JP Morgan Executives Emergency Life Boat Drills $JPM

JP Morgan (NYSE:JPM) and Jamie Dimon are trying to pretend the recent departure of Frank J. Bisignano, co-chief operating officer is like no big deal. Frank Bisignano is moving on to become chief executive of the payment processing firm First Data Corporation.

You should not have games of revolving chairs with a settled executive suite. The co-chief operating set up was just agreed to. So someone did not believe for the time being and pushed the right buttons to get himself another better job. JP Morgan is supposed to be a prestige large money center bank. Top jobs should make you very wealthy.

Frank Bisignano looked at the lay of the land and determined JP Morgan is a discard. I’m sure he had his reasons. He is not a stupid man. But the final analysis concludes JP Morgan is the place to leave.

Ignore the press releases and other blandishments. The departure speaks volumes of Jamie Dimon and JP Morgan. Smart people do not get off a rising rocket.

George Gutowski writes from a caveat emptor perspective.

Jamie Dimon Black Swan Waiting. JP Morgan’s Coming Political Demise $JPM

JP Morgan (NYSE:JPM) got its ass kicked in Washington DC again. The whole London whale thing was rehashed except with power of subpoena and regulatory oversight a slightly different view is coming out.

Jamie Dimon originally characterized the problem as dumb mistakes and people got fired but we have the capital so don’t worry. Some of the testimony indicates major fails in the governance process. Executives skated the puck around pretending it was something else as the risk management process was subverted to get around problems until the whale was so big nothing more can be done.

Imagine a Harvard Case Study where the CEO declares “We were dumb”. Yes they were dumb and continue to be dumb. It no longer is business. This is politics. The Obama administration needs to show changes on Wall Street. Jamie Dimon who once nurture fantasies of a cabinet level position is now only a CEO of a major NYC money center bank. (with a fancy Upper East side apartment of course)

Elizabeth Warren is a Senator from Massachusetts and probably will be re-elected for the rest of her life. Jamie Dimon has played his political cards very poorly. He even flirted with that guy Romney for a little while. Politically they want a poster boy scalp. The left wants the raw meat. The right is too disorganized to mount a defence. The Tea Party may be funded by Wall Street but it does not know how to defend Wall Street.

Target JP Morgan and Jamie Dimon.

Look at JP Morgan’s Board of Directors. no one and I mean no one has any experience in trading, derivates or mathematics and underpins both. So when the regulator says the board is inadequate  you have to be afraid. But how do you change the board. The power structure will support itself and defend against change. shareholder wealth will not be maximized.

So if you are starting to belive there is a political plot against Jamie Dimon and JP Morgan. I would agree with you.

Check out a few board members and see if they should be involved in trading derivatives and political machinations.

James Bell 63 retired from Boeing.

Timothy Flynn 55 retired head of KPMG

Crandall Bowles 64 retired Chair of Spring Industries a manufacturer of window products made it onto the board of JP Morgan.

David Cote 59 Chair and CEO of Honeywell. an industrialist.

William Weldon 63 was Chair and CEO J&J now just chair.

Laban Jackson 69 Real Estate Developer

Steven Burke 53 NBCUniversal and Comcast

Ellen Futter 62 President American Museum of Natural History. Perhaps one day they will have an exhibit of trading desks.

Lee Raymond 73 Fmr Chair & CEO of ExxonMobil. He may have some understanding of trading.

James Crown 58 Private Investor.

No one on the board has an operational background in banking, financial services, derivatives, or political operations. Perhaps Team Obama has figured this out and sees a soft target.

Not sure if Jamie Dimon has figured this one out yet.

But he will?

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski


JP Morgan & Wells Fargo Set Tone. Except No One Thinks About Rising Interest Rates or Margin Compression $JPM $WFC $XLF

Interest Rates

Interest Rates (Photo credit: 401K)

Everyone is applauding JP Morgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) about their Q1 numbers. Red ink has turned black in many categories. Much improvement has been experienced in credit loss reserves. It’s always nice when you stop losing money because your customers are now able to meet their obligations. Not exactly genius more in the fundamental must have category. So if you believe the economy is improving as both sets of executives maintain you will see gradually improving fundamentals. Wells Fargo even went so far as to say that loans and mortgages taken on now in the early stages of the recovery have less risk than loans and mortgages taken on in the latter stages of the economic cycle [some would say bubble]. Hard to argue so far.

But think in terms of game changers. Nothing ever goes in a straight line. Financial institutions live and die by their ability to maintain adequate net spread. That is the difference between what funds cost and what they can charge their clients who can meet their obligations. Interest rates are at historically low levels. Yield oriented depositors and investors are only too aware of the pain and suffering low-interest rates have exacted.

The market dynamic in a rising interest environment will be for borrowers to attempt to lock in long while providers of funds in whatever form will attempt to stay short and lock in better rates higher up the cycle. This happens every time. Also while the credit risk seems to be improving as loans and mortgages increase in cost a lot of underwriting starts to fall apart. most consumers will struggle with an extra three percent cost on their mortgage.

We may already be seeing the beginnings of margin compression. Concern has been raised about JP Morgans increased cost of long-term debt which would be provided by bond investors who should be the smartest guys in the room when it comes to interest rates.

Do not be lulled into a false sense of security with the two supposed better names in the banking sector. They will all experience the same challenges of margin compression. It happens with every increase in the interest rate cycle. So far management is whistling through the grave yard and not speaking about it.

Iceberg straight ahead!

George Gutowski writes from a caveat emptor perspective.