The Financial Industry Regulatory Authority (FINRA), Wall Street’s self-regulator with a long history of conflicts of interest, has released a summary of its findings from the examinations it conducts at the nation’s brokerage firms. As is typical of FINRA, the document released to the public is extremely light on details. (Almost half of FINRA’s Board comes from inside the industry, with current representation from JPMorgan Chase, Merrill Lynch, Citadel and Fidelity, to name just a few of the insiders.) One area of the report did stand out, however. FINRA has expressed concerns about the fairness of the price you’re getting on the stock or bond trade you’re placing with your broker. In Wall Street parlance, this is known as ‘Best Execution.’ The report explains: ‘Best execution is a significant investor protection requirement that essentially obligates a broker dealer to exercise reasonable care to execute a customer’s order in a way to obtain the most advantageous terms for the customer… If a broker-dealer receives an order routing inducement, such as payment for order flow, or trades as principal with customer orders, it must not let those factors interfere with its duty of best execution nor take them into account in analyzing market quality… ‘FINRA had concerns regarding the duty of best execution at firms of all sizes that receive, handle, route or execute customer orders in equities, options and fixed income securities. FINRA found that some firms failed to implement and conduct an adequate regular and rigorous review of the quality of the executions of their customers’ orders… ‘As a result of such deficiencies, these firms failed to assure that order flow was directed to markets providing the most beneficial terms for their customers’ orders. FINRA notes that conducting a regular and rigorous review of customer execution quality is critical to the supervision of best execution practices, particularly if a firm routes customer orders to an alternative trading system in which the firm has a financial interest or market centers that provide order routing inducements, such as payment for order flow arrangements and order routing rebates.’
In an October 2017 interview, Jamie Dimon famously lambasted Bitcoin as a ‘fraud’ and the people who bought it as ‘stupid’ which, temporarily, halted the ascent in the Bitcoin price. It also led to much heated debate in the mainstream media and much anger across the crypto community. In a just as incendiary follow up, Dimon sat down for another interview, this time as ‘The Economic Club of Chicago’. We wondered whether he would confirm recent reports that JPMorgan Chase would buy and sell Bitcoin futures for clients after the upcoming launch on the CME. Sadly, he wasn’t pressed on this question. Instead, he had some striking comments about the longevity of Trump’s Presidency, as Reuters reports. Jamie Dimon, chief executive officer of JPMorgan Chase & Co, on Wednesday said he expects to see a new U. S. president in 2021 and advised the Democratic party to come up with a ‘pro-free enterprise’ agenda for jobs and economic growth instead. Asked at a luncheon hosted by The Economic Club of Chicago how many years Republican President Donald Trump will be in office, Dimon said, ‘If I had to bet, I’d bet three and half. But the Democrats have to come up with a reasonable candidate … or Trump will win again.’ Dimon, who in the past has described himself as ‘barely’ a Democrat, has been going to Washington more often since the 2016 elections to lobby lawmakers on issues including changes in corporate taxes, immigration policies and mortgage finance.
This post was published at Zero Hedge on Nov 23, 2017.
We’ve had a seemingly never-ending parade of crony capitalists, bankers, and politicians calling bitcoin everything from a ‘fraud’ to ‘Enron’ to ‘junk.’ Yesterday, though, a big name came out on the side of bitcoin. Steve Wozniak, co-founder of Apple. Notice that while people like JP Morgan’s Jamie Demon and Mastercard CEO, Ajay Banga, have never actually created any real wealth in their lives, Wozniak played a very crucial role in the development of personal computers which has led to the internet… which led to bitcoin… which has created massive amounts of wealth and freedom for the world.
Barack Obama is funding the anti-Trump movement through a series of backdoor deals and policies. Wall Street may be surprised to learn that it is also helping bankroll the anti-Trump ‘resistance’ whether they wanted to or not. Wall Street is fighting policies which would heavily favor it, including corporate tax cuts and the repeal of Obama-era banking and health-care regulations. We have the Obama administration to thank for the harsh anti-Trump movement by far left groups, according to an article by the New York Post. The Obama administration’s massive shakedown of Big Banks over the mortgage crisis included unprecedented back-door funding for dozens of Democratic activist groups who were not even victims of the crisis. At least three liberal nonprofit organizations the Justice Department approved to receive funds from multibillion-dollar mortgage settlements were instrumental in killing the ObamaCare repeal bill and are now lobbying against GOP tax reform, as well as efforts to rein in illegal immigration. An estimated $640 million has been diverted into what critics say is an improper, if not unconstitutional, ‘slush fund’ fed from government settlements with JPMorgan Chase and Co., Citigroup Inc. and Bank of America Corp., according to congressional sources. The payola is potentially earmarked for third-party interest groups approved by the Justice Department and HUD without requiring any proof of how the funds will be spent. Many of the recipients so far are radical leftist organizations who solicited the settlement cash from the administration even though they were not parties to the lawsuits, records show. ‘During the Obama administration, groups committed to ‘revolutionary social change’ sent proposals and met with high-level HUD and Justice Department officials to try to get their pieces of the settlement pie,’ Cause of Action Institute vice president Julie Smith told The Post. -New York Post
This post was published at shtfplan on September 25th, 2017.
This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission. Bloomberg has nice piece on the battle between JPMorganChase’s Jamie Dimon and the Minneapolis Fed’s Neel Kashkari. (Bloomberg) Jamie Dimon is America’s most famous banker, and Neel Kashkari is its most outspoken bank regulator, so it’s not a shock that they would eventually come to blows. What’s interesting is that their contretemps is over an acronym that most Americans have never heard of, but one that may be central to preventing another recession. TLAC, which is pronounced TEE-lack, is something you need to know about if you want to judge the sparring between Dimon, the well-coiffed chief executive of JPMorgan Chase & Co., and Kashkari, the very bald man who ran for governor of California on the Republican ticket and is now president of the Federal Reserve Bank of Minneapolis. On April 6, Kashkari went after Dimon in a way that circumspect central bankers ordinarily don’t. In an essay published on Medium and republished on the Minneapolis Fed website, he challenged Dimon’s assertion in his annual letter to shareholders that 1) there’s no longer a risk that taxpayers will be stuck with the bill if a big bank fails, and 2) banks have too much capital (meaning an unnecessarily thick safety cushion). Wrote Kashkari: ‘Both of these assertions are demonstrably false.’
After a humiliating election loss just eight days earlier, the Wall Street Democrats in the U. S. Senate laid the groundwork for another humiliating defeat in the midterms in 2018 by electing Senator Chuck Schumer to be the Senate Minority Leader. Schumer is considered the poster boy for Wall Street – as their mouthpiece for lax regulation and a reliable Senate confirmation vote for Wall Street cronies to lead regulatory agencies. Over the past five years, Schumer has raised over $25.8 million for his campaign committee and Leadership PAC with the leading donors being security and investments firms and their outside law firms, according to data from the Center for Responsive Politics. Schumer’s top ten largest donors over his entire political career include seven major Wall Street banks: Goldman Sachs, Citigroup, JPMorgan Chase, Credit Suisse, Morgan Stanley, UBS and the now defunct Bear Stearns. Also in the top ten are two law firms that regularly represent Wall Street firms when they are charged with fraud: Paul Weiss and Sullivan and Cromwell. The Democrats’ head-in-the-sand vote yesterday came despite progressive activists staging a sit-in in Schumer’s office on Monday to demand that he step aside and allow the Senate Minority Leader post to go to Senator Bernie Sanders – now widely seen across America as the true leader of the Democratic Party.
It’s more than a coincidence that at a time when the two leading candidates for the highest office in the United States are considered untrustworthy by tens of millions of their fellow citizens, the industry that has perpetually attempted to stack the political deck in Washington has also lost the trust of a majority of Americans. This feels to many like having Wall Street’s one percent at the rudder for the past two decades has finally steered the ship of state into a toxic sink hole that is devouring the credibility of the United States at home and abroad. Wall Street’s image has fallen so low that the Federal Reserve Bank of New York is holding an annual ‘Reforming Culture and Behavior in the Financial Services Industry’ conference. That New York Fed President Bill Dudley is heading up this conference shows just how hopelessly lost Wall Street really is. (Dudley is the guy who didn’t see a problem with his wife collecting $190,000 annually from JPMorgan Chase while Dudley supervised the bank. The New York Fed is also the place that allowed JPMorgan CEO Jamie Dimon to continue to sit on its Board as JPMorgan was being investigated by the Fed for losing over $6 billion in depositors’ money in the London Whale derivatives fiasco. And Dudley is also the guy that allowed the firing of one of his own bank examiners, Carmen Segarra, after she filed a negative examination of Goldman Sachs. Segarra filed a Federal lawsuit charging that she was fired in retaliation for refusing to change her examination report. The portrait of the New York Fed as a crony regulator under Dudley was dramatically broadened in 2014 when ProPublica and public radio’s This American Life released internal tape recordings Segarra had made inside the New York Fed showing a lap dog regulator cowering before a powerful Wall Street firm.)
Following on the story of how aggressive cross-selling requirements spurred employees to abuse customers and commit fraud at Wells Fargo, this week the Massachusetts Secretary of the Commonwealth William Galvin accused Morgan Stanley of ‘dishonest and unethical conduct’ within the state and Rhode Island relating to employee contests that were run to push securities-based loans onto customers from January 2014 to April 2015. See Morgan Stanley unit accused of high pressure sales tactics: ‘This complaint lays bare the culture at Morgan Stanley that bred the high-pressure effort to cross-sell banking products to its brokerage customers without regard for the fiduciary duty owed to the investor,’ Galvin said in a statement. ‘This contest was relatively local, but the aggressive push to cross-sell was company wide.’ There should be no shock in any of this. Anyone who has dealt with an investment bank the past few years will have experienced cross-selling first hand. Employees are trained to recommend customers with any apparent resources (assets or income) to one of the bank’s army of ‘advisors’. Cross-selling is the business model of today’s finance sector. It has been the motivation for merging different product and advisory firms since the 1990′s when Glass Steagall (1933) divisions between deposit taking and product sales were eroded and then rescinded in 1999. This chart shows the massive consolidation since 1995 which has created the 4 largest US banks today: Citi, JP Morgan, Bank of America and Wells Fargo.
Wall Street would have to come up with billions of dollars in additional capital in a proposed revamp of the Federal Reserve’s annual stress tests that could also scrap some provisions that lenders have criticized. As the Fed has signaled for months, it is considering changes that would raise the minimum capital that the biggest banks need for a passing grade, Fed Governor Daniel Tarullo said Monday. But the Fed is also mulling concessions that Wall Street has sought, such as eliminating its assumption that lenders would continue to pay out the same level of dividends and buy back shares during periods of financial duress, he said. The plan shows that even after a litany of new rules and capital demands imposed on the biggest banks in response to the financial crisis, regulators still aren’t satisfied that Wall Street is safe enough to endure another economic tsunami. Tarullo, the Fed’s point person on regulation, conceded that the proposal ‘would generally result in a significant increase in capital requirements’ for the largest lenders. The overhaul tries to incorporate all the new capital requirements into the stress tests, which already represent the highest hurdle that U. S. banks must clear to show they can survive a hypothetical crisis. A particularly heavy mandate for Wall Street giants is an extra surcharge each firm has to maintain based on their size and complexity. For JPMorgan Chase & Co., that surcharge means an extra 3.5 percentage points of capital.
ALHAMBRA PARTNERS / September 23, 2016 Alan Greenspan is confused – again. The man who admitted to the world a decade ago he didn’t know much if anything about interest rates is now trying to change that reputation by suggesting yet again interest rates are set to rise. In testimony before Congress in February 2005, the then-Chairman of the Federal Reserve actually said: For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum. Bond price movements may be a short-term aberration, but it will be some time before we are able to better judge the forces underlying recent experience. To an economist, it was a ‘conundrum’ especially where econometrics and statistics and take the dominant view (if it can be called that). That is one facet to the Greenspan story that is so odd yet so compelling in all the wrong ways. Though he was an economist by schooling, he had more practical experience in the ‘real’ world. He served on boards of such illustrious companies as Alcoa, General Foods, even Mobil. But he was also a director for JP Morgan and Morgan Guaranty. He should have known better, as his infamous 1966 essay on gold reveals. Thus, we can reasonably assume that what transformed his worldview was not economics (small ‘e’) but rather power. Not only had he been appointed to major corporate boards, he was heavily involved in politics, including the kinds that are the stuff of conspiracy theories.
There is a lot of talk out there about the auto-loan market right now. The default rates for auto loans in oil-producing regions in the US have been jumping, while hedge fund honcho Jim Chanos has said the auto-lending market should ‘scare the heck out of everybody.’ John Oliver has used time on his show, ‘Last Week Tonight,’ to highlight the ways some used-car dealerships take advantage of people. Now, in a presentation Monday at the Barclays Financial Services Conference, Gordon Smith, the chief executive for consumer and community banking at JPMorgan, has set out some eye-opening statistics on the market. To be clear, JPMorgan decided back in 2013 to pretty much pull out of auto lending to subprime borrowers – that is car buyers with the worst credit profiles – and the presentation slides are at least in part designed to reassure investors that JPMorgan isn’t participating in the loose lending that its competitors might be. With that said, let’s dive in:
In Japan, the yield hunters have become the hunted. Investors who refused to swallow negative yields to hold Japan’s shorter-dated bonds are suffering, as an index of sovereign debt maturing in 20 years or more has lost 9 percent this quarter. The yield on 2036 bonds climbed to the highest since March 16 as BOJ Governor Haruhiko Kuroda noted last week that low long-term yields hurt returns on pension and insurance investments, even as he signaled there would be no reduction in easing with a policy review due Sept. 21. A 20-year debt sale Tuesday drew the lowest demand in six months. ‘JGBs are responding unreservedly to the BOJ’s message that it’s not desirable for superlong yields to be too low,’ said Takafumi Yamawaki, the chief rates strategist in Tokyo at JPMorgan Chase & Co. ‘The problem is we don’t know what the BOJ’s desired level is, and that’s created an atmosphere of paranoia in the market.’ The intensity of Japan’s bond selloff has sparked concern the market will become the epicenter for a global rout, just as it led a record rally in the first half of 2016. Federal Reserve officials are cautioning against waiting too long to tighten policy, while the European Central Bank is playing down the prospect of further stimulus. DoubleLine Capital Chief Investment Officer Jeffrey Gundlach is among those recommending investors prepare for bonds to fall.
China’s got the world puzzling over its oil hoard. From underground caverns by the Yellow Sea to a scattering of islands in the Yangtze River delta, the government has been stockpiling crude for emergencies in a network of storage sites dotted around the country. Record purchases this year by the world’s biggest energy consumer have helped oil prices recover from the worst crash in a generation. What the country plans to do next could determine where they go from here. The difficulty is that nobody outside China really knows for certain. The government won’t say how much it’s holding or when the tanks will be full. Energy Aspects Ltd. says the country will probably keep buying and fill up commercial tanks if it has to, while the likes of JPMorgan Chase & Co. say the purchases may soon stop. The difference in opinion is equivalent to about 1.1 million barrels a day, or more than the Asian country buys from Saudi Arabia. ‘China seems to feel no obligation to report on its strategic stocks, and that might confer a genuine advantage in its favor,’ said John Driscoll, the chief strategist at JTD Energy Services Pte, who has spent more than 30 years trading crude and petroleum in Singapore. ‘The scope of their purchases can dramatically affect fundamentals and prices. However, since they will likely be shrouded in secrecy, it will remain challenging to quantify the impact.’
THE most dramatic moment of the global financial crisis of the late 2000s was the collapse of Lehman Brothers on September 15th 2008. The point at which the drama became inevitable, though – the crossroads on the way to Thebes – came two years earlier, in the summer of 2006. That August house prices in America, which had been rising almost without interruption for as long as anyone could remember, began to fall – a fall that went on for 31 months (see chart 1). In early 2007 mortgage defaults spiked and a mounting panic gripped Wall Street. The money markets dried up as banks became too scared to lend to each other. The lenders with the largest losses and smallest capital buffers began to topple. Thebes fell to the plague. Ten years on, and America’s banks have been remade to withstand such disasters. When Jamie Dimon, the boss of JPMorgan Chase, talks of its ‘fortress’ balance-sheet, he has a point. The banking industry’s core capital is now $1.2 trillion, more than double its pre-crisis level. In order to grind out enough profits to satisfy their shareholders, banks have slashed costs and increased prices; their return on equity has edged back towards 10%. America’s lenders are still widely despised, but they are now in reasonable shape: highly capitalised, fairly profitable, in private hands and subject to market discipline. The trouble is that, in America, the banks are only part of the picture. There is a huge, parallel structure that exists outside the banks and which creates almost as much credit as they do: the mortgage system. In stark contrast to the banks it is very badly capitalised (see chart 2). It is also barely profitable, largely nationalised and subject to administrative control.
The Federal Reserve bank is well-known for its secrecy. But in an attempt to reach out to the people it claims to serve, the monolithic bank just created a Facebook page . . . and it’s probably really regretting that decision. Unlike Twitter, where the Fed decides which comments to reply to – and therefore which show up publicly on its page – its public Facebook page, launched Thursday morning, is not as restrictive. In fact, the Board of Governors of the Federal Reserve System page has been relentlessly trolled since it went up. The Federal Reserve bank was originally crafted largely by bankers, including JPMorgan Chase & Co. It has never been fully audited since the Federal Reserve Act was passed in 1913, yet it enjoys an omnipresent status in the United States. As the Fed’s Facebook page points out, ‘Over the years, its role in banking and the economy has expanded.’ People have protested the banking institution since it was created, but it remains one of the best-guarded, most opaque institutions in the country. A congressionally mandated audit by the Government Accountability Office in 2011 found the Fed had loaned out $16 trillion dollars to big banks around the world. As noted by Senator Bernie Sanders at the time, ‘This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.’ Sanders’s press release highlighted a more specific conflict of interest:
Economists setting their expectations for China and PBOC ‘stimulus’ should have been paying attention to retail sales; not Chinese retail sales, butAmerican. They keep seeing a rebound that just doesn’t exist. US consumers, as the central marginal marketplace for the world economy of goods, have steadfastly refused the invitation of the unemployment rate to produce a worldwide economic resurgence. While mainstream expectations are set as if US labor market data is meaningful for that future, everything about current spending and production (globally) shows them devoid of any significance at any time. In mid-April this year, for example, Chinese industrial production for March was figured to have accelerated to 6.8%. The level of growth wasn’t the reason for enthusiasm, as nearly 7% is itself unusually low for China. Instead, what got economists excited was how favorably it compared to the alarmingly low 5.4% despair of February. Rather than seeing the US economy for what it was and has been, and thus what the Chinese economy actually was and is, deference remained strong for orthodox policies despite what they had not achieved anywhere. Friday’s growth report revealed China’s aggressive monetary stimulus was finally bearing fruit, Jing Ulrich, managing director and vice chairman for Asia Pacific at JPMorgan Chase, told CNBC’s ‘Street Signs.’ ‘Data from the investment-industry nexus show that the tried-and-tested stimulus measures of recent months have stirred up the physical part of the economy, especially towards the end of Q1, while consumption remained relatively robust,’ Louis Kuijs, head of Asia economics at Oxford Economics, echoed in a note.
Since last Friday’s phony jobs report the casino has become so unhinged that analysis is beside the point. A picture worth an eventual thousand point drop on the S&P 500 will do the job. While we are waiting it might be wondered, however, whether nearly two decades of central bank financial repression have not merely destroyed honest price discovery on Wall Street. Perhaps it has actually extinguished brain function entirely among the corporal’s guard of carbon units that remain. Yes, it is not surprising at all that the robo-machines are now gunning for the 2200 point on the S&P 500 charts. That’s what they do. What defies explanation, however, is that the several dozen humans left on Wall Street who apparently talk to Bob Pisani are actually attempting to rationalize this ‘breakout’ of, well, madness. According to JPMorgan’s latest thoughts, for example, it’s all explained by Mr. Market hard at work discounting a meme called ’17x/$130′.
In an op-ed originally posted by Jamie Dimon in the NYT, the JPM CEO explains that what is plaguing the US is not anger at bailed out banks, some of which like HSBC were confirmed to have been “too big to prosecute” and hatred of crony capitalism which has bailed out banks like, oops, JPMorgan, and is instead mostly due to “wage stagnation and income inequality”, which according to Dimon is due to minimum wage pressures. We kept looking for some additional comments about how the average Wall Street CEOs on average made 124 times the average worker at the banks, but couldn’t find it. Instead we read many words why raising the wage for a tiny subset of JPM workers who still make $10.15 to $12 or even, gasp, $16.50, should fix the US. * * * Jamie Dimon: Why We’re Giving Our Employees a Raise WAGE stagnation. Income inequality. A lack of quality education. Insufficient training and skills development. Issues like these have led approximately two-thirds of Americans to believe that the next generation will be worse off than the last. And it is true that too many people are not getting a fair opportunity to get ahead. We must find ways to help them move up the economic ladder, and everyone – business, government and nonprofits – needs to play a role.
This post was published at Zero Hedge on Jul 12, 2016.
One of the pillars of oil’s recovery from the lowest price in 12 years may be on the verge of crumbling. China is likely close to filling its strategic petroleum reserves after doubling purchases for it this year as prices plunged, JPMorgan Chase & Co. analysts including Ying Wang wrote in a June 29 research note. Stopping shipments for the reserve would wipe out about 15 percent of the country’s imports, according to the bank. Chinese crude imports have risen 16 percent this year, and the country is rivaling the U. S. as the world’s biggest oil purchaser. That demand, along with supply disruptions from Canada to Nigeria, has helped boost oil prices about 80 percent since January. ‘China has taken the opportunity of lower oil prices since early-2015 to accelerate the strategic petroleum reserve builds,’ Wang said in the report. ‘This volume might be close to the capacity limit, in our view, and together with potential teapot utilization pullback and slower-than-expected demand from China could increase near-term risks to global oil prices.’
A little noticed 2008 email from former Federal Reserve Chairman, Ben Bernanke, raises serious questions about his official narrative on the collapse of Lehman Brothers. We’ll get to the email in detail, but first some necessary background. A lot of eyes rolled on Wall Street last October when Ben Bernanke, who chaired the Federal Reserve in the lead up to and during the financial collapse in 2008, released his memoir of the financial crisis with the title: ‘The Courage to Act: A Memoir of a Crisis and its Aftermath.’ Many Wall Street observers felt the title would have more correctly captured the facts on the ground had it read: ‘The Lack of Fed Courage to Supervise Mega Banks Led to an Epic Collapse.’ (In the leadup to the crisis, the Fed allowed Citigroup CEO Sandy Weill and JPMorgan Chase CEO, Jamie Dimon, to sit on the Board of its Federal Reserve Bank of New York, among numerous other conflicts of interest.) Throughout his memoir, including Chapter 12 titled ‘Lehman: The Dam Breaks,’ Bernanke goes to great pains to paint a portrait of the Fed and himself as being intensely on top of the situation at Lehman Brothers from March 2008 forward, following the Bear Stearns collapse and its absorption by JPMorgan Chase.