JPMorgan Bear Case Scenario $JCP, $C, $XLF, $BAC, $WFC, $AIG

JPMorgan (NYSE:JPM) demonstrates the high cost of litigation and poor governance. Not all of this is Jamie Dimon’s fault. They inherited lots of problems when they bought at 2008 distress prices. Little did they know at the time.

Short ratio is 2.98%

Clearly a systemically important firm, that seems very good at hitting every major pothole in the road. JP Morgan remains on the regulatory radar. Every regulatory gun out to make a name for him/herself keeps a file on these guys.

Jamie Dimon needs to come up with a karmic cleansing action to shed some perception baggage.

George Gutowski writes from a caveat emptor perspective.

Volcker Rule – Pigs at Trough or Good Risk Management $XLF, $C, $BAC, $JPM, $WFC, $AIG, $GS, $MS #Volckerrule

The much debated Volcker Rule will be voted on by a series of regulatory agencies. essentially the rule in most part is a form of return to the old Glass Steagall system. Wall Street will still be allowed to take risks  But banks reliant on depositor funds and ultimately relying on Federal Government Deposit Insurance will no longer have the right to blow their financial brains out at the expense of depositors and the US tax payer.

Wall Street is still allowed to take risks and blow their brains out. Just use your own money or risk capital that knowingly accepts the risks and rewards.

US Chamber of Commerce and banking industry want to retain the lucrative side of hedging and risk which the Volcker rule wishes to separate. This allows them to absorb loses and stay in business. Take for example JPMorgan and the London Whale which apparently is a complete surprise to Jamie Dimon and the board of directors. If that was a private equity fund it may have gone bankrupt. In any event there would have been some very close questioning and not some shareholder dithering over who to vote for board director. Funds would have been withdrawn and vigorous lawsuits would have been launched.

The mood of the country is that of mistrust. Main street does not trust Wall Street. Tea Party supporters will find that while some voters mistrust government spending they do not want to back risk loving Wall Street Banks. The two dots do not connect.

You want to take risk. Go ahead. Just play with your own money. If you want to invest in risk invest directly. Blue Chip banks do not reward shareholders for the risks undertaken in hedges, prop trading and derivatives.

Perhaps management just does not want to be held accountable. The markets are volatile and its harder than it looks.

George Gutowski writes from a caveat emptor perspective.

JPMorgan Analyst Hypocrisy Will Jamie Dimon’s Condom Finally Rupture $JPM $C $WFC $GS $XLF $BAC

What’s this about Jamie Dimon’s condom rupturing? So far JPMorgan (NYSE:JPM)has had an enchanted life. Huge regulatory fines that would have crucified most CEO’s and Boards have not been hurtful to the current management structure.

The embarrassing losses of the London Whale and huge costs of new risk management programs are still being digested. Yet the stock has stayed spectacularly strong. Today in a strong rebound market it is up on pre-earnings speculation.

Yet many analysts are anticipating a significant drop in earnings. We all know about the jumbo fines which will be one time events. Look carefully and the mortgage market looks weak. JPMorgan results are weak and expected to stay weak.

This bodes poorly for JPMorgan, other banks and the economy.

If you believe in the law of unintended consequences; has Jamie Dimon’s condom ruptured.

Please discuss among yourselves.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

JPMorgan and Jamie Dimon Reach Guinness World Record. Must be Last Chance Gulch. $JPM $XLF Read..

JPMorgan (NYSE:JPM) is coughing up some $920 million in fines for the London Whale debacle. The SEC continues to push on high and exorbitant CEO salaries. At what point will the regulators of financial behaviour decide that the CEO with record-breaking fines should be subject to a suitability review.

Jamie Dimon and JPMorgan will hold an everlasting card in the Financial Trivia Question. “Who had to pay the biggest fine for financial screw-ups in all of history.”

Checking with Guinness World Book of Records to see if a new plateau has been reached.

You think this is the last one? Because no one has the stomach for more governance problems from JPMorgan. I don’t care if they spend $200 million or more on risk and compliance models. It’s all about the leadership.

Can you imagine the memoirs if he writes them? Guaranteed best seller but the editing will be a bitch.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti


Strange Logic behind Regulators Lawsuits on London Whale $JPM, $XLF It’s all about the Kill Shot.

JPMorgan (NYSE:JPM) is in the news again. Finally some charges or something or other are about to be laid. But the regulators are going after some small fish. The Board of Directors untouched. Jamie Dimon the CEO has all his Teflon intact. Bruno Iksil the London Whale has slithered out. Neither Ina Drew, the bank’s former chief investment officer, nor Achilles Macris, a former top Chief Investment Office executive have been charged.

The regulators want to lower level operatives. Two former JPMorgan traders – Javier Martin-Artajo and Julien Grout are the targets “du jour”  Minnows not whales.

Pour Quoi?

By charging the most senior members of JPMorgan the regulator would face blow back over their ineffectual role. Everyone is innocent until proven guilty. Defense lawyers say what they need to say to get their clients off. The regulator cannot get a clean “Kill Shot” so its taken an Uzi and is spraying a few small fish to make it look good.

Regulators are political animals and savvy as to the way of bureaucracy. They have no interest in suicidal confrontation where they end up wearing it.

Obama for all his chagrin with Wall Street may end up giving Jamie Dimon an ambassadorship just to neutralize him and his cohorts.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti . One piece of advice to one and all. Never walk in front of the snipers rifle.

JPMorgan Criminal Charges. One Key Wild Card $JPM $XLF $C $BAC $WFC

JPMorgan (NYSE:JPM) faces new civil and criminal charges on supposed swindles in mortgage-backed securities. Criminal hard to prove and sustain on appeal. Civil is business and is settled as you or I pay parking tickets.

Just remember this Jamie Dimon is not beloved within Washington DC. If there is a file that will get extra resources it will be this one. Criminal charges are not business.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti

JP Morgan Tricks and Sleight of Hand. Need Proof in Dividend $JPM

JP Morgan (NYSE:JPM) came up with a beat the street for latest quarterly earnings. When you think about it Jamie Dimon after all the controversy at the AGM about his role as Chairman and CEO could not come up with less than expected. But buddy you cheatin a bit. As a bank you warn us that loan growth is soft. Then we all hear that mortgage refi and the housing market is not as strong as we want it to be. Then you make the numbers by cutting back on your loan loss reserves. If you had not cut back on loan loss you would have had a big miss. The four-year trend looks like the slope of a double black diamond skill hill. Dangerous.

So the operations are not carrying themselves as well as they should. Investors are starting to get tired of the magic trick. We all know banks will lose money somewhere, somehow and for sure. So why cut back and manufacture pretty profits for today. The profits are like cut fresh flowers. They eventually wilt.

The real proof is in the dividend. In God we trust all others including Jamie Dimon pay cash. When they pop the dividend that’s when you start to believe. In the meantime from the folks that brought you the London Whale and then made earnings by dropping loan loss provisions it’s a real caveat emptor moment. No need to rush in.

George Gutowski writes from a caveat emptor perspective.

JP Morgan and Nitroglycerine are now Exactly the Same. $JPM $XLF

JP Morgan (NYSE:JPM) beat off the governance rebels and upheld the olde order. Jamie Dimon will get to keep his job as CEO and Chairman. After some heavy lobbying, arm twisting and God only knows what kind of IOU’s are now out there Jamie Dimon stays in.

I’m not sure the right side won but it is one share one vote which means the big institutions rule. OK so Jamie Dimon’s skills at infighting have triumphed for the present. Business and risk à la Jamie Dimon continue.

Here’s the rub. Financial Institutions are highly leveraged and accident prone at times. No one on JP Morgans Board has significant banking or derivatives/trading experience. They can listen to all the presentations and still not fathom the crux of the matter. They have to trust.

The Board has to trust that nothing will go wrong for a long time. (Long time is defined by how much longer Jamie Dimon wants to stay on) Things do go wrong at financial institutions. London whale debacles have happened to almost every institution in one way or another. The next time something big goes wrong the market will have another crisis of confidence. Everything will boil to the surface. Everything will get second guessed. Large institutional investors will loss heart and come back with a vengeance.

So investing in JP Morgan in addition to the normal risks one would expect from a large financial institution is now like walking with a large jar of nitroglycerine. One false step and it all blows. It blows if you trip. It blows if someone bumps into you. Investing is a blood sport and more than a bump can and will occur.

George Gutowski writes from a  caveat emptor perspective.

Jamie Dimon Imitates James Cagney $JPM $XLF “Why You Dirty Rat”

Jamie Dimon Chair and CEO of JP Morgan (NYSE:JPM) is beginning to resemble James Cagney in some of his film roles as an unyielding, unrepentent, tough guy who was not going to take anything from any body. You see? BTW I think Cagney robbed some banks as well.

Just to summarize some of the points which have not influenced Jamie Dimon

  1. London Whale debacle destroying shareholder wealth
  2. Publicly arguing with Governors of Central Banks
  3. Falling out of the running to be Secretary of Treasury under President Obama
  4. Trying to get cozy with the GOP to get the same possible job back
  5. Two major proxy solicitation services recommending Chair and CEO position be split.
  6. Public recommendations that certain independent board members not be re-elected.
  7. Independent board members meeting with third parties about some or all of the above.
  8. Federal Regulators saying they do not trust JP Morgan.
  9. Major institutional shareholders feeling very uneasy about it all. Thats not a vote of confidence.
  10. Warren Buffett making public statements of support indicate Jamie Dimon does not have the support you would think he should have as the Chairman/CEO

Regardless of where you stand on this issue; because it has become an issue of the tar baby variety it will not go away in a satisfactory fashion. It is a huge distraction.

If there is a final shoot out of the James Cagney fashion shareholder wealth will be destroyed. Who then will be the “Dirty Rat”

George Gutowski writes from a caveat emptor persepctive.

ISS recommends against 3 directors on JP Morgan Board. $JPM

International Shareholders Services (ISS) is recommending against re-election of three members of Board of Directors for JP Morgan (NYSE:JPM). Referring to last years London Whale debacle they are citing “material failures of stewardship and risk oversight” specifically they are recommending shareholders withhold votes for

David M Cote  is Chairman and Chief Executive Officer of Honeywell International Inc. Prior to joining Honeywell, he served as Chairman, President and Chief Executive Officer of TRW Inc., which he joined in 1999 after a 25 year career with General Electric. Mr. Cote was named co-chair of the U.S.-India CEO Forum by President Obama in 2009, and has served on the Forum since July 2005. Mr. Cote is a member of The Business Roundtable and serves on an advisory panel to Kohlberg Kravis Roberts & Co. Also sits on risk policy committee for JPM

James S Crown received his law degree from Stanford University Law School in 1980. Following law school, Mr. Crown joined Salomon Brothers Inc. and became a vice president of the Capital Markets Service Group in 1983. In 1985 he joined his family’s investment firm. He sits on the risk policy committee for JP Morgan.

Ellen V Futter was a director of the Federal Reserve Bank of New York (1988–1993) and served as its Chairman (1992–1993). She is a member of the risk policy committee for JPM.

Say what you want the team blew it and shareholder wealth was destroyed. With these resumes and responsibilities its hard to have confidence in these individuals to stay as members of board.

JP Morgan and Jamie Dimon has already heard from Fed regulators that JP Morgan is not trusted. What will probably happen is this team will quietly resign and skulk away through the back door.

The real problem is how does Jamie Dimon go home.

George Gutowski writes from a caveat emptor perspective.