(Image Credit: Flickr/Mike Fisher)
The Wall Street Journal is crying big tears for JPMorgan:
Trying to keep an accurate tally of the government investigations of J.P. Morgan has become a full-time job. This week the New York Times counted investigations in at least seven federal agencies, while the Journal counted seven investigations in the Justice Department alone, plus inquiries at other agencies.
Mr. Dimon's worst sin in Washington's eyes may be that J.P. Morgan earned record profits last year despite the Whale losses.
Um, no. Ironically, the same same WSJ editorial lists of few of JPMorgan's "sins":
Now each day seems to bring details of another government investigation—about mortgage underwriting, mortgage-backed securities, energy markets, credit cards, other Whale-related cases and more. Since 2008 J.P. Morgan has spent more than $18 billion on legal expenses.
Let's take a look at just a few of these "sins"- otherwise known to the legal profession as fraud, market manipulation and money laundering:
In July, JPMorgan Ventures Energy agreed to pay the Federal Energy Regulatory Commission $410 million in fines. Why? Because in JPMVEC used Enron-style market manipulations to bilk ratepayers in California and the Midwest out of at least $124 million dollars.
The manipulating of heavily regulated energy markets through creative price-setting is analogous to what Enron did in the early part of the century with strategies named “Fat Boy,” “Ricochet,” and the always popular “Death Star.”
In August the Commodities Futures Trading Commission subpoened JPMorgan for documents relating to allegations of price-fixing in the aluminum market. The CFTC investigation was in addition to at least 4 class action lawsuits filed by individuals and companies in New York, Florida, Louisiana and Michigan.
From a NYT report:
Wall Street’s maneuverings in the commodities markets have added many billions to the coffers of investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more for gasoline, electricity and a wide range of products, from cars to cellphones.
Not content with squeezing money from consumers for electricity, soda cans and cell phones, JPMorgan looked abroad for bigger profits, and wound up paying the Treasury Department $88.3 million dollars in August 2011 for money laundering in prohibited transactions with Cuba and Iran.
The WST is also wringing its hands over the plight of the poor, defenseless shareholders of JPMorgan:
And now the feds are making Morgan's shareholders pay for this embarrassment. Morgan investors recently had to pay another $920 million to settle U.S. and U.K. charges related to the Whale.
I have a brief message for the phony free-marketeers at the Wall Street Journal:
Nobody held a gun to the heads of JPMorgan shareholders when they purchased their shares, and nobody is holding a gun to their heads now.
They were free to dump their shares and walk away after the first settlements began. Or later, when multiple settlements showed that share prices were inflated by ill-gotten gains.
But they didn't. Now they're paying the price.
Maybe, just maybe, if more shareholders dumped their shares when repeated settlements made the news, JPMorgan would simply fail due to its own shoddy management.
Happy Thanksgiving. Or maybe JPMorgan calls it "Thankstaking."