Dodd-Frank financial reform legislation of 2010 was supposed to end the hubris of OTC derivatives and force these vehicles into the sunlight of exchanges and central clearinghouses. But that hasn’t happened. Corporate business media is simply declining to report on it. According to the Office of the Comptroller of the Currency, the federal regulator of national banks, as of December 31, 2020, only “35 percent of banks’ derivative holdings were centrally cleared.” That’s more than a decade after the “reform” legislation was signed into law.

What you don’t want a high-risk institution to be is a pivotal cog in the U.S. payments system. But according to the Center’s data, that’s exactly how JPMorgan Chase has maneuvered itself. The bank was responsible for $337.49 trillion of the U.S. payments system in 2019. That’s more than the next two largest banks in that category combined: Bank of New York Mellon at $169 trillion; and Citigroup at $158 trillion.

Source: National Information Center

Outside of Wall Street On Parade, there are only two trial lawyers who seem to comprehensively understand what is really going on at JPMorgan Chase. In 2016 Helen Davis Chaitman and Lance Gotthoffer, wrote a book, JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook, comparing the bank to the Gambino crime family. The lawyers wrote:

“In Chapter 4, we compared JPMC to the Gambino crime family to demonstrate the many areas in which these two organizations had the same goals and strategies. In fact, the most significant difference between JPMC and the Gambino Crime Family is the way the government treats them. While Congress made it a national priority to eradicate organized crime, there is an appalling lack of appetite in Washington to decriminalize Wall Street. Congress and the executive branch of the government seem determined to protect Wall Street criminals, which simply assures their proliferation.”

Chaitman and Gotthoffer write further in their book:

“If Jamie Dimon is running a criminal institution, he should be prosecuted for it. And law enforcement has the perfect tool for such a prosecution: the Racketeer Influenced and Corrupt Organizations ACT (RICO).

“Congress enacted RICO in 1970 in order to give law enforcement the statutory tools it needed to prosecute the people who committed crimes upon orders from mob leaders and the mob leaders themselves. RICO targets organizations called ‘racketeering enterprises’ that engage in a ‘pattern’ of criminal activity, as well as the individuals who derive profits from such enterprises. For example, under RICO, a mob leader who passed down an order for an underling to commit a serious crime could be held liable for being part of a racketeering enterprise. He would be subject to imprisonment for up to twenty years per racketeering count and to disgorgement of the profits he realized from the enterprise and any interest he acquired in any business gained through a pattern of ‘racketeering activity.’ ”

On September 16, 2019 two current and one former trader at JPMorgan Chase were charged under the RICO statute for turning the precious metals desk of JPMorgan Chase into a racketeering enterprise. Dimon got a pay bump for his “performance” that year to $31.5 million.

There Is Not One Elected Official at the Federal Reserve

There Is Not One Elected Official at the Federal Reserve, But It Has Been Unilaterally Rewriting the Rules on Wall Street Since 2007

By Pam Martens and Russ Martens: June 9, 2021 ~

Source: https://wallstreetonparade.com/2021/06/there-is-not-one-elected-official-at-the-federal-reserve-but-it-has-been-unilaterally-rewriting-the-rules-on-wall-street-since-2007/

The Federal Reserve will release the results of its stress tests of the mega banks on Wall Street on June 24. That exercise is nothing more than a shell game to mislead Congress and the public into believing that actual due diligence is being done by the Fed on these massive federally insured banks with their inhouse trading casinos. (See Three Federal Studies Show Fed’s Stress Tests of Big Banks Are Just a Placebo.) In reality, the Fed is a completely captured appendage of Wall Street.

The Fed has outsourced the nitty-gritty supervision of Wall Street banks to the New York Fed, which is, literally, owned by the same banks. (See These Are the Banks that Own the New York Fed and Its Money Button.)

That the Fed is still allowed by Congress to have anything to do with supervising these banks shows just how far down the rabbit hole Wall Street’s money and influence in Washington has taken the country.

There is only one institution in America that has less credibility than the mega banks on Wall Street. That’s the Federal Reserve. Despite not having one elected official among its ranks, the Fed has unilaterally altered the U.S. financial system into a grotesque version of itself.

Let’s start with what the Fed did beginning in December of 2007 without any approval from Congress. The Fed created a sprawling octopus of bailout programs for the mega banks and their foreign derivative counterparties. The Fed then battled in court for years to keep Congress and the public from learning the astronomical sums the Fed had spent to prop up failed banks across Wall Street. When the government finally released an audit of the Fed’s bailout programs on July 21, 2011, the tally came to a cumulative $16 trillion. (See chart below.) But when the Levy Economics Institute added in other Fed bailout programs that the government audit had bypassed, the actual tally came to $29 trillion.

In what kind of democracy does an institution lacking even one elected official get to unilaterally prop up insolvent banking behemoths after those same banks cratered the U.S. economy through the creation of fraudulent mortgage products?

When the government audit was released, the office of Senator Bernie Sanders of Vermont released a statement, which read in part:

“The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.”

Sanders stated at the time, “The Federal Reserve must be reformed to serve the needs of working families, not just CEOs on Wall Street.”

That statement from Sanders came almost a decade ago in July 2011. Not only has the Fed not been reformed but it has unilaterally given itself new powers to replace the free market’s setting of interest rates for its own regime of Fed administered rates.

How is the Fed administering rates? It has ballooned its balance sheet to $7.9 trillion (yes, trillion) by gobbling up Treasury securities and mortgage-backed bonds from the surpluses on Wall Street and parking them on its own balance sheet. It’s been engaged in this sleight-of-hand, which it quaintly calls “quantitative easing” since the financial crisis of 2008.

On December 12, 2007, the Fed’s balance sheet stood at $881.75 billion. It has exploded to nine times that amount in the span of 13-1/2 years.

Even Fed insiders have spoken out against these artificially low interest rates administered by the Fed. Eric Rosengren, President of the Boston Fed, noted the following in a speech he delivered to the Marquette University Economics Department on October 8, 2020:

“…the extended low interest rate environment after the Great Recession helps explain why the leverage ratio rose over the past 10 years. Corporations increased their leverage as the prevailing low interest rate environment provided more capacity to take on debt.

“However, in an economic downturn, greater leverage – with its principal and interest repayment demands – may prove problematic for firms, or by extension the economy. This can result in firms being forced into bankruptcy, which hurts a wide range of stakeholders in addition to lenders and investors, including customers, suppliers, and employees.”

Rosengren added later in the speech:

“Clearly a deadly pandemic was bound to badly impact the economy. However, I am sorry to say that the slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult.”

The mega banks on Wall Street that are supposed to be supervised by the Fed are among those corporations that have gorged on debt. According to a June 2020 article at Bloomberg News, four of those banking behemoths have also been paying out more than they earned for years. The article revealed the following about the dividends and stock buybacks at Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo:

“From the start of 2017 through March, the four banks cumulatively returned about $1.26 to shareholders for every $1 they reported in net income, according to data compiled by Bloomberg. Citigroup returned almost twice as much money to its stockholders as it earned, according to the data, which includes dividends on preferred shares. The banks declined to comment.”

Citigroup was the largest of the bank basket cases during the crash of 2008. It received a secret $2.5 trillion in cumulative loans from the Fed. (See chart below.) The Fed was not permitted by law to make loans to an insolvent institution. But it decided, on its own, to make loans to this highly questionable institution.

Just how little Congress has done to rein in the Fed is clear from the multi-trillions of dollars the Fed showered on Wall Street trading houses during the repo loan crisis that began on September 17, 2019 – months before there was any COVID cases reported anywhere in the world. (See Fed Repos Have Plowed $6.6 Trillion to Wall Street in Four Months; That’s 34% of Its Feeding Tube During Epic Financial Crash.)

The Fed is not just administering interest rates. It is also administering the stock market. On March 12 of last year, the Dow was down 1900 points intraday and looking like it was about to plunge further. The Fed directed the New York Fed to make the announcement that it would be offering an unprecedented $1.7 trillion in repo loans to its primary dealers (trading houses on Wall Street) over that day and the next. The Dow immediately shaved 500 points from its losses.

As we reported on that date:

“To prop up the stock market further, the Fed announcement indicated that the $500 billion in 3-month loans and $500 billion in one-month loans will be offered weekly ‘for the remainder of the monthly schedule.’ That means $1 trillion a week will be available at below-market interest rates. That will be on top of the $175 billion the Fed is offering daily in one-day loans and the $45 billion it is offering each Tuesday and Thursday in 14-day loans. This is a dramatic expansion of the Fed’s balance sheet to support Wall Street — all without one vote, or debate, or hearing occurring in Congress.”

GAO Data on Fed’s Emergency Lending Programs During 2007-2010 Financial Crisis

Related Articles:

In the Midst of a Liquidity Crisis, the Fed Rolls Back Liquidity Requirements at Banks

Fed’s Latest Plan for Bailing Out Wall Street Banks: Let Them Overdraft their Accounts at the Fed

Despite Its Five Felony Counts, the Federal Reserve Has Entrusted $2 Trillion in Bonds to JPMorgan Chase

This Fed President Thinks Wall Street Banks Should Stop Whining for the Fed to Bail Them Out and Plan for their Own Liquidity

The Fed Has Created the Big Lie for Congress on its Repo Loans while the New York Fed Blocks Freedom of Information Requests

The Fed Is Offering $100 Billion a Day in Emergency Loans to Unnamed Banks and Congress Is Not Curious Enough to Hold a Hearing

 

Morgan Stanley Has Paid Fines for Two Decades for Abusing Customers

 

Morgan Stanley Has Paid Fines for Two Decades for Abusing Customers with In-House Products, Now It Plans to Stuff Bitcoin Futures into Its Mutual Funds and Retiree Annuities

By Pam Martens and Russ Martens: May 14, 2021 ~

Source: https://wallstreetonparade.com/2021/05/morgan-stanley-has-paid-fines-for-two-decades-for-abusing-customers-with-in-house-products-now-it-plans-to-stuff-bitcoin-futures-into-its-mutual-funds-and-retiree-annuities/

James Gorman, Chairman and CEO, Morgan Stanley

Morgan Stanley has more than 15,000 financial advisors calling clients each day with investment recommendations that are frequently engineered inside the firm. (These are known as in-house or proprietary products.) For the past two decades, we have been reading about regulatory fines against Morgan Stanley for abusing its customers in these home-grown offerings.

In November 2000, Morgan Stanley’s Dean Witter unit was charged by the National Association of Securities Dealers’ regulatory arm with selling over $2 billion of Term Trusts to more than 100,000 customers using an internal marketing campaign that characterized the investments as safe and low-risk. The NASD Regulation complaint said that Dean Witter targeted “certificate of deposit holders and other conservative investors, many of whom were elderly with moderate, fixed incomes…” The risky Term Trusts at one point had lost over 30 percent of their value and had to reduce their dividends by nearly a third.

The NASD Regulation complaint noted that “Dean Witter’s marketing effort for the Term Trusts also included high-pressure sales efforts at the regional and branch levels, include the use of sales contests and sales quotas.”

In 2003, Morgan Stanley was fined $50 million by the Securities and Exchange Commission for improper mutual fund sales practices. The SEC said the firm had set up a “Partners Program” in which a “select group of mutual fund complexes paid Morgan Stanley substantial fees for preferred marketing of their funds.” The firm further incentivized its brokers to recommend the purchase of the “preferred” funds by paying them increased compensation. The SEC said Morgan Stanley also failed to disclose the higher fees imposed on Class B shares of its proprietary funds versus sales of Class A shares.

In November 2019, the SEC again charged and fined Morgan Stanley for selling its customers more expensive share classes of mutual funds when less expensive share classes were available. The SEC noted that Morgan Stanley’s recommendations of more expensive share classes negatively impacted the overall return on the customers’ investments. According to the SEC, the activity had occurred for more than seven years, from at least July 2009 through December 2016.

One would think that Morgan Stanley might now be cautious and try to avoid further wrath from regulators over its mutual fund practices. Just the opposite appears to be the case. As we pointed out earlier this week, Bitcoin has been thoroughly discredited by some of the smartest people in the investment community. The only thing more risky than buying Bitcoin with cash is buying Bitcoin with leveraged futures contracts. And that’s just what Morgan Stanley told the SEC in recent filings that it plans to do.

Yes, Morgan Stanley plans to stuff Bitcoin futures contracts into a host of its own mutual funds. If that’s not troubling enough, Cayman Island subsidiaries also come into play with these Bitcoin futures contracts . Per the April 30, 2021 prospectus from Morgan Stanley:

“Special Risks Related to the Cayman Islands Subsidiary. Each of the Advantage Portfolio, Asia Opportunity Portfolio, Counterpoint Global Portfolio, Developing Opportunity Portfolio, Global Insight Portfolio, Global Opportunity Portfolio, Global Permanence Portfolio, Growth Portfolio, Inception Portfolio, International Advantage Portfolio, International Opportunity Portfolio and Permanence Portfolio may, consistent with its principal investment strategies, invest up to 25% of its total assets in a wholly-owned subsidiary of the Fund organized as a company under the laws of the Cayman Islands. Each Subsidiary may invest in GBTC [Grayscale Bitcoin Trust], cash-settled bitcoin futures and other investments…

“While each Subsidiary may be considered similar to investment companies, it is not registered under the 1940 Act and, unless otherwise noted in the Prospectus and this SAI, is not subject to all of the investor protections of the 1940 Act and other U.S. regulations. Changes in the laws of the United States and/or the Cayman Islands could result in the inability of a Fund and/or the Subsidiary to operate as described in the applicable Prospectus and this SAI and could eliminate or severely limit the Fund’s ability to invest in the Subsidiary which may adversely affect the Fund and its shareholders.”

Morgan Stanley includes numerous risks concerning its Bitcoin strategy, including the following:

“Exchanges on which bitcoin is traded (which are the source of the price(s) used to determine the cash settlement amount for a Fund’s bitcoin futures) have experienced, and may in the future experience, technical and operational issues, making bitcoin prices unavailable at times. In addition, the cash market in bitcoin has been the target of fraud and manipulation, which could affect the pricing of bitcoin futures contracts.

“In addition, bitcoin and bitcoin futures have generally exhibited significant price volatility relative to traditional asset classes. Bitcoin futures may also experience significant price volatility as a result of the market fraud and manipulation noted above.”

Assuming that there are investors in America that want exposure to potential “market fraud and manipulation,” we’re pretty sure that group of investors does not include retirees seeking safety through annuities.

And yet, we found this stunning prospectus from Morgan Stanley that was filed with the SEC on March 31 and updated on April 30 of this year. It pertains to the mutual funds offered by the Morgan Stanley Variable Insurance Fund, which it explains as follows:

“The Portfolios are not available for direct investment. Shares of the Portfolio are offered exclusively to certain life insurance companies in connection with particular variable life insurance and/or variable annuity contracts they issue. The insurance companies invest in shares of the Portfolios in accordance with instructions received from owners of variable life insurance or annuity contracts.

“Variable annuities are long-term investments designed for retirement purposes.”

Got that? Retirement purposes.

The prospectus includes the following among numerous risks involved with bitcoin:

“Bitcoin futures expose a Fund to all of the risks related to bitcoin discussed below and also expose the Fund to risks specific to bitcoin futures. Regulatory changes or actions may alter the nature of an investment in bitcoin futures or restrict the use of bitcoin or the operations of the bitcoin network or exchanges on which bitcoin trades in a manner that adversely affects the price of bitcoin futures, which could adversely impact a Fund and necessitate the payment of large daily variation margin payments to settle the Fund’s losses.”

Underscoring just how volatile Bitcoin is, consider this headline from CNBC on March 13 of last year: “Bitcoin loses half of its value in two-day plunge.” Do folks nearing retirement really want something in their investment portfolio that has already demonstrated the ability to lose half its value in the span of 48 hours?

On Tuesday, the SEC sent a tepid warning to Morgan Stanley and other Wall Street firms planning to stuff bitcoin futures into their mutual funds. The statement came from the SEC’s Division of Investment Management (IM) and included this:

“IM staff understands that some mutual funds are investing or seek to invest in Bitcoin futures and that these funds believe they can do so consistent with the substantive requirements of the Investment Company Act and its rules and other federal securities laws. IM staff, in coordination with staff from the Division of Examinations, will closely monitor and assess such mutual funds’ and investment advisers’ ongoing compliance with the Investment Company Act and the rules thereunder and the other federal securities laws. Investor protection and assessing the ongoing compliance of these funds is a top priority for the staff.

“In addition, IM staff, in coordination with staff from the Division of Economic and Risk Analysis and Division of Examinations, will closely monitor the impact of mutual funds’ investments in Bitcoin futures on investor protection, capital formation, and the fairness and efficiency of markets.”

For how the SEC is rapidly evolving into the LifeLock commercial, where it simply “monitors” a situation rather preventing financial crimes against the public, see our previous reporting here.

It should also be noted that Morgan Stanley is the least appropriate firm to be engaging in a high stakes game with its reputation. During the last financial crisis, the firm was in such dire straits that the Federal Reserve had to loan it a cumulative total of $2.04 trillion in emergency bailout funds. (Yes, trillion.) See page 131 of the GAO’s Audit of the Fed’s secret loans here.

A Bitcoin futures contract is a derivative and Morgan Stanley, in particular, does not have a good history with derivatives. Part of Morgan Stanley’s stresses during the last financial crisis on Wall Street came from one of its traders, Howie Hubler, losing $9 billion of the firm’s capital betting on subprime debt. Michael Lewis, in his book The Big Short, describes Hubler as a star bond trader at Morgan Stanley, making $25 million in one year prior to the collapse of the subprime mortgage market. Hubler was one of those who made early bets that the lower-rated subprime bonds would fail. Hubler used credit default swaps (derivatives) to make his bets. But because he had to pay out premiums on these bets until the collapse came, he placed $16 billion in other bets on higher-rated portions of the subprime market, according to Lewis. When those bets failed, Morgan Stanley lost at least $9 billion.

It’s time for the Biden administration to appoint real watchdogs to police, rather than “monitor,” Wall Street.

A Trader’s Federal Lawsuit Against JPMorgan Chase Offers a Window into the Crime Culture

A Trader’s Federal Lawsuit Against JPMorgan Chase Offers a Window into the Crime Culture at the Five Felony-Count Bank

By Pam Martens and Russ Martens: April 20, 2021 ~

Source: https://wallstreetonparade.com/2021/04/a-traders-federal-lawsuit-against-jpmorgan-chase-offers-a-window-into-the-crime-culture-at-the-five-felony-count-bank/

Jamie Dimon, Chairman and CEO, JPMorgan Chase

Donald Turnbull, a former Global Head of Precious Metals Trading at JPMorgan Chase, has filed a doozy of a federal lawsuit against the bank. Turnbull worked on the same JPMorgan Chase precious metals desk that was deemed to be a racketeering enterprise by the U.S. Department of Justice when it handed down indictments in 2019. This was the first time that veterans on Wall Street could recall employees of a major Wall Street bank being charged under the Racketeer Influenced and Corrupt Organizations Act or RICO statute, which is typically reserved for organized crime.

JPMorgan Chase, the largest bank in the United States, has the further unprecedented distinction for a U.S. bank of being charged with five felony counts by the Department of Justice in a six-year span of time, running from 2014 to 2020. The bank admitted to all of the charges while its Board kept Chairman and CEO, Jamie Dimon, at the helm throughout the unprecedented crime wave, giving the impression that crime is an accepted business model at the bank.

Turnbull’s lawsuit, filed earlier this month in the federal district court for the Southern District of New York, alleges that the bank trumped up false charges against Turnbull as a pretext to terminate him when it was actually terminating him for cooperating with the Department of Justice’s investigation.

Turnbull was not one of the traders that was indicted by the Department of Justice. Nonetheless, Turnbull states in the lawsuit that the indicted traders received better benefits when they were released from employment than he did. Despite a seriously-ill wife, Turnbull states in the lawsuit that JPMorgan Chase cancelled his health insurance, did not pay him severance, and took away his unvested stock awards.

The lawsuit offers multiple examples of how indicted traders were treated in a far more favorable manner than was Turnbull. One example, of many cited in the lawsuit, reads as follows:

“Trader C was employed by JPMorgan between 2008 and 2019. JPMorgan recognized that Trader C’s trading practices ‘could be perceived as spoofing’ when it began an internal investigation of his conduct in 2016. JPMorgan—having concluded that his conduct did not meet company standards—issued a verbal warning. But Trader C’s conduct so obviously violated JPMorgan’s ‘could be perceived as spoofing’ ‘standard’ that the Bank used examples of his order sequences in employee training materials as illustrations of how not to trade— because the conduct looked like spoofing. Nevertheless, JPMorgan retained him in its employ until he resigned three years later to plead guilty to eight years of spoofing, and a related CFTC enforcement action acknowledged that he placed ‘thousands’ of spoof orders.”

The lawsuit offers the court this analysis of why Turnbull had to be “neutralized.”

“Mr. Turnbull’s account lent credibility to the notion that the Bank itself was the most culpable entity in the alleged conspiracy; the risk he posed had to be neutralized…JPMorgan sought to reframe the narrative as though the defendants operated in their allegedly manipulative manner without JPMorgan’s knowledge.”

This is not the first time that an employee at JPMorgan Chase has alleged that they were fired and then framed for reporting wrongdoing.

In 2013, one of JPMorgan Chase’s licensed brokers, Johnny Burris, was employed in a JPMorgan Chase branch near Phoenix, Arizona. He complained that the bank was pressuring him to sell its own proprietary mutual funds to clients rather than allowing him the independence to select the funds that he felt were in the clients’ best interests. After Burris refused to sell the in-house funds, the bank terminated his employment. The bank then had one of its own employees draft bogus customer complaints against Burris and file them with FINRA, the self-regulator that also oversees Wall Street’s private justice system known as binding or mandatory arbitration, according to the New York Times. During the arbitration hearing, the JPMorgan employee denied that he had authored the claims for the customers.

In 2015, New York Times’ reporter Nathaniel Popper wrote an article on the Burris matter. Popper quoted the customers, by name, denying that they had made the complaints or had even seen the text of what they were supposed to have alleged against Burris.

In December 2015, the Securities and Exchange Commission appeared to validate the very complaints alleged by Burris, fining JPMorgan Chase $267 million and making it admit to wrongdoing. JPMorgan Chase paid an additional fine of $40 million to the Commodity Futures Trading Commission in a parallel action. Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, stated the following in the SEC’s announcement of the fine:

“In addition to proprietary product conflicts, JPMS [JPMorgan Securities] breached its fiduciary duty to certain clients when it did not inform them that they were being invested in a more expensive share class of proprietary mutual funds, and JPMCB [JPMorgan Chase Bank] did not disclose that it preferred third-party-managed hedge funds that made payments to a J.P. Morgan affiliate. Clients are entitled to know whether their adviser has competing interests that might cause it to render self-interested investment advice.”

There was also the case of Alayne Fleischmann, as Matt Taibbi detailed in a report for Rolling Stone in 2014. Taibbi summarizes the matter as follows:

“Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as ‘massive criminal securities fraud’ in the bank’s mortgage operations.”

Fleischmann, a lawyer, put her concerns in writing to management. Taibbi writes that she was “quietly dismissed in a round of layoffs” the following year.

The crime culture at JPMorgan Chase has another distinction. As far as we are aware, it is the only major bank on Wall Street to be compared to the Gambino crime family in a book authored by two trial attorneys.

In 2016 trial lawyers Helen Davis Chaitman and Lance Gotthoffer released the book JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook. In chapter 5 of the book, Chaitman and Gotthoffer provide this analysis: (JPMC stands for JPMorgan Chase.)

“In Chapter 4, we compared JPMC to the Gambino crime family to demonstrate the many areas in which these two organizations had the same goals and strategies. In fact, the most significant difference between JPMC and the Gambino Crime Family is the way the government treats them. While Congress made it a national priority to eradicate organized crime, there is an appalling lack of appetite in Washington to decriminalize Wall Street. Congress and the executive branch of the government seem determined to protect Wall Street criminals, which simply assures their proliferation.”

Chaitman and Gotthoffer then offered the path going forward:

“If Jamie Dimon is running a criminal institution, he should be prosecuted for it. And law enforcement has the perfect tool for such a prosecution: the Racketeer Influenced and Corrupt Organizations ACT (RICO).

“Congress enacted RICO in 1970 in order to give law enforcement the statutory tools it needed to prosecute the people who committed crimes upon orders from mob leaders and the mob leaders themselves. RICO targets organizations called ‘racketeering enterprises’ that engage in a ‘pattern’ of criminal activity, as well as the individuals who derive profits from such enterprises. For example, under RICO, a mob leader who passed down an order for an underling to commit a serious crime could be held liable for being part of a racketeering enterprise. He would be subject to imprisonment for up to twenty years per racketeering count and to disgorgement of the profits he realized from the enterprise and any interest he acquired in any business gained through a pattern of ‘racketeering activity.’ ”

But despite the unprecedented and recurring pattern of crime at JPMorgan Chase, neither the bank’s federal regulators nor its Board of Directors has seen fit to dismiss Jamie Dimon without health benefits, severance or unvested stock awards. Instead, the Board has made Dimon a billionaire while they are also richly rewarded. (See If You’re Baffled as to Why JPMorgan Chase’s Board Hasn’t Sacked Jamie Dimon as the Bank Racked Up 5 Felony Counts – Here’s Your Answer.)

 

Senator Warren: “BlackRock Manages More Assets than the Entire GDP of Japan.”

Senator Warren: “BlackRock Manages More Assets than the Entire GDP of Japan.” (How About JPMorgan Chase Having Custody of Assets That Are 5.8 Times the GDP of Japan.)

By Pam Martens and Russ Martens: March 25, 2021 ~

Source:  https://wallstreetonparade.com/2021/03/senator-warren-blackrock-manages-more-assets-than-the-entire-gdp-of-japan-how-about-jpmorgan-chase-having-custody-of-assets-that-are-5-8-times-the-gdp-of-japan/

Senator Elizabeth Warren Speaking at Senate Banking Hearing, March 24, 2021

Yesterday, during a Senate Banking hearing with witnesses Fed Chair Jerome Powell and Treasury Secretary Janet Yellen, Senator Elizabeth Warren grilled Yellen on why BlackRock wasn’t being investigated for posing a systemic risk to the U.S. financial system. Warren stated:

“BlackRock is the world’s largest asset management firm, overseeing nearly $9 trillion in assets. That’s more than double where it was 10 years ago. It also holds a stake in just about every company listed on the S&P 500. To put that in perspective, Blackrock manages more assets than the entire GDP of Japan, or Germany, or Great Britain or any other nation in the world, except the United States and China.”

BlackRock may, indeed, pose a systemic risk to the U.S. financial system but it’s not because it holds a stake in just about every company listed on the S&P 500. It’s because it produces Exchange Traded Funds (ETFs) which promise intraday liquidity for buyers and sellers, which clearly is not the case during a market panic. During the market panic over the pandemic last year, the Fed gave a no-bid contract to BlackRock to manage its corporate bond buying programs, which included allowing BlackRock to bail out its own junk bond and investment grade bond ETFs that were tanking. (See Icahn Called BlackRock “An Extremely Dangerous Company”; the Fed Has Chosen It to Manage Its Corporate Bond Bailout Programs.)

But if we’re going to seriously talk about systemic risk to the U.S. financial system we need to start at the top rung of the ladder. That’s JPMorgan Chase. According to the Office of the Comptroller of the Currency, the regulator of national banks, JPMorgan Chase “maintains one of the world’s largest and most complex fiduciary businesses with total fiduciary and related assets of $29.1 trillion, including $1.3 trillion in fiduciary assets and $27.8 trillion of non-fiduciary custody assets.”

Not to put too fine a point on it, but $29.1 trillion is 5.8 times the $5 trillion GDP of Japan in 2020 while BlackRock’s assets are just 1.8 times Japan’s GDP in 2020.

In addition, BlackRock has never been charged with a felony by the U.S. Department of Justice. JPMorgan Chase has been charged with five felony counts by the Department of Justice in the last seven years and admitted to all of them.

Making it appear that felonious behavior is a feature, not a bug, at JPMorgan Chase is the fact that its Board of Directors has seen fit to keep Jamie Dimon as its Chairman and CEO throughout this unimaginable crime spree at the largest federally-insured bank in the United States. The Board has also very generously compensated Dimon. (See Jamie Dimon Gets $31.5 Million Pay Despite Bank’s Criminal Charges as U.S. Slides Below Uruguay on Corruption Index.)

And it’s not like the U.S. Senate isn’t aware of the systemic risk that JPMorgan Chase poses to the U.S. financial system. In 2012 and 2013 the Senate’s Permanent Subcommittee on Investigations conducted a nine-month investigation into the London Whale scandal at JPMorgan Chase. The bank had used as much as $157 billion of deposits at its federally-insured bank to make wild gambles in derivatives in London. The bank lost at least $6.2 billion on those trades.

Senator McCain was the ranking member of the Senate’s Permanent Subcommittee on Investigations at the time its 300-page report on the London Whale was released. At the hearing on March 15, 2013 that accompanied the report, Senator McCain said this:

“This investigation into the so-called ‘Whale Trades’ at JPMorgan has revealed startling failures at an institution that touts itself as an expert in risk management and prides itself on its ‘fortress balance sheet.’  The investigation has also shed light on the complex and volatile world of synthetic credit derivatives. In a matter of months, JPMorgan was able to vastly increase its exposure to risk while dodging oversight by federal regulators. The trades ultimately cost the bank billions of dollars and its shareholders value. These losses came to light not because of admirable risk management strategies at JPMorgan or because of effective oversight by diligent regulators. Instead, these losses came to light because they were so damaging that they shook the market, and so damning that they caught the attention of the press. Following the revelation that these huge trades were coming from JPMorgan’s London Office, the bank’s losses continued to grow.  By the end of the year, the total losses stood at a staggering $6.2 billion dollars…”

During the 2008 Wall Street crash, Americans learned the meaning of “too big to fail” when it came to mega banks on Wall Street holding federally-insured deposits while also being allowed by their regulators to run trading casinos in stocks, subprime debt, commodities and derivatives. The banks and the foreign counterparties to their derivative trades were bailed out – to the cumulative tune of $29 trillion in secret loans made by the Fed from at least December 1, 2007 through July 21, 2010.

In the next crash on Wall Street – which is only a matter of when, not if – the American people will finally grasp that the Dodd-Frank financial “reform” legislation of 2010 did nothing meaningful to actually reform Wall Street. It simply allowed these mega banks to grow even bigger and more systemically connected to one another, creating a domino effect of failures when one of the mega banks becomes insolvent.

In 2016 researchers at the U.S. Treasury’s Office of Financial Research (OFR), Jill Cetina, Mark Paddrik and Sriram Rajan, meticulously spelled out for federal regulators and the general public the potential for contagion and systemic counterparty risks building up inside these Wall Street banks. The report found that the Fed’s stress tests were not capturing the real risk on Wall Street. According to the researchers, the critical issue is not what would happen if the largest counterparty to a specific bank failed but what would happen if that counterparty happened to be the counterparty to other systemically important Wall Street banks.

The researchers explained that the Fed’s stress test “looks exclusively at the direct loss concentration risk, and does not consider the ramifications of indirect losses that may come through a shared counterparty, who is systemically important.” By focusing on “bank-level solvency” instead of the financial system as a whole, the Federal Reserve is very likely dramatically underestimating the fragility of the U.S. financial system in times of stress.

According to the 2019 Systemic Risk Indicators released by the National Information Center, part of the Federal Financial Institutions Examination Council (FFIEC), JPMorgan Chase ranks at the very top of the list for risk in eight out of the 12 risk indicators measured.

The scariest statistic is where this five-felony bank stands in the U.S. payments system. According to its own data submitted on its Y-15 filing, JPMorgan Chase was responsible for $337 trillion in payments over the prior four quarters. That’s $168 trillion larger than the next largest bank in the payments category, Bank of New York Mellon.

Eustace Mullins on the Magic Money Machine

 

The finances of European occupation, with references to Italy