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 Funds would have been withdrawn and vigorous lawsuits would have been launched.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.

Mortgage Fines Reveal Board Room Stupidity at $BAC and $JPM, $C, $WFC, $XLF

We all knew billion dollar fines were coming. We now know that they are just speeding tickets. Bank of America, Wells Fargo, JPMorgan and others thought they were getting strategic assets at bargain basement levels. Turns out take-overs were not worth it. Big money spent should have been kept inside. Billion dollar fines will always be a bad use of capital.

The banks will survive because they are too large to fail.

However  you have to ask “How smart was that board of directors to buy a pig in a poke” what will they do next time. What grand strategy will they have.

Banks are the most difficult investments to analyze. So you decide to follow good management. Except you cannot find good management. When they had the chance they bought crap.

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.

US Banks Need Big Political Bargain $XLF, $C, $WFC, $JPM, $BAC

It’s about five years since the 2008 melt-down and Washington is still prosecuting and bringing new charges against banks for their roles in mortgage-backed securities. The Banks need to make a Big Political Bargain and call the Federal dogs off. Fines are in the hundreds of millions. Costs of litigation and senior level distraction are in the tens of millions. The banks need to staunch this flow and look to the future.

The government needs to realize the banking sector is the aircraft carrier of the economy. Must be protected at all costs. So stop with the lawsuits regardless of ideological justification.

Obama has three more years. Republicans can’t win the White House without better Latino support in three years. Three years plus of litigation can be a long time.

So make a deal banks. This has to be business and not personal. Someone needs to be able to have the right lunch with Senator Elizabeth Warren and lay the ground work for the next ten years. Not fight rear guard actions because of the past ten years.

George Gutowski writes from a Caveat Emptor Perspective.

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