Josh Rosner has done a yeoman’s job looking closely at JPM’s finances, regulatory violations, and trading losses. I found much of what he wrote surprising.

In particular, I was surprised to learn that JPM:

-Had many similar anti money laundering laws violations as HSBC;
-Failed to Segregated Accounts ala MF Global
-Engaged in Risky trading behavior that cost them over $8B
-Demanded that the FDIC cover WAMU’s losses despite their purchase of them;
-Paid more than $8.5 billion in regulatory and legal settlements –almost 12% of 2009-12 net income!

Prior installments are here:

Intro Poor Risk Controls

part 2: JPM wants FDIC (read taxpayer)to cover WaMu’s mortgage losses

part 3 Segregated Accounts

part 4 London Whale

part 5 (tonite)

Complete Report PDF (Friday am)

Category: Corporate Management, Really, really bad calls, Regulation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Josh Rosner’s JPM Analysis”

  1. rd says:

    If you are Too Big To Fail, then you are Too Big To Regulate since any perturbance of the Force can bring doom.

    Break up the TBTF banks.

  2. Bam_Man says:

    So surprised to see that a generation+ of regulatory capture, control fraud and moral hazard run amok have turned the TBTF banks into criminal enterprises. Shocked! Shocked, I tell you!

  3. Pantmaker says:

    This whole piece is superb. JPM is a microcosm (though hardly micro) of this entire ridiculous market. This is the stuff of which glorious airpockets are made.

  4. Been Around 1963 says:

    My favorite part of the JPM Task Force Report says that they didn’t let the numbers or positions frame the narrative; rather, they relied on unsubstantiated recollections. So how can the reader make an independent judgement of the facts?

    Here’s the money quote:

    The description of “what happened” is not a technical analysis of the Synthetic Credit Portfolio or the price movements in the instruments held in the Synthetic Credit Portfolio. Instead, it focuses on the trading decision-making process and actions taken (or not taken) by various JPMorgan personnel. The description of activities described in this Report (including the trading strategies) is based in significant measure on the recollections of the traders (and in particular the trader who had day-to-day responsibility for the Synthetic Credit Portfolio and was the primary architect of the trades in question) and others. The Task Force has not been able to independently verify all of these recollections.

  5. [...] Even the bank with the reputation as being the “best managed bank” in the U.S., JP Morgan, has engaged in massive fraud.  For example, the Senate’s Permanent Subcommittee on Investigations released a report today quoting  an examiner at the Office of Comptroller of the Currency – JPMorgan’s regulator – saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses.   And Joshua Rosner – noted bond analyst, and Managing Director at independent research consultancy Graham Fisher & Co – notes that JP Morgan had many similar anti money laundering laws violations as HSBC, failed to segregate accounts a la MF…. [...]

  6. [...] Even the bank with the reputation as being the “best managed bank” in the U.S., JP Morgan, has engaged in massive fraud. For example, the Senate’s Permanent Subcommittee on Investigations released a report today quoting an examiner at the Office of Comptroller of the Currency – JPMorgan’s regulator – saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. And Joshua Rosner – noted bond analyst, and Managing Director at independent research consultancy Graham Fisher & Co – notes that JP Morgan had many similar anti money laundering laws violations as HSBC, failed to segregate accounts a la MF…. [...]

  7. [...] Even the bank with the reputation as being the “best managed bank” in the U.S., JP Morgan, has engaged in massive fraud. For example, the Senate’s Permanent Subcommittee on Investigations released a report today quoting an examiner at the Office of Comptroller of the Currency – JPMorgan’s regulator – saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. And Joshua Rosner – noted bond analyst, and Managing Director at independent research consultancy Graham Fisher & Co – notes that JP Morgan had many similar anti money laundering laws violations as HSBC, failed to segregate accounts a la MF…. [...]