JPMorgan Pays for Shorting Madoff Without Telling Anyone • Hacker News Board

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#81

Post by bonemachine » Thu, Jan 09, 2014, 7:43 PM UTC

retube wrote: post #74

bonemachine wrote: post #47

Earlier quoted context omitted.

they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. Ugh. They were fined for selling bad mortgage bonds. Not for acquiring Bear and WaMu. It also ends up being closer to $5B due to tax breaks and other incentives, BTW.

His point is that the majority of the fine levied (80%) against JPM was in relation to WaMu and Bear Stearns behaviour BEFORE JPM bought them. The real crazy tho is that JPM _knew_ that some potentiually dodgy stuff had been going on at WaMu/BS and sought assurance from the regulators that they would not be held liable if they bought these two firms - which they were basically doing as a favour for the US Gov. Then t…

[They] sought assurance from the regulators that they would not be held liable if they bought these two firms... Then the regulators fucked them anyway.

Not doubting you, but can you provide more substantiation / detail on that assertion, please? What kind of assurances were given, and when? And more to the point: were they contractual assurances, or were they not? I highly doubt that JPM went into the deal blind, and even more so, that they would have taken on any significant risk of open-ended liabilities on the basis of a handshake.

And they certainly didn't go into the deal as a "favor" to anyone -- they did it to save their tender, pink skins, knowing full well what the future liabilities would likely be.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#82

Post by bonemachine » Thu, Jan 09, 2014, 7:45 PM UTC

spinlock wrote: post #66

bonemachine wrote: post #47

Earlier quoted context omitted.

they were basically fined $13B for acquiring WaMu and Bear Sterns in the financial crisis. Ugh. They were fined for selling bad mortgage bonds. Not for acquiring Bear and WaMu. It also ends up being closer to $5B due to tax breaks and other incentives, BTW.

The crimes happened at Bear and WaMu. It did not happen on Jamie Diamon's watch.

Aw -- you're just being silly when you say that.

You know perfectly well that when companies make acquisitions, that they assume both the liabilities along with all the other assets they're acquiring.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#83

Post by bonemachine » Thu, Jan 09, 2014, 7:52 PM UTC

ig1 wrote: post #59

bonemachine wrote: post #28

Earlier quoted context omitted.

JPM reported Madoff to the SEC in the 90's. They also reported him to the British banking authorities much more recently. Also: the actions for which JPM was recently fined concern primarily the years 2007 and 2008. JPM may have acted differently in the 1990s, but that's practically irrelevant to what happened ten years later -- especially given the extent to which the size, and the number of unsophisticated investor…

It was a UK trading desk at JPM that identified it as suspicious and reported it in the UK. It's pretty blurry about what the reporting requirements should be in such cases. Should firms be required to report any suspicious activity found by any team in any location to every regulator that covers them ? (generally the rule at most banks is to report it to the legal team who then figures out who should be notified)

Should firms be required to report any suspicious activity found by any team in any location to every regulator that covers them ?

Don't know about "any activity, any location", but the SEC's position is that JPM failed to report specific activities to U.S. Treasury's enforcement unit (FinCEN), as per the requirements of its charter.

If you need more clarification as this finding, you might want to look into the court documents.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#84

Post by bonemachine » Thu, Jan 09, 2014, 8:23 PM UTC

spinlock wrote: post #69

guimarin wrote: post #42

That dimon is still being targeted astounds me. This is an example of why even those in power should not be the nail that sticks out. In case you're wondering why dimon, why JP Morgan it all traces back to this [1] event. 1. in 2008/2009, can't find it on Google bc why have a date search anymore. Jamie Dimon was called before the finance committee to explain the financial meltdown. He allegedly stormed out after repr…

Congress shouldn't have that much influence over the SEC. I always assumed it was because Dimon is the only CEO able to admit he's not infallable. I also think JPM is ahead of the curve on action against them. Again, they'll admit mistakes and take the fines. The rest of the street is denying everything but I believe they'll eventually be targetted as well.

Congress shouldn't have that much influence over the SEC.

Hate to break this to you, but Congress created the SEC.

You also might want to look into Articles 1 and 8 of the Constitution, BTW.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#85

Post by mathattack » Thu, Jan 09, 2014, 8:27 PM UTC

rhizome wrote: post #32

mathattack wrote: post #30

Earlier quoted context omitted.

The reality on banks like this is that they are very hard to manage. There are specialists in every corner, and somehow the head of the bank has to keep tabs on all of them. Almost always, the money makers outearn the risk managers and compliance folks, so it's a game of catch-up. (Any bank that flipped it would go out of business - like the one honest used car salesman would.)

If I didn't know better I'd think you were saying these banks are too big.

It depends on your point of view. Too big for what? Big can come in different manners. # of people to watch when 1 or 2 can cause trouble. Size of assets. # of distinct businesses. Size of risk position. Size of counterparty risk.

Re: JPMorgan Pays for Shorting Madoff Without Telling Anyone

#86

Post by rhizome » Thu, Jan 09, 2014, 8:42 PM UTC

mathattack wrote: post #85

rhizome wrote: post #32

Earlier quoted context omitted.

If I didn't know better I'd think you were saying these banks are too big.

It depends on your point of view. Too big for what? Big can come in different manners. # of people to watch when 1 or 2 can cause trouble. Size of assets. # of distinct businesses. Size of risk position. Size of counterparty risk.

So big that they're hard to manage.