morgan-chase

Brookfield Sells 1.1 Million-SF Office Tower in Chicago

January 3, 2011

Brookfield completed its sale of 300 S. Riverside Plaza, a 23-story, 1.08 million-square-foot office tower in Chicago’s West Loop, on behalf of one of its funds. A private investment group led by Joseph Mizrachi and David Werner purchased the trophy asset for approximately $194 million, or more than $180 per square foot. Brookfield acquired the property from JPMorgan Chase & Co. for $135 million or $125.50 per square foot in September 2006. During…

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Rabbi Shmuley Boteach: Will Banks and JP Morgan Chase Be More Ethical in the Coming Year?

December 24, 2010

Tis’ the season to be jolly. Er.. if you’re a Wall Street banker, that is, where billions in end-of-year bonuses are about to rain down like manna from heaven. Wall Street is the one place in America where the economic downturn has not reached. Over the holiday period flashy Ferraris will be fired up and driven off showroom floors. The Hamptons will emerge from a deep winter thaw, warmed by the fires of credit cards working at such a feverish pace that plastic will be hard-pressed not to melt. Oh yes, happy days are here again. If only the prophet Amos were alive to see it, he might have proclaimed, “Let champagne flow like a river; Don Perignon like a mighty spring.” King David would likewise have cheered, “Yay, though I walk through the valley of the shadow of unemployment, I shall fear no recession, for my government bailouts are with me… My cash runneth over.” OK, ok. So I sound a little bit envious. I confess. But only a little. I do not begrudge the success of my Wall Street brothers. Not because I have mastered jealousy but because I make a living counseling people whose lives are in crisis. And I’ve discovered that the only thing that buys happiness on this earth is a life lived as a blessing to others. Excessive consumption is naught by a manifestation of the black hole at our center and the human need to fill it with an endless supply of adult toys (OK, calm down. I mean, of course, the more respectable, if somewhat infantile, adult toys of the car, yacht, and plane variety). Not that there aren’t many Wall Street bankers who fill their lives with virtue rather than Hermes. Many of my former Oxford students run hedge funds and work on the street. The majority of them make money to give it away to the needy around the world and support their families in dignity. They reject conspicuous consumption, live faith-based lives, and are communally engaged. But they might just be the exception that proves the rule. There can be little doubt that the success of the banking industry is critical to the success of the overall American economy. But that success dare not be made off the backs of hard-working Americans. Let them Wall Street traders be paid a king’s ransom. Let them eat cake. But when government bailouts are chiefly responsible for their astronomical profits, then they better make darn sure that the spigot is not suddenly turned off for desperate homeowners who need modifications to stay in their homes. I used to have a much higher opinion of Wall Street and indeed, as I wrote above, many of my closest friends are bankers. But a series of unfortunate incidents soured me, nearly all of them with JP Morgan Chase and its subdivision Bear Stearns. I have earlier written of Bear Stearns’ losing about forty percent of my retirement savings and then trying to triple charge me with fees when another trader moved the money into mutual funds. Wow. You’d think that after everything my wife and I had been through they would at least not try and gouge me. I shared how an old and influential friend at the bank then told me that any attempt to recover the paltry $3900 I had requested, amid losses of tens of thousands, due to consequences of the triple-charging on the part of the young trader, would be labeled extortion. Bigger wow! If you complain they threaten you? Nobody likes to be threatened or bullied so I had no choice but to sue Bear Stearns. I have tried to settle the suit. Bear is offering a pittance. Still I indicated a willingness to accept the small sum to simply put the matter behind me. This was never about money but about a regular person showing Wall Street that they can’t simply push us around. But the draconian confidentiality terms Bear is demanding is making even a small settlement difficult. As a writer, broadcaster, and columnist, I talk about the state of the economy and the state of our banks as an important barometer of the overall health of our nation’s values. And it seems to me that rather than large institutions like Bear Stearns try to gag people from being critical, especially when it is the only remedy available to us given our weakness in taking on multi-billion dollar institutions, it is better to correct their inner culture to act fairly and ethically in the first place. The New York Times Magazine recently ran a cover story that seemed like a puff piece on JP Morgan CEO Jamie Dimon entitled, “America’s Least-Hated Banker.” (That’s what passes for a compliment for bankers today.) I would like to believe that he’s a good guy. Perhaps he is the genius they say he is (though I was startled to see writer Roger Lowenstein disclose halfway through the piece that “my mother is friendly with Dimon’s parents.” I kind of wondered why he was selected him to write the profile.) But to prove it, Dimon must demonstrate that he is changing the culture at Bear Stearns and JP Morgan Chase and that he gets that while it’s nice to make bucket loads of money and afford the luxuries of life, it’s even more important to uphold the highest ethical standards while doing so. Rabbi Shmuley Boteach is founder of This World: The Values Network, an organization dedicated to promoting universal Jewish values in the culture. The international best-selling author of 24 books, his most recent work is “Renewal: A Guide to the Values-Filled Life.” Follow him on Twitter @RabbiShmuley.

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22 Arrested In Foreclousre Protest At Chase

December 16, 2010

LOS ANGELES — Police arrested 22 demonstrators who blocked entry to a downtown Chase bank branch Thursday to protest what they said were unfair home foreclosures. The demonstrators, which included homeowners facing foreclosure, community advocates and labor leaders, silently allowed officers to bind their wrists behind their backs with plastic restraints and guide them into a police van. Dozens more demonstrators chanted and marched on a nearby sidewalk holding sighs that said “Stop Bank Greed, Save Our Neighborhoods” as the 12 men and 10 women were taken into custody. Detective Gus Villanueva said there were no injuries to police or protesters, who would be cited for trespassing and released. Alliance of Californians for Community Empowerment member David Mazariegos said the demonstrators hoped to bring attention to the plight of people who were unjustly losing their homes. He said banks’ failure to modify many borrowers’ loans puts them in violation of the Home Affordable Modification Program in which lenders agreed to participate as part of the bank bailout. “The banks are not helping anyone stay in their homes,” Mazariegos said. “It’s highway robbery, what they’re doing to these people.” ACCE director Amy Schur said the groups were singling out JPMorgan Chase & Co. because most of the borrowers whose foreclosures and evictions they are contesting are serviced by that bank. A Chase spokeswoman did not immediately return a phone call Thursday.

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Sheriff Who Refused To Evict Foreclosed Homeowners Forced To Resume

November 20, 2010

CHICAGO — An Illinois sheriff who halted foreclosure evictions last month because some bank employees weren’t following the proper procedures said Friday he’s been forced to order his deputies to carry them out, but he will continue investigating the matter and could charge banks and their employees with crimes. Cook County Sheriff Tom Dart said he is only ordering evictions to resume because county prosecutors told him that he was legally bound to carry out foreclosure eviction orders signed by a judge. “For the people who have been involved with this and think now that because the (Cook County) State’s Attorney’s office has ordered me to go ahead with the evictions that everything’s fine . . . No, we are going to be looking at you for criminal violations,” Dart said. “You may have got through one storm now, the other one is coming.” Dart singled out Bank of America, JP Morgan Chase and GMAC/Ally Financial last month for problems with eviction notices. He said Friday that investigators continue to find problems with bank employees signing off on foreclosure documents they haven’t read, although he did not single out individual companies. “When we asked a month ago . . . send me an affidavit to say that everything was done legally, not one organization, law firm handling these cases, not one of them sent in one document,” Dart said. “Not one, and they had over a month to do it.” The sheriff said that if anything, his office’s investigation has shown the problems that prompted the moratorium were even more widespread than he first thought. “We are being overwhelmed with abundant evidence that there are irregularities,” he said, adding that just a cursory investigation by his financial crimes unit has shown problems in eviction order after eviction order. “Irregularities are going on all over the place here. It’s the norm.” Tom Kelly, a spokesman for Chase, said that steps have been taken to ensure that foreclosure documents don’t have any problems in anticipation for the resumption of evictions later this month. Gina Proia, a spokeswoman for Ally Financial, said her company has been examining foreclosure documents carefully and has not found any cases of inappropriate notices being sent. A spokesman for Bank of America did not immediately return calls for comment. Dart said investigators found clear evidence of “robo-signing,” in which lenders’ employees sign scores of documents in a day that they could not have possibly have read to determine whether the foreclosures were legal. Investigators have, for example, come across documents signed by employees who have admitted in depositions in other parts of the country that they were taking part in “robo-signing,” he said. He also said that law school students have agreed to examine a total of 2,200 cases that have been submitted to his office, including the 1,800 that are ready for evictions to be carried out, to determine whether there were any irregularities. Cases where problems are spotted will be investigated further by his office to determine if criminal charges should be filed, he said. Dart also hinted that just because he is being forced to resume evictions, the banks shouldn’t expect his deputies to start carrying out the 1,800 evictions he said are ready to be executed. “We will move ahead with those cases, but we’ll do it in a thoughtful way,” he said, adding that the deputies would do things like put notices on doors and suggesting to homeowners places they might go for legal help. “We’re going to make sure all their rights are being looked after and we are proceeding in a lawful way where the due process people deserve is being looked after.”`

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Will Ferrell Loses Lawsuit Against JPMorgan, Slapped With $600,000 Penalty

November 18, 2010

Will Ferrell lost a lawsuit against JPMorgan Chase and now has to pay a big legal fee, NYT ‘s DealBook reports. The suit , which the actor filed in 2008 with his wife and a business manager, and with fellow funnyman Larry David’s trust, claimed the bank had “engaged in the unauthorized and unsuitable purchases” of $18 million of securities in the accounts of two “unnamed” parties. A Financial Industry Regulatory Authority arbitration panel not only ruled against Ferrell and the others but also decided they have to pay JPMorgan $600,000 to cover legal fees, and an additional $22,500 for “discovery abuse” and not following legal rules during the case. The NYT and the Wall Street Journal say this sort of penalty on investors is highly unusual. “It’s about time,” Jonathan Uretsky, a securities lawyer, told the WSJ . “I think this should happen more often.” Read the ruling: Finra Ruling Against Will Ferrell and Others

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New ‘Stress Tests’ Coming For Banks

November 18, 2010

WASHINGTON — The nation’s largest banks must undergo new stress tests to show they can weather another recession, and the Federal Reserve said those that pass them can boost dividends paid to investors. Banks would need to show the Fed’s bank examiners that they’re in good financial health and that they have adequate capital to absorb potential losses over the next two years. The Fed oversees Wall Street’s biggest banks, including Citigroup, Bank of America, JPMorgan Chase & Co., and Wells Fargo. Banks have to file plans to the Fed showing that they would have sufficient capital cushions to cover any losses under different economic scenarios – including if the economy were to fall back into a recession, Fed officials said. All of the 19 largest banks overseen by the Fed must file the plans – even if they don’t intend to increase their dividend payments. The plans must be filed by Jan. 7, 2011. The upcoming round of “stress tests” are a key part of the Fed’s ongoing efforts to make sure that banks – and the entire financial system – are stable. The safety and soundness of the banking system is an important ingredient to the economy’s health. Banks that don’t pass the stress tests will have to take steps to raise new capital to build up their cushions. On Wall Street, banks’ stock prices tumbled after the Fed released the guidelines. Bank of America’s stock price dropped 2.68 percent. Wells Fargo’s fell 1.21 percent, JPMorgan Chase’s declined 1.09 percent and Citigroup’s stock price slid 0.71 percent. The Fed’s first stress tests were conducted in 2009 as the country was still reeling from the worst recession and financial crisis since the 1930s. Those results were made public in a move to boost confidence in the then-fragile U.S. banking system. The results of the upcoming exams, however, won’t be made public, Fed officials said. That’s in line with banking regulators’ long tradition of keeping such information confidential. Banks wanting to boost their dividends also would need to show the Fed they have a plan to comply with stricter global capital requirements recently agreed to in Basel, Switzerland. And banks would need to repay the federal government any bailout money received during the financial crisis before they can boost their dividend payments. During the financial crisis, banks cut their dividend payments. By boosting their payments, banks may be able to attract new investors. JPMorgan Chase is among the banks interested in boosting dividend payments. JPMorgan Chase CEO Jamie Dimon has said he’d like to increase the bank’s annual dividend to between 75 cents and $1 a share. It is currently 20 cents a share. The Fed hopes to move quickly to complete the stress tests. Banks that satisfy the guidelines should be able to boost their dividends in the first quarter of 2011, Fed officials said. ___ Pallavi Gogoi in New York contributed to this report.

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NYC Pension Funds Want Bank Foreclosure Audits

November 16, 2010

NEW YORK — The trustees of New York City’s government pension funds asked the directors of four major banks Tuesday to play a bigger role in policing company foreclosure practices. City Comptroller John Liu said the retirement system owns about $1.77 billion worth of stock in Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co. and Bank of America Corp. – an investment that could take a hit if the banks mishandle the mountains of bad home loans facing the industry. Liu said the trustees have become concerned in recent months about a variety of reported problems in the way banks are handling foreclosures. Saying the problems suggest “a larger systemic failure,” Liu said the trustees have filed a shareholder proposal calling for the banks’ directors to perform independent audits of internal controls over the foreclosure process and report back by Sept. 30. Among other things, the review calls for an examination of whether the banks have created “perverse” incentives that lead to houses being seized even when a loan modification might be better for everyone involved. “We raised concerns with the banks in July that misaligned incentives, inferior customer service and repeated requests for paperwork were undermining the loan modification process and leading to unnecessary foreclosures for homeowners,” Liu said in a statement. Bank of America said the resolution would be reviewed, along with other shareholder proposals, as part of the process leading up to the filing of the company’s proxy statement in advance of its annual meeting. Spokespeople for the other three banks declined to comment. Last month, several major banks temporarily halted most or all of their foreclosures nationwide after allegations that signatures were forged and documents weren’t checked properly in thousands of cases. Bank of America suspended foreclosures in all 50 states, while JP Morgan Chase halted them in 40 states. Lenders repossessed 909,000 homes through the first 10 months of the year and are on pace to take back more than 1 million homes this year.

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Video: Liu Calls for Independent Audit of Foreclosure Practices

November 16, 2010

Nov. 16 (Bloomberg) — New York City Comptroller John Liu discusses his request, on behalf of the city’s Pension Funds, to directors at Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. to conduct independent audits of their banks’ mortgage and foreclosure practices. Liu speaks with Carol Massar on Bloomberg Television’s “In the Loop With Betty Liu.” (Source: Bloomberg)

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Video: U.S. Stocks Rise on Manufacturing Data, Fed Speculation

November 1, 2010

Nov. 1 (Bloomberg) — Bloomberg’s Courtney Donohoe reports on the performance of the U.S. equity market today. U.S. stocks rose, recovering from a late-day tumble, as growth in Chinese and American manufacturing and speculation the Federal Reserve will pump cash into the economy overshadowed a report that JPMorgan Chase & Co. was being probed for mortgage deals. Bloomberg’s Pimm Fox also speaks. (Source: Bloomberg)

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SEC Investigating Deal Between JPMorgan And Hedge Fund Magnetar

November 1, 2010

The Securities and Exchange Commission is investigating whether JPMorgan Chase allowed a hedge fund to improperly select assets for a $1.1 billion deal backed by subprime mortgages, according to people familiar with the probe.

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SEC Probe on JPMorgan Chase & Co. Leads Markets Lower

November 1, 2010

SEC Probe on JPMorgan Chase & Co. Leads Markets Lower

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SEC Probe on JPMorgan Chase & Co. Leads Markets Lower

November 1, 2010

SEC Probe on JPMorgan Chase & Co. Leads Markets Lower

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JPMorgan Almost Doubles Lobbying Spending In Third Quarter

October 21, 2010

The 10 biggest banks in the U.S. spent almost $11 million lobbying the government on financial reform legislation and other issues during the third quarter of 2010, according to the latest disclosure reports. And though the Dodd-Frank financial reform bill was signed into law by President Obama on July 15, several prominent banks have since increased their lobbying, a sign that the real back-room deals may be happening now while several agencies write the specific rules and regulations. Major Wall Street players and banks have been huddling in meetings with regulators and staffers at the Federal Reserve, the Federal Deposit Insurance Corporation, the Comptroller of the Currency and the Securities and Exchange Commission in recent months to hash out the details of those rules. JPMorgan Chase almost doubled their spending on lobbying to $2.7 million from $1.5 million in the second quarter. And Barclays PLC upped its expenditures to $1.09 million from $930,000 in the second quarter. But other firms reduced their spending, including Bank of America, which spent almost $700,000, down from $1.09 million in the second quarter, and Goldman Sachs cuts its lobbying almost in half, from $1.58 million to $780,000. In addition to financial reform, JPMorgan’s interests covered the gamut, from credit card transaction fees and proposals to increase commercial real estate lending to rural housing loan programs and the government’s massive $3.4 billion settlement of a lawsuit involving alleged mismanagement of Native American trust accounts — sometimes referred to as the biggest class-action lawsuit in history against the government. Here is how much the top 10 banks spent on lobbying in the third quarter: Bank of America Corporation – $690,000 JPMorgan Chase & Co. – $2.74 million Citigroup Inc. – $1.34 million Wells Fargo & Company ) – $1.18 million Goldman Sachs Group, Inc. – $780,000 Morgan Stanley – $650,000 Metlife, Inc. – 1.19 million Barclays Group US Inc. – $1.09 million Taunus Corporation (Deutsche Bank) – $540,000 HSBC North America Holdings – $540,000 `

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Video: JPMorgan’s Patterson Says Weaker Dollar in U.S. Interest: Video

October 15, 2010

Oct. 15 (Bloomberg) — Rebecca Patterson, global head of foreign exchange at the private banking unit of JPMorgan Chase & Co. in New York, talks about the outlook for global currencies. The dollar rose for the first time in four days versus the euro as falling global stocks and growing U.S. legal scrutiny of home foreclosure practices boosted demand for the greenback as a refuge. Patterson also discusses international ire over currency valuations. She speaks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

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George Goehl: Big Banks Will Clean Up This Mess – When We Demand It

October 14, 2010

A generation ago, as children, many of us proudly took our roll of quarters to the neighborhood bank, and opened our first savings account, because we trusted the bank. We believed it was the safest and most reliable place for our money. Fast-forward to today and we can’t be sure that the bank that is kicking families out of their hom e actually owns their mortgage. As Bank of America, JP Morgan Chase, and others scurry to figure out if their foreclosure processes are in fact legal, it’s clear we’ve reached a new low in terms of trust in America’s big banks. In the two years since the nation’s largest banks were bailed out by the American taxpayer they have shown very little in the way of thanks. They can begin demonstrating some gratitude by rebuilding what they broke. First, all lenders need to prove that they actually own all of the mortgages for which they claim ownership and prove they are not guilty of fraudulently kicking families out of their homes. And we need to demand this of them . Then they need to immediately institute principal reduction programs to bring mortgages down to their real market value and provide long-term forbearance programs for families struggling with unemployment. This would be a good first step on the long road of regaining the trust of the American public. It would also demonstrate that they appreciate the hand up we gave them, and are ready to play a constructive role in moving the whole country, not just themselves, toward a real and sustained recovery. Two years since the banks sent the economy to the brink, it is clear than anything less than the American people rising up and demanding action means that Wall Street will be let off the hook, again. We’ve been far too patient, too understanding and too flexible with the big banks when time and again they have proven that they cannot be trusted. The power is in our hands. This election season, demand that your lender prove they actually own the mortgage they claim and that they are not guilty of fraud . Then ask the candidates, which side are you on – the big banks that sank the economy, or the American people that are working to rebuild it. Then challenge them to prove it by demanding that big banks place a moratorium on foreclosures, reduce principal to market value to keep families in their homes, and demonstrate they are ready to do their part to fix what they broke. To contact your lender, go to Where’s the Note .

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Would A Foreclosure Moratorium Be ‘Very Damaging’ To Homeowners?

October 14, 2010

The Obama administration is resisting calls for a national foreclosure moratorium amid a foreclosure fraud scandal that has already forced some of the nation’s biggest banks to halt foreclosures in every state. Stopping foreclosures, the administration argues, would be bad for homeowners. “A national moratorium would be very damaging to exactly the kind of people we’re trying to protect,” Treasury Secretary Tim Geithner said on Wednesday, “because the consequence of that would be in neighborhoods that have been most affected by the foreclosure crisis, where you see lots of houses on the block empty, unoccupied, what it means is those communities will be living longer with houses unoccupied, with more pressure on their house price with the people still in their houses.” Wall Street agrees: “It would be catastrophic to impose a system wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy,” the Securities Industry and Financial Markets Association, a Wall Street lobbyshop, said in a statement. “It must be recognized that the mortgage market, investors and the health of the economy are all inter-related. Investors in the housing market–including American workers with pension funds, 401k plans, and mutual funds–would unjustly suffer losses in their savings from these actions.” Bank of America, JPMorgan Chase, and Ally Financial have temporarily halted foreclosures after so-called “robo-signers” admitted they did not verify information in thousands of foreclosure documents they signed. Congressional leaders, including Senate Majority Leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.) have asked for moratoriums and investigations. Regardless of the overall trajectory of home prices, consumer advocates said the most damaging thing for homeowners is the current situation. Dean Baker, co-director of the progressive Center for Economic and Policy Research, said in an email to HuffPost that the threat of a foreclosure moratorium would give homeowners leverage to win mortgage modifications while doing nothing to hurt banks. “If a bank realizes that it will have to spend a lot of time and money cleaning up its paperwork to go through a foreclosure it may suddenly get more serious about offering a modification that will people to stay in their home,” wrote Baker in an email to HuffPost. “Also, even if that doesn’t happen, homeowners may be able to stay in their homes (rent and/or mortgagefree) for another 2-3 months while the banks get the paperwork in order. What’s the down side for the homeowner?” As for banks, Baker calls bull on fears that a moratorium could have catastrophic consequences. “The fact that the banks say a moratorium would be catastrophic should be taken as having absolutely zero value. There are few people on the planet with less credibility,” Baker wrote. “For the last two years everyone familiar with the housing market has been talking about the ‘shadow inventory.’ These are the hundreds of thousands of foreclosed homes that banks have deliberately kept off the market. The reason is presumably that they were worried about glutting the market with foreclosed properties, depressing prices even more.” Ira Rheingold, director of the National Association of Consumer Advocates, told HuffPost that a moratorium “is neither damaging or particularly helpful to homeowners.” “What’s damaging homeowners is the failure of Secretary Geithner and others in the administration to hold the servicers accountable for breaking the mortgage system and for violating the law. What’s damaging is Treasury’s failure to create and mandate a loan modification program that would actually help homeowners stay in their homes and stabilize their communities,” wrote Rheingold. “What would be helpful would be the imposition of this necessary timeout so that servicers can use this time to learn how to comply with the law and Treasury can finally figure out a solution to the problem of hundreds of thousands or millions of unnecessary foreclosures.” (Despite the self-imposed moratoriums by Bank of America and JPMorgan Chase, foreclosures have continued in Florida, according to news-press.com in Fort Myers.) Alan White, a professor at Valparaiso University Law School, wrote in a blog post that the Obama administration is using the robo-signer scandal as a “scapegoat” when the real crisis facing the housing market is the the more than five million mortgages in default or foreclosure. “If every bank and servicer called off its moratorium today, and if all the state Attorneys General went away, we would simply go back to the agonizing process of dumping another 100,000 or so foreclosed properties on the market every month, while homeowners who want to make payments wait for months to get their workouts processed. Before the foreclosure fraud scandal hit we were already facing another five years of depressed and uncertain home prices, even assuming more homeowners now making payments don’t start falling behind.” Industry analyst Sean O’Toole, founder of ForeclosureRadar.com and a critic of the Obama administration’s approach to the housing crisis, said he agreed with Geithner that a moratorium would be damaging — but he said a moratorium would exacerbate problems created by recent accounting-rule changes and programs like HAMP . “The reality is that foreclosures are at an all time low as a percentage of delinquencies thanks to these policies which together allow banks to delay foreclosure and inflate assets,” wrote O’Toole in an email. “Clearly servicers should be required to follow foreclosure laws, but we need to keep in mind that one of the primary things plaguing the housing market at this point is uncertainty. Buyers are worried about shadow inventory, foreclosure waves, and when the bottom will be reached. These delays increase that uncertainty and hurt the housing market far more than they help.”

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JPMorgan Chase Third Quarter Earnings…

October 13, 2010

JPMorgan Chase Third Quarter Earnings…

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GMAC Mortgage To Review Foreclosure Documents Nationwide

October 12, 2010

LOS ANGELES — GMAC Mortgage said Tuesday that it has enlisted several legal and accounting firms to conduct independent reviews of its foreclosure procedures nationwide as questions grow over whether lenders improperly took back properties from thousands of homeowners. The company, a unit of Ally Financial Inc., also said a review of cases in 23 states has found no evidence to date that the company has conducted any inappropriate foreclosures. GMAC and other mortgage lenders have come under criticism as evidence has surfaced that they have been using flawed court papers to evict homeowners. That has led state and federal officials to ramp up pressure on the mortgage industry. The special inspector general overseeing the financial industry bailout is investigating the company after an employee approved thousands of foreclosures without reading the paperwork. And attorneys general of up to 40 U.S. states are expected to announce a joint investigation into banks’ use of flawed foreclosure paperwork as early as this week. Last month, GMAC halted certain evictions and sales of foreclosed homes to review cases in 23 states where foreclosures require judges’ approval. The review has been under way for about two months and is still ongoing, the company said. GMAC said its foreclosure sales also receive an additional review to ensure that the company followed procedures to prevent foreclosure, that the timing of the foreclosure was appropriate and that the procedure complies with all state laws. “We are taking these additional steps to restore confidence in the process, which is critical for the stability of the home and mortgage industry,” the company said. In addition to GMAC, JPMorgan Chase and PNC suspended foreclosures amid evidence that bank employees falsely swore they had personal knowledge of a particular case, because documents could not be located or because of other paperwork problems. On Friday, Bank of America became the first bank to halt foreclosures in all 50 states.

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Video: JPMorgan’s Paton Says Food Stamp Use to Keep Rising: Video

October 8, 2010

Oct. 8 (Bloomberg) — Christopher Paton, a managing director at JPMorgan Chase & Co. who runs the firm’s public-sector benefit payments business, discusses the outlook for food stamp use. The number of Americans receiving food stamps rose to a record 41.8 million in July as the jobless rate hovered near a 27-year high, according to the U.S. Department of Agriculture. Paton speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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Little-Noticed Bill Could Make It Harder To Challenge Foreclosures

October 7, 2010

UPDATE: An Obama administration official tells HuffPost that the White House has ‘concerns’ about the bill . Challenging foreclosures could become more difficult for homeowners if the president signs a bill that passed through the Senate last week. The little-noticed bill comes at a time when the validity of foreclosure proceedings across the nation have been called into question. The House passed the bill in April, and its brisk journey through the Senate has drawn scant attention, Reuters reports. If signed into law, it would require courts to accept certain documents that have been notarized out of state, streamlining foreclosure proceedings and stripping homeowners of one legal method of challenging a foreclosure. The legislation would come just as a foreclosure validity crisis is mounting: GMAC, JPMorgan Chase and Bank of America have admitted to not properly reviewing some of their foreclosure documents. The foreclosure controversies that have emerged in recent weeks throw doubts on the larger foreclosure system. A non-bank entity, Mortgage Electronic Registration Systems, has been initiating foreclosures, the Washington Post reports, exercising an authority that judges have ruled it does not have. In response to the mounting scandal, House Speaker Nancy Pelosi (D-Calif.) called on Tuesday for an investigation into foreclosure fraud . “This is a very big deal,” she told HuffPost. Ohio Secretary of State Jennifer Brunner told Reuters the timing of the bill’s passage was “suspicious,” implying that mortgage companies might have engaged in behind-the-scenes lobbying.

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Video: JPMorgan’s Kanno Discusses BOJ Monetary Policy, Yen: Video

October 6, 2010

Oct. 6 (Bloomberg) — Masaaki Kanno, a former BOJ official and now chief Japan economist at JPMorgan Chase & Co. in Tokyo, talks about Japan’s economy and central bank monetary policy. The Bank of Japan yesterday cut its benchmark overnight interest rate for the first time since 2008 and pledged to hold it at “virtually zero” until officials foresee a sustained end to deflation. The BOJ also adopted a 5 trillion yen ($60 billion) program aimed at lowering long-term borrowing costs and the premiums on corporate debt. Kanno also discusses the yen and Federal Reserve monetary policy. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

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Video: JPMorgan’s Ulrich Sees `Gradual, Steady’ Rise in Yuan: Video

October 5, 2010

Oct. 5 (Bloomberg) — Jing Ulrich, chairman of China equities and commodities at JPMorgan Chase & Co., talks with Bloomberg’s Julie Hyman about the outlook for the yuan. Ulrich also discusses the possible impact of Federal Reserve monetary policy on financial markets, and Chinese manufacturing. (Source: Bloomberg)

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Video: Zandi Sees Foreclosure Errors Lengthening Housing Crisis: Video

October 4, 2010

Oct. 4 (Bloomberg) — Mark Zandi, chief economist at Moody’s Analytics Inc., talks about the impact of bank foreclosure errors on the housing market. Bank of America Corp. delayed foreclosures after a federal regulator called for a review because lenders may have submitted defective documents when repossessing homes. Court documents showed JPMorgan Chase & Co. and Ally Financial Inc. employees may have submitted affidavits without confirming their accuracy. Zandi talks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (This is an excerpt of the full interview. (Source: Bloomberg)

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Video: Zandi Sees Foreclosure Errors Lengthening Housing Crisis: Video

October 4, 2010

Oct. 4 (Bloomberg) — Mark Zandi, chief economist at Moody’s Analytics Inc., talks about the impact of bank foreclosure errors on the housing market. Bank of America Corp. delayed foreclosures after a federal regulator called for a review because lenders may have submitted defective documents when repossessing homes. Court documents showed JPMorgan Chase & Co. and Ally Financial Inc. employees may have submitted affidavits without confirming their accuracy. Zandi talks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (This is an excerpt of the full interview. (Source: Bloomberg)

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Bank Of America Exec Signed, But Didn’t Read Up To 8,000 Foreclosure Papers Per Month

October 1, 2010

WASHINGTON (AP, ALAN ZIBEL) — A Bank of America official acknowledges in a legal proceeding that she signed up to 8,000 foreclosure documents a month and typically didn’t read them. The executive’s admission adds the nation’s largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them. Two other companies, Ally Financial Inc.’s GMAC Mortgage unit and JPMorgan Chase, have halted tens of thousands of foreclosure cases after similar problems became public. The Bank of America executive said in a February deposition in a Massachusetts bankruptcy case that she signed 7,000 to 8,000 foreclosure documents a month. “I typically don’t read them because of the volume that we sign,” the executive said. The disclosure comes two days after JPMorgan said it would temporarily stop foreclosing on more than 50,000 homes so it can review documents that might contain errors. Last week, GMAC halted certain evictions and sales of foreclosed homes in 23 states to review those cases after finding procedural errors in some foreclosure affidavits. After GMAC’s announcement, state attorneys general in California and Connecticut told the company to stop foreclosures until it proves it’s complying with their state laws. The Ohio attorney general this week asked judges to review GMAC foreclosure cases. And in Florida, the state attorney general is investigating four law firms, two with ties to GMAC, for allegedly providing fraudulent documents in foreclosure cases. In some states, lenders can foreclose quickly on delinquent mortgage borrowers. But 23 states use a lengthy court process for foreclosures. They require documents to verify information on the mortgage, including who owns it. Florida, New York, New Jersey and Illinois are the biggest states with this process.

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Video: Lee Says October Could Be `Very Good’ for U.S. Stocks: Video

October 1, 2010

Oct. 1 (Bloomberg) — Thomas Lee, chief U.S. equity strategist at JPMorgan Chase & Co., talks with Bloomberg’s Julie Hyman and Mark Crumpton about the outlook for the U.S. stock market. Lee also discusses the Securities and Exchange Commission and Commodity Futures Trading Commission’s report on the May 6 stock market crash and his investment strategy. (Source: Bloomberg)

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JPMorgan Suspends Certain Foreclosures As Doubts Grow Over Legality

September 29, 2010

Even as August saw more Americans lose their homes to foreclosure than in any other month on record, there are growing concerns over the legality of many of those proceedings. JPMorgan Chase has suspended legal proceedings on “certain” foreclosures, due to concerns about the validity of the foreclosure documents, a spokesman for the bank told CNBC Wednesday (hat tip to Zero Hedge ). JPMorgan spokesman Tom Kelly confirmed to the AP Wednesday that “employees signed some affidavits about loan documents without personally verifying the files.” The decision is the latest signal of a potentially massive stall in the nation’s foreclosure process. Last week, after GMAC Mortgage halted its foreclosures in 23 states , the Washington Post reported that one of GMAC’s employees hadn’t read the roughly 10,000 foreclosure documents he approved each month (and now Colorado wants to be added to that list of states). It then turned out that the “robo signer” might not have been alone. This week, the controversy extended to JPMorgan Chase, as lawyers for a Florida homeowner challenged the person’s JPMorgan foreclosure , citing a May statement from an executive for the bank who said she didn’t properly review foreclosure documents before approving them. Zero Hedge, for what it’s worth, sees this as the beginning of a larger unraveling in the country’s foreclosure process. Indeed, regardless of what JPMorgan determines during its review, the freeze will throw countless foreclosures into doubt. As Bloomberg noted this week, delays in foreclosure proceedings would cripple the already wounded housing market.

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Elizabeth Warren Was Paid To Be An Expert Witness In Cases Against Bailed-Out Banks

September 28, 2010

While acting as a government-appointed bailout watchdog, Elizabeth Warren, whom President Obama appointed this month to lead the creation of the Consumer Financial Protection Bureau , served as an expert witness in cases against some of the big banks receiving aid from the Troubled Asset Relief Program, Bloomberg News reports. Warren was paid $90,000 to be an expert witness in a class-action lawsuit at the same time she was head of the Congressional Oversight Panel , which oversees the $700 billion government bailout of the financial sector. Bank of America, Citigroup and JPMorgan Chase, all of which received TARP assistance, were among the defendants in the suit, according to Bloomberg . Warren told Bloomberg that her work as a witness constituted no ethical violations, saying she had prior approval from the ethics lawyer for the Congressional Oversight Panel. A Harvard professor and an expert on the financial sector particularly as it relates to middle-class consumers, Warren said she was allowed to continue doing side jobs even as she held this government role. Warren is famously tough as advocate for the middle class, and a former student described her teaching style at Harvard as “Socratic with a machine gun.” As head of the panel overseeing TARP, she remained more skeptical than Treasury secretary Tim Geithner about whether the program had actually succeeded in ensuring that certain banks could function without government support. In appointing Warren to set up the CFPB, which she is credited with devising, the president effectively made her head of the agency, at least for now, and sidestepped what could have been a contentious confirmation hearing.

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JPMorgan Reportedly Pushing FDIC To Cover Some WaMu Expenses

September 28, 2010

J.P. Morgan Chase & Co. is putting federal regulators on notice that it may go after the very funds it used to buy Washington Mutual Inc.’s banking assets–and then some. In a series of previously undisclosed letters sent to the Federal Deposit Insurance Corp., the nation’s second-largest bank by assets warned it could seek billions in legal protection from the FDIC receivership that liquidated the Seattle-based thrift two years ago, people familiar with the situation said.

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JPMorgan Foreclosure Disputed, Casting Wider Doubts

September 27, 2010

The integrity of thousands of foreclosure notices issued by JPMorgan Chase could be cast in doubt, as a court battle over one Florida homeowner’s foreclosure might implicate numerous similar filings, reports Bloomberg News . It’s the latest example of a situation that could stall foreclosures across the nation. Last week, the Washington Post reported that Jeffrey Stephan, a document processor for Ally Financial, who lives in a “modest” two-story house in a small Pennsylvania town, had approved up to 10,000 foreclosure documents a month without actually reading them. The news came to light after Ally said it was putting the brakes on foreclosures in 23 states, citing “corrective action” it needed to take. And when, at the end of the week, Ally began to withdraw foreclosure documents reviewed by another employee, Kristine Wilson , it appeared there might be yet another “robo signer.” Now, lawyers for a Florida homeowner are using a May statement by JPMorgan executive Beth Ann Cottrell to claim that the homeowner’s foreclosure isn’t valid. In her statement, Cottrell said she was part of an eight-person team that approved about 18,000 documents a month without seriously reviewing them. “My review is more or less signing the document unless it’s questionable,” she said, according to Bloomberg , where “questionable” is meant literally: “somebody has a question and brings it to me and says, ‘Beth, can you take a look at this?’” These increased doubts about foreclosure filings come as the nation’s total volume of foreclosures is itself increasing. More Americans lost their homes to foreclosure in August than in any other month on record, according to data from RealtyTrac. While the document-processing scandals may seem like good news for homeowners dealing with foreclosure, Bloomberg notes that the doubts could delay the housing market’s recovery. Home prices continue to fall, and foreclosure controversies, which create uncertainty in the market, may delay their hitting bottom.

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Video: Feroli Says Fed Still Has `Some Tools Left’ for Economy: Video

September 17, 2010

Sept. 17 (Bloomberg) — Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., discusses the outlook for Federal Reserve monetary policy. Feroli, speaking with Betty Liu on Bloomberg Television’s “In the Loop,” says the Fed still has “some tools left” to help the economy and expects the central bank to expand its balance sheet by year end. He also discusses tax policy. (Source: Bloomberg)

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Video: Ulrich Says Gradual Yuan Gains in China’s Best Interest

September 17, 2010

Sept. 17 (Bloomberg) — Jing Ulrich, JPMorgan Chase & Co.’s chairwoman for China equities and commodities, talks about her investment strategy and the outlook for yuan appreciation. She speaks from Beijing with Mark Barton on Bloomberg Television’s “Global Connection.”

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Michael Goldberg, Ex-Conn. Resident, Admits Running $100 Million Ponzi Scheme

September 13, 2010

NEW HAVEN, Conn. — Authorities say a former Wethersfield, Conn., resident has pleaded guilty to federal charges he operated a $100 million Ponzi scheme that ripped off hundreds of investors. Federal prosecutors and the FBI say Michael Goldberg stole more than $30 million in 12 years by promising investors huge returns quickly on money they gave him to buy diamonds for resale or to buy foreclosed assets from the JPMorgan Chase & Co. bank. Prosecutors say he didn’t invest the money and paid old investors with funds from new investors. They say the result was “financial misery” for many of them. Goldberg revealed his scheme to authorities. He’ll be sentenced Dec. 2 on three counts of wire fraud. The 39-year-old faces up to 60 years in prison. A defense attorney hasn’t returned a phone message left after business hours Monday.

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Video: Koll Says Ichiro Ozawa Would Be Good for Japan Economy: Video

September 13, 2010

Sept. 14 (Bloomberg) — Jesper Koll, Tokyo-based head of equity research at JPMorgan Chase & Co., discusses Japanese politics. Japan’s ruling party will determine today whether Prime Minister Naoto Kan stays in office or is replaced by Ichiro Ozawa, whose call to boost spending to spur economic growth has roiled the bond market. Koll speaks with Mike Firn on Bloomberg Television. (Source: Bloomberg)

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Video: Achuthan Doubts August U.S. Jobs Report a `Game Changer’: Video

September 3, 2010

Sept. 3 (Bloomberg) — Lakshman Achuthan, managing director of the Economic Cycle Research Institute, and James Glassman, senior economist at JPMorgan Chase & Co., talk about today’s August U.S. jobs report and economic outlook. Private payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated, Labor Department figures in Washington showed today. Achuthan and Glassman speak with Tom Keene and Ken Prewitt on Bloomberg Radio’s “Bloomberg Surveillance.” (Source: Bloomberg)

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JPMorgan Will Shut Propietary Trading Desk In Response To Volcker Rule: Bloomberg

August 31, 2010

Aug. 31 (Bloomberg) — JPMorgan Chase & Co., the second- largest U.S. lender by assets, told traders who bet on commodities for the firm’s account that their unit will be closed as the company begins to shut down all its proprietary trading, according to a person briefed on the matter.

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Video: Mellman Says Slowdown in U.S. Growth Is `Intensifying’: Video

August 20, 2010

Aug. 20 (Bloomberg) — Robert Mellman, an economist at JPMorgan Chase & Co., talks with Bloomberg’s Julie Hyman about the state of the U.S. economy and the prospects for quantitative easing by the Federal Reserve. Economists at JPMorgan lowered U.S. growth estimates, predicting that the economy will grow at a 1.5 percent annual rate this quarter and at a 2 percent pace in the last three months of the year, a percentage point less than they previously projected. (Source: Bloomberg)

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Rick Lazio: Wall Street’s Subprime Candidate

August 19, 2010

Within Hours of George Bush’s May 3, 2007, announcement that he was naming Charles Millard head of the $64 billion Pension Benefit Guaranty Corporation (PBGC), Rick Lazio got an e-mail about it from a fellow JPMorgan Chase executive.

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Rick Lazio: Wall Street’s Subprime Candidate

August 19, 2010

Within Hours of George Bush’s May 3, 2007, announcement that he was naming Charles Millard head of the $64 billion Pension Benefit Guaranty Corporation (PBGC), Rick Lazio got an e-mail about it from a fellow JPMorgan Chase executive.

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Video: Kwock Says Lenovo Faces Softer Near-Term Demand in China: Video

August 18, 2010

Aug. 19 (Bloomberg) — Alvin Kwock, an analyst at JPMorgan Chase & Co., talks about Lenovo Group Ltd.’s financial results and growth outlook. Lenovo, China’s biggest maker of personal-computers, posted fiscal first-quarter profit that missed analysts’ estimates after the company offered cheaper products and raised marketing spending to boost sales. Kwock speaks from Taipei with Bloomberg’s Rishaad Salamat. (Source: Bloomberg)

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NJ Settles SEC Fraud Charges Over Muni Bond Sales

August 18, 2010

WASHINGTON — The state of New Jersey has settled federal civil fraud charges of failing to inform bond investors that it had not met obligations to its largest pension plans, federal regulators said Wednesday. In announcing the settlement, the Securities and Exchange Commission said New Jersey did not give municipal bond investors enough information to fully assess the state’s financial picture. New Jersey was the first state ever charged for violations of the securities laws. New Jersey neither admitted nor denied the allegations. It did agree to refrain from future violations of the securities laws. Many states around the country have been unable to fully fund their public employee pension plans in the financial crisis. “It is an area of concern,” Elaine Greenberg, chief of the SEC’s municipal securities and public pensions unit, said in a telephone interview. “We want to make sure that states and municipalities are adequately disclosing” their pension fund liabilities, she said. In a news release, the New Jersey attorney general’s office and the Treasury Department said state officials cooperated with the inquiry. The state noted in the release that it responded to the situation by hiring outside lawyers in 2007 to advise the state on disclosure obligations and adopting new formal disclosure procedures. No financial penalty was levied against the state. The SEC said it took into account state authorities’ cooperation in its investigation and the action taken by the state to correct the situation. New Jersey sold more than $26 billion in municipal bonds between 2001 and 2007 to raise money for economic development projects, such as roads and power lines, the SEC said. But the bond sale documents didn’t disclose that the state had failed to meet its financial obligations to two state employee pension funds. New Jersey likely couldn’t contribute to the pension funds without raising taxes or cutting services, the SEC said. As a result, investors in New Jersey’s bonds lacked sufficient information to assess the state’s financial status, the SEC said. “All issuers of municipal securities, including states, are obligated to provide investors with the information necessary to evaluate material risks,” Robert Khuzami, the SEC’s enforcement director, said in a statement. Since the start of the SEC’s inquiry in April 2007, no rating agencies have downgraded New Jersey’s credit rating “and the state has continued to make all required debt-service payments on the bonds,” the state said in its release. A spokesman for the state Treasury Department said repayment of bonds was never at risk. “The state of New Jersey has never failed to pay its bondholders,” said the spokesman, Andy Pratt. The nation’s $2.7 trillion muni bond market is used to finance schools, roads and hospitals around the country. Retail investors increasingly participate in the market, seeking safe investments with reliable returns. The SEC last year proposed requiring brokers in municipal bonds to make fuller and more timely disclosures to investors. Also last year, the agency reached a settlement with JPMorgan Chase & Co. in which the Wall Street bank agreed to pay $75 million in civil fines and forfeit $647 million in fees to resolve charges that it made unlawful payments to friends of public officials to win municipal bond business in Alabama.

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Video: Thomas Lee Sees Potential for `Huge Refinancing Boom’: Video

August 11, 2010

Aug. 11 (Bloomberg) — Thomas Lee, chief U.S. equity strategist at JPMorgan Chase & Co., discusses the yield on the 10-year note and the outlook for mortgage refinancings. Lee, talking with Betty Liu and Jon Erlichman on Bloomberg Television’s “In the Loop,” also comments on expectations for the Standard & Poor’s 500 Index. (Source: Bloomberg)

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Goldman Sachs’s Derivatives Generated Up To 35 Percent Of Its 2009 Revenue

August 9, 2010

Goldman Sachs made up to 35 percent of its 2009 revenue from derivatives, according to recent documents disclosed to the Financial Crisis Inquiry Commission and leaked to the Wall Street Journal. In a memo sent to the FCIC — a government panel charged with investigating the roots of the financial crisis — Wall Street’s most profitable bank revealed that its derivatives operations generated $11.3-$15.9 billion of its $45.17 billion net revenue in 2009 . This amounts to 25-35 percent of the bank’s revenue. “We have asked for the same information from several banks,” an FCIC spokesman told the WSJ . “They have all indicated they are working hard to provide that information to us. If we need additional information, we will ask for it.” Concurrently, Goldman Sachs suffered 10 days of losses in the second quarter through trading stocks and bonds . However it still beat its biggest rivals on Wall Street, generating $5.61 billion of trading revenue during the 65-day quarter. As HuffPost’s Shahien Nasiripour pointed out last week, Bank of America recorded losses on 12 of its 63 trading days last quarter and JPMorgan Chase lost money on 8 trading days.

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Video: JPMorgan’s Masters Reassures as Commodities Unit Slips: Video

August 3, 2010

Aug. 3 (Bloomberg) — Bloomberg’s Dawn Kopecki discusses the performance of JPMorgan Chase & Co.’s commodities unit. Blythe Masters, the head of the unit, sought to reassure her team on an internal conference call on July 22 after “extremely difficult” dismissals, defections and a first half in which some results were as much as 20 percent below expectations. Kopecki talks with Erik Schatzker on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

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Video: Taormina Says Budget Cuts, Higher Taxes Help Bondholders: Video

July 30, 2010

July 30 (Bloomberg) — Rick Taormina, head of municipal strategies at JPMorgan Chase & Co., talks about the municipal bond market and the impact of budget cuts and tax increases on bondholders. Taromina, speaking with Scarlet Fu on Bloomberg Television’s “InBusiness,” also discusses the outlook for California’s creditworthiness. (Source: Bloomberg)

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Video: JPMorgan’s Loeys Sees Growth Slowing In Emerging Markets

July 30, 2010

July 30 (Bloomberg) — Jan Loeys, global head of market strategy at JPMorgan Chase & Co., talks about the global economy and the prospects of a renewed recession. He speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”

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David Fiderer: Goldman’s Half Trillion With A Hedge Fund Is Too Big To Ignore

July 24, 2010

In June 2008, Goldman Sachs wasn’t subject to the kind of regulatory scrutiny imposed on commercial banks. If it were, a government auditor from would have asked a very obvious question: “What are you doing with half a trillion dollars in notional exposure to a hedge fund?” Specifically, Goldman’s fourth largest counterparty exposure for credit derivatives, about $590 billion, was to a hedge fund called Blue Mountain Credit Alternatives Master Fund, L.P. According to numbers compiled by the Financial Crisis Inquiry Commission , Goldman did more credit derivatives business with this hedge fund than with JPMorgan Chase, UBS or Barclays. Derivatives exposure can be measured all sorts of different ways, so Goldman might claim that the net number is, in fact, much smaller. For instance, Goldman bought $566 million in credit protection on AIG from Blue Mountain, but it also sold $581 million in credit protection to Blue Mountain. So if AIG had gone bankrupt, Goldman would have owed $15 million to Blue Mountain. The net is reasonably small. Even so, that kind of execution risk on a single hedge fund, founded in 2003 with 115 employees, would set off alarm bells with most auditors. Blue Mountain had $3.2 billion in funds under management as of January 1, 2007. The FCIC should dig much deeper. The primary reason why the amount looks so weird is that derivatives trading is dominated by the too-big-to-fail crowd, global banks like Deutsche and Barclays, plus, (before we learned that Lehman was too big to fail) large U.S. brokerage firms. The Office of Currency Control, while compiles exposures on all U.S. bank holding companies, showed that by year-end 2008, U.S. banks held $15 trillion in notional exposure on credit derivatives. About 90% of that total, or $13.4 trillion, was concentrated among the big three –JPMorgan Chase, Citibank, and Bank of America. Three months later, when Goldman, Morgan Stanley, and Merrill Lynch (embedded within BofA) were added to the list, the aggregate number doubled to $30 trillion . Almost all the exposure was concentrated among the big five. Look at the trading counterparties with whom Goldman bought and sold credit default swaps on AIG. The big numbers are all with huge global financial institutions, except for Blue Mountain. This is very suspicious because credit default swaps offer all sorts of opportunities for insider trading and market manipulation. A CDS is very different from an interest rate or foreign currency derivative, which references a vast impersonal financial market. It would be very hard for a single bank or hedge fund to manipulate the yield curve or the price of the yen. A credit default swap is the bet on the failure of a single entity, such as AIG, Greece or a CDO. Because there is no transparency in credit derivatives trading, there are opportunities for, among other things, round tripping, wherein trades go back and forth in order to establish trumped-up price quotes. With a credit default swap, you can lose 100% of the notional amount. The OCC quarterly report, which also compiles the derivative trading revenues of all bank holding companies, discredits the testimony of Goldman CFO David Viniar , who told the FCIC that his firm did not break down derivative exposures. And now that Goldman’s story about being fully hedged on AIG seems to be falling apart, there’s no reason why we should take anything they say at face value.

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Goldman Sachs Spends 40 Percent More On Lobbying In Second Quarter

July 21, 2010

The “vampire squid” is stretching its tentacles. As Goldman Sachs faced arguably one of its most challenging quarter in decades — on several fronts, from SEC charges and lagging profits to financial regulatory reform and renewed scrutiny of all its activities — the firm increased its spending on lobbying by almost 40% in the second quarter of 2010 and has already spent almost as much in the first half of this year as it did in all of 2009. In its most recent lobbying report filed last night, Goldman spent $1.58 million to influence Congress and the White House on a host of issues including Wall Street reform — specifically derivatives regulation, bank tax and financial risk management — the much-debated unemployment benefits extension, municipal finance, small business funding, climate change legislation and transportation funding. Goldman paid a number of prominent lobbying firms, many of them staffed by former Congressional aides and lawmakers — the Gephardt Group led by former House Majority Leader Richard Gephardt ($50,000), Gibson, Dunn & Crutcher ($20,000) and the Harold Ford Group founded by former Congressman Harold Ford Jr. ($30,000). Overall, Wall Street ramped up its lobbying in the quarter in a furious attempt “at derailing or diluting the financial reform legislation that Congress finally enacted this month,” reports Reuters . At the bill’s signing ceremony on Wednesday morning, President Obama noted that battle: “To get there, we had to overcome an array of powerful lobbyists.” JPMorgan Chase increased its lobbying spending from $1.51 million in the first quarter to $1.52 in the second quarter; Wells Fargo $1.02 million to $1.3 million; Bank of America $940,000 to $1.09 million; Citigroup $1.44 million to $1.47 million.

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