September 2013 archive

JPMorgan Agrees to Pay $920 Million in Fines Over Trading Loss

By BEN PROTESS and JESSICA SILVER-GREENBERG, The New York Times

September 19, 2013, 9:23 am

Extracting the fines and a rare admission of wrongdoing from JPMorgan Chase, the nation’s largest bank, regulators in Washington and London took aim at a pervasive breakdown in controls and leadership at the bank. The deal resolves investigations from four regulators: the Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve and the Financial Conduct Authority in London.

But the bank has struggled to settle with another regulator, the Commodity Futures Trading Commission, which is investigating whether the bank’s trading manipulated the market for financial contracts known as derivatives. JPMorgan Chase disclosed on Thursday that the agency’s enforcement staff had recommended the filing of an enforcement action.

…

Under the deal with the S.E.C., which also brought civil cases against the traders, JPMorgan took the unusual step of acknowledging that it violated federal securities laws. That concession reverses a decade-long policy at the S.E.C. to allow banks to “neither admit nor deny” wrongdoing. It may also expose JPMorgan to private litigation from investors who will seize on the bank’s admissions.

For now, the bank agreed to pay $300 million to the comptroller’s office, and about $200 million to the S.E.C. and each of the other agencies. The comptroller’s office also cited the bank on Thursday for separate failings in the way it collected overdue bills from consumers and military members.

The fines, while collectively steep, fall in between what other banks have paid when settling with multiple regulators. And the fines can be seen as a reasonable trade-off for a bank seeking to move past the trading losses.

…

Even with the settlement on Thursday, JPMorgan’s regulatory headaches are far from over. On Thursday, both the comptroller’s office and the Consumer Financial Protection Bureau levied fines against the bank for its credit-card practices, including how the bank pursues customers who have fallen behind on their bills.

JPMorgan agreed to pay $80 million in fines to regulators over accusations that the bank duped its credit card customers into buying products pitched as a way to shield them from identity theft. Those products, regulators said, never materialized.

“Put simply, Chase was charging consumers for services that they did not receive,” said Richard Cordray, the director of the Consumer Financial Protection Bureau.

…

The regulators also faulted JPMorgan for how the bank collects debt from its customers. The federal actions stem from an investigation into debt-collection lawsuits the bank filed against its credit card customers from 2009 to 2011. As JPMorgan churned through a glut of overdue credit card bills and other loans, authorities said, the bank relied on faulty documentation to substantiate the amount owed by consumers. Often, the bank relied on outside law firms without double-checking their work.

The questionable debt-collection practices evoked some of the same tactics banks used to foreclose on homes during the mortgage crisis. Those problems – like robo-signing, where bank employees and outside lawyers churned through mountains of foreclosure documents without vetting them for errors – were at the center of a sweeping deal between the nation’s biggest banks and the comptroller’s office.

On Thursday, the regulators took aim at the lawsuits JPMorgan filed to recover money on unpaid bills. According to the comptroller’s office, JPMorgan relied on sworn legal documents that had not been reviewed for accuracy. The bank also flouted a federal law that governs how lenders collect overdue bills from military members, the comptroller’s office said.

JPMorgan Pays Small Fine For Lying To Regulators And Manipulating Market

By: DSWright, Firedog Lake

Thursday September 19, 2013 8:58 am

You had to see this coming. After lying to regulators, manipulating the market, and putting out fraudulent documents JPMorgan will pay a relatively small fine and move on. Because when the powerful repeatedly break the law the consequences are never very severe. If we stopped these Wall Street banksters from making criminal profits they might stop making criminal profits – then where would our economy be?

…

Well, as long as they learned their lesson. Never mind that JPMorgan reported $6.5 billion in profits last quarter. So of course a fine significantly less than 3 months profit will really make them shudder. It’s all about incentives people.

The one regulator that hasn’t taken a dive so far is the CFTC which has refused to settle unless JPMorgan admits market manipulation. Lets hope they don’t cave. Though it seems their regulatory colleagues just left them alone in the desert.

…

(W)hat is the penalty for that crime for 99% of Americans? Someone audits you or your business and you “fail to turn over significant information” to an auditor? I’ll give you a hint, it wouldn’t be a relatively small fine. Actually it would be a very large fine and possibly a government mandated visit to a correctional facility. But that’s what you get for not being rich enough to bribe Congress.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

The New York Times Editorial Board: The March to Anarchy

Until now, the only House Republicans pushing for a government shutdown and debt crisis were a few dozen on the radical right, the ones Senator, Harry Reid, the majority leader, referred to as “the anarchists.” On Wednesday, however, the full Republican caucus, leadership and all, joined the anarchy movement, announcing plans to demand the defunding of health care reform as the price for keeping the government open past Sept. 30. [..]

Mr. Boehner is playing the dangerous game of trying to placate the extremists for a few days. But, in the end, the burden will be squarely on his shoulders. If he allows the entire House, including Democrats, to vote on straightforward measures to pay for the government and raise the debt limit, the double crisis will instantly end. If he does not, he will give free rein to his party’s worst impulses.

Richard (RJ) Eskow: Your Household Lost Seven Thousand Dollars Last Year. Where Did It Go?

If you’ve read the new Census Bureau on income, poverty, and health insurance you may be asking yourself: Where did our seven thousand dollars go?

We’re inundated with economic numbers every day, so let’s just consider that one figure for a moment: Seven thousand dollars. Actually, the statistics tell us that the figure for your household is probably even larger than that. The average under-65 household in the United States has lost $7,490 in annual income since the year 2000, according to 2012 census data. [..]

That’s a lot of money for most people. And it raises the question: If the average household — if your household — didn’t get that money, who did?

Ahoy mateys.  It be Cap’n Hank Bloodbeard hijacking your blog ag’in.  Since the establishin’ of International Talk Like a Pirate Day in 1995, the number of Pirates has increased gratifyin’ly thereby proving the success of our Pastafarian Pirate Recruitin’ Program and confirmin’ the link between increased piracy and declinin’ Global Warmin’.

But wait ye say, Global Warmin’ has gotten worse and Pastafarianism is a made up religion contrived out of equal measures of ennui, ignorance and Rum!

WHY IS THERE NEVER ANY RUM!  Oh, that’s why.

Ye scurvy dog, them be fightin’ wards.  Ye’ll walk the plank. I’ll keelhaul ye.  I’ll see your black hearted soul in Davey Jones Locker (the one ‘e shares w’ Peter Toth).

We used to worry about that too until we took up w’ a crew o’ Freshwater Pirates from the Chicago School who explained that it doesn’t matter how consistently and thoroughly wrong ye are if ye suck up to rich people enough and parrot their prejudices, beat down the po’ folk until morale improves, and kiss their ass long and hard.  Take what ye can, give nothin’ back, yo ho.

Polly want a grant?

E’en on these shores Cap’n Bloodbeard (aside from really enjoyin’ referin’ to hisself in the thard person) be known for ‘is trail of terror and carnage and really bad puns.

• 2007 DocuDharma

• 2008 DocuDharma
• 2008 Daily Kos

• 2010 The Stars Hollow Gazette

• 2011 DocuDharma
• 2011 The Stars Hollow Gazette

• 2012 DocuDharma
• 2012 The Stars Hollow Gazette

I generally celebrate International Talk Like a Pirate Day by telling the 3 Pirate Jokes.  There are only 3, all the others are just variations.  As Cap’n Slappy says:

Thar be only three pirate jokes in the world. The biggest one is the one that ends with someone usin’ “Arrr” in the punchline. Oh, sure, thar be plenty o’ these, but they’re all the same damn joke.

“What’s the pirate movie rated? – Arrr!” “What kind o’ socks does a pirate wear? – Arrrrgyle!” “What’s the problem with the way a pirate speaks? – Arrrrticulation!” …and so forth.

The second joke is the one wear the pirate walks into the bar with a ships wheel attached to the front o’ his trousers. The bartender asks, “What the hell is that ships wheel for?” The pirate says, “I don’t know, but it’s drivin’ me nuts!”

And finally. A little boy is trick or treatin’ on Halloween by himself. He is dressed as a pirate. At one house, a friendly man asks him, “Where are your buccaneers?” The little boy responds, “On either side o’ me ‘buccan’ head!”

And there ye have it. A symposium on pirate humor that’ll last ye a lifetime – so long as life is violent and short.

If ye steer a course to the official website of International Talk Like A Pirate Day, ye may wish to read the FAQ, to help ye splice the mainbrace proper like.  Then ye’ll be ready to talk like a pirate.

Talking like a pirate, however, doesn’t just mean running through the hallways yelling “yarr!” at everyone. To get more in touch with one’s inner pirate, here is a short list of useful terms that may help readers throughout their day of pillaging and searching for buried treasure.

I also spend this day in Worship at Church and emulate the manners, customs, and language o’ me Pirate forbearers (I have the good fortune to be 1/4 full blooded Pirate through my Viking ancestors, indeed Viking is a verb which means ‘Pirate’) and singing some Pirate Carols.

There will come a time when you have a chance to do the right thing.

I love those moments. I like to wave at them as they pass by.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

September 19 is the 262nd day of the year (263rd in leap years) in the Gregorian calendar. There are 103 days remaining until the end of the year.

On this day in 1796, President George Washington’s Farewell Address to the Nation is published.

George Washington’s Farewell Address was written to “The People of the United States” near the end of his second term as President of the United States and before his retirement to Mount Vernon.

Originally published in David Claypoole’s American Daily Advertiser on September 19, 1796 under the title “The Address of General Washington To The People of The United States on his declining of the Presidency of the

United States,” the letter was almost immediately reprinted in newspapers across the country and later in a pamphlet form. The work was later named a “Farewell Address,” as it was Washington’s valedictory after 45 years of service to the new republic, first during the Revolution of the Continental Army and later as the nation’s first president.

The letter was originally prepared in 1792 with the help of James Madison, as Washington prepared to retire following a single term in office. However, he set aside the letter and ran for a second term after his Secretary of the Treasury, Alexander Hamilton, and his Secretary of State, Thomas Jefferson, convinced him that the growing divisions between the newly formed Federalist and Democratic-Republican parties, along with the current state of foreign affairs, would tear the country apart in the absence of his leadership.

Four years later, as his second term came to a close, Washington revisited the letter and with the help of Alexander Hamilton prepared a revision of the original draft to announce his intention to decline a third term in office; to reflect the emerging issues of the American political landscape in 1796; and to parting advice to his fellow Americans, express his support for the government eight years following the adoption of the Constitution; and to defend his administration’s record.

The letter was written by Washington after years of exhaustion due to his advanced age, years of service to his country, the duties of the presidency, and increased attacks by his political opponents. It was published almost two months before the Electoral College cast their votes in the 1796 presidential election.

On August 3, 2013, Hassan Rouhani took over the office of president of Iran, its seventh since the overthrow of the shah. He succeeded Mahmoud Ahmadinejad, the controversial conservative who was most likely elected as a reaction to the US President George W. Bush calling Iran part of his “axis of evil” and UN sanctions. President Rouhani, a devote Muslim, is also a lawyer, academic and diplomat. He headed Iran’s former nuclear negotiating team and was the country’s top negotiator with the UK, France, and Germany on Iran’s nuclear program. He has been steadily reaching out to the world using a unique tool, Twitter. Yeah, he tweets and sent his blessing to Jews worldwide on Rosh Hashanah.

And he isn’t the only member of the Iranian government that Tweets, so does Foreign Minister Javad Zarif. He had a very interesting exchange with Christine Pelosi, daughter of U.S. House Minority Leader Nancy Pelosi:

It would seem that rational heads have taken charge. Indeed they have. In the latest sign that he is reaching out to thaw the relationship with the US, Pres. Rouhani granted an interview with NBC News national and international correspondent Ann Curry who pointedly asked him about Iran’s intent to acquire nuclear weapons. Not surprising to anyone who pays close attention to the politics of Iran, Pres. Rouhani clearly stated the Iran will never develop nuclear weapons.  

Pres. Rouhani confirmed that he has exchanged letters with President Barack Obama and is hoping to meet with him next week at the UN General Assembly in New York City.

A meeting could go a long way to cooling the militarist rhetoric that has dominated any discussion about the Middle East and move to ease the sanctions imposed by the international community on Iran that have mostly impacted the less fortunate Iranians.

The ball is now in President Obama’s court.

The Crunchy Center

Sheer Accumulation of Breathless Wrongness

How large is this building?  What about that one?

The Best F#@king News Team Ever

The progressive Democrats of the Senate got Larry Summers to withdraw from consideration for chair of the Federal Reserve over the weekend. So now they’re yellin’ for Yellen. Well, folks Janet Yellen the current vice chair of the Federal Reserve is just the distaff version of Larry minus the misogyny.

Huffington Post‘s senior political economy reporter Zach Carter gives a rundown of Ms. Yellen’s policy history before and during her tenure as chair of Council of Economic Advisers in the Clinton administration. During that time she backed the repeal of the landmark Glass-Steagall bank reform, supported the 1993 North American Free Trade Agreement and pressured the government to develop a new statistical metric intended to lower payments to senior citizens on Social Security. Yes, dears, that last one would be an earlier version of the Chained CPI.

But in the 1990s, Yellen and Summers both served in the Clinton administration, and pursued many of the same policies. Yellen began serving as Chair of President Bill Clinton’s Council of Economic Advisers in 1997, and publicly endorsed repealing Glass-Steagall’s separation between traditional bank lending and riskier securities trading during her Senate confirmation hearing. Yellen referred to deregulating banking as a way to “modernize” the financial system, and indicated that breaking down Glass-Steagall could be the beginning of a process allowing banks to merge with other commercial and industrial firms. [..]

At the same event, Yellen endorsed establishing a new statistical metric that would allow the federal government to reduce Social Security payments over time, by revising the consumer price index, or CPI, the government’s standard measurement for inflation. [..]

Before Yellen joined the Clinton administration, she was a respected economist at the University of California at Berkeley. In 1993, she joined dozens of other academics in signing a letter to Clinton advocating for the North American Free Trade Agreement. The letter was signed by prominent conservative economists including Milton Friedman, but also by many economists who are now considered progressive, including Paul Krugman and former Obama adviser Christina Romer. Krugman has since expressed disappointment with some of the trade pact’s effects.

(all emphasis mine)

The full transcript of Ms. Yellen’s Feb. 5, 1997 conformation hearing can be read here (pdf).

To be fair on the Glass-Steagall repeal, Ezra Klein weighed in at his Washington Post Wonkblog:

Another point here is that Glass-Steagall really wasn’t behind the crisis. Wonkblog’s Glass-Steagall explainer has much more detail on this, but perhaps the simplest way to make the point is to quote Sen. Elizabeth Warren, the lead sponsor behind the bill to restore Glass-Steagall. When Andrew Ross Sorkin asked her whether the law would’ve prevented the financial crisis or JP Morgan’s subsequent losses, she said, “the answer is probably ‘No’ to both.” There are good reasons to bring back Glass-Steagall, but they’re separate from the events of 2007 and 2008.

Which is only to say that supporting the repeal of Glass-Steagall in 1997 doesn’t say that much about somebody’s opinions on regulating Wall Street today. And, in general, we don’t know very much about Janet Yellen’s views on the subject. As I’ve argued before, the support for her on this dimension (as opposed to on the monetary policy dimension) really comes from an anybody-but-Summers impulse.

Carter also noted in his article that Ms. Yellen is more consumer friendly. During her tenure as president of the San Francisco Federal Reserve from June 14, 2004 until 2010, she identified the housing bubble and urged stronger regulation to limit its damage.

This still leaves a lot of questions about whether she would support the chained CPI, that is very unpopular among seniors and the public in general, or support regulation to rein in the TBTF banks. As lambert at Corrente puts it:

“Be careful what you wish for; you might get it” was made for situations like this.

So let’s not confuse a solid base hit with a game-winning grand slam, OK?

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Wednesday is Ladies’ Day.

Follow us on Twitter @StarsHollowGzt

Bryce Covert; Larry Summers Is Out, but the Boys’ Club Is as In as Ever

The thing is, increasing diversity isn’t easy, and it’s not just because the pipeline of talented women pushing for the top sometimes runs dry. It’s because men have dominated the upper echelons of society, be it policymaking or otherwise, for centuries, and therefore bringing in more women means reaching outside the close at hand, the people you already know, those who you might already be friends with.

Obama has a boys’ club problem. Larry Summers was reportedly playing golf with the president while the debate raged about who would get the pick. We can be sure that Yellen didn’t get such access-of the sixteen people who most frequently play golf with the president, not a single one is a woman. Every journalist has given off-the-record access to is a man. And then there’s the famous photo of a nearly all-male group of senior advisers briefing the president, except for the leg of Valerie Jarrett. In some ways it’s understandable that most of the people who surround the president are men. Many of the already powerful and successful in this country are. But a commitment to diversity has to be proactive, going beyond the boundaries of the in club to find those who haven’t been invited yet.

Rebecca Manski: Wall Street’s Long, Occupied History

Today marks the beginning of the third year since Occupy Wall Street activists got off the Internet and began their real-world occupation at Zuccotti Park. Inspired by the home of the Egyptian revolution at Tahrir Square – tahrir means “Liberty” in Arabic – the new occupiers restored the park’s original name, Liberty Plaza. (Some also called it “Liberty Square.”) In the two months of the occupation, many thousands of people came from far and wide to converge on that magnetic, contested space.

Zuccotti Park was first called “Liberty Plaza” for good reason. It’s situated in a neighborhood that has been the site of struggles for liberation ever since European colonists first arrived. Occupy added one more chapter to an area already steeped in a history of resistance.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

September 18 is the 261st day of the year (262nd in leap years) in the Gregorian calendar. There are 104 days remaining until the end of the year.

On this day in 1793, George Washington lays the cornerstone to the United States Capitol building, the home of the legislative branch of American government. The building would take nearly a century to complete, as architects came and went, the British set fire to it and it was called into use during the Civil War. Today, the Capitol building, with its famous cast-iron dome and important collection of American art, is part of the Capitol Complex, which includes six Congressional office buildings and three Library of Congress buildings, all developed in the 19th and 20th centuries.

As a young nation, the United States had no permanent capital, and Congress met in eight different cities, including Baltimore, New York and Philadelphia, before 1791. In 1790, Congress passed the Residence Act, which gave President Washington the power to select a permanent home for the federal government. The following year, he chose what would become the District of Columbia from land provided by Maryland. Washington picked three commissioners to oversee the capital city’s development and they in turn chose French engineer Pierre Charles L’Enfant to come up with the design. However, L’Enfant clashed with the commissioners and was fired in 1792. A design competition was then held, with a Scotsman named William Thornton submitting the winning entry for the Capitol building. In September 1793, Washington laid the Capitol’s cornerstone and the lengthy construction process, which would involve a line of project managers and architects, got under way.

In the aftermath of another mass shooting that took the lives of 12 people and the gunman in the heart of the nation’s capital at the Washington Naval Yard, Washington Hospital Center Chief Medical Officer Janis Orlowsi, a trauma surgeon spoke to the press. After reporting on the status of the victims who were being treated at her hospital, Dr. Orlowsi made a powerful plea for gun control.

You know what, we see a lot of trauma. And you know, sometimes it’s just, you know – accidents that occur that we get to help people with, because they’re accidents. And then you see what I call senseless trauma. And there is – there’s something evil in our society that we as Americans have to work to try and eradicate.

   I – I have to say, I may see this everyday, I may, you know, be the Chief Medical Officer of a very large trauma center. But there’s something wrong here when we have these multiple shootings, these multiple injuries. There is something wrong. and the only thing that I can say is we have to work together to get rid of it.

   I would like you to put my trauma center out of business. I really would. I would like to not be an expert on gunshots and not to be an expert on this. We are – we do it well. Very experienced surgeons. But, quite frankly, I would rather they were doing their surgery on other things. And you know, it’s a great city. It’s a great country. And we have to work together to get rid of this. Because we just cannot have, you know, one more shooting with, you know, so many people killed.

   We’ve got to figure this out. We’ve got to be able to help each other. We’re dealing right now with three innocent people. But my prayers and my thoughts go out to those people who have died as a result of today. And, you know, their families and what they’re going to have to go through. So I have to say, you know, it’s a challenge to all of us. Let’s get rid of this. This is not America. This is not Washington D.C. This is not good. So we have got to work to get rid of this.