Go Back   DreamTeamDownloads1, FTP Help, Movies, Bollywood, Applications, etc. & Mature Sex Forum, Rapidshare, Filefactory, Freakshare, Rapidgator, Turbobit, & More MULTI Filehosts > World News/Sport/Weather > Other Interesting News

Other Interesting News Other News That is Not on World Events

IMPORTANT ANNOUNCEMENT
Hallo to All Members. As you can see we regularly Upgrade our Servers, (Sorry for any Downtime during this). We also have added more Forums to help you with many things and for you to enjoy. We now need you to help us to keep this site up and running. This site works at a loss every month and we appeal to you to donate what you can. If you would like to help us, then please just send a message to any Member of Staff for info on how to do this,,,, & Thank You for Being Members of this site.
Post New ThreadReply
 
LinkBack Thread Tools Display Modes
Old 12-05-12, 21:34   #1
The Enigma
 
photostill's Avatar
 
Join Date: Apr 2012
Posts: 9,977
Thanks: 3,009
Thanked 1,524 Times in 928 Posts
photostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant futurephotostill has a brilliant future
Default ...The Financial Crisis

JPMorgan Trading Loss Suggests Little Has Changed Since The Financial Crisis
by D.M. Levine w/Emily Peck contributing

If you thought Wall Street had learned its lesson four years after the global financial crisis, JPMorgan Chase's $2 billion trading debacle suggests you should think again, investment bankers and industry experts say.

To some, it suggests that the need for financial reform is still just as urgent as it was the day the crisis broke out.

JPMorgan revealed on Thursday that it had lost about $2 billion (with possibly more losses to come) from risky bets on opaque derivatives at a London trading desk.

The pressure on the bank intensified on Friday, with reports that the Securities and Exchange Commission had opened an investigation of its trades and Fitch Ratings downgrading the bank's long-term credit rating to A+ from AA-.

JPMorgan's big losing trade shows that at least some big banks are engaged in the same sort of behavior that rocked the financial system in 2008, if on a smaller scale.

“This is a smaller version of the same betting that went on in 2006,” said Will Rhode, a principal and director of fixed income at The Tabb Group, a financial-markets research and advisory firm.

“Ultimately, this is about banks being dissatisfied with the single-digit returns on equity that are associated with their conventional lending businesses, and trying to find other ways to make money," said Daniel Alpert, founding managing partner at investment bank Westwood Capital, "with risk, once again, taking a backseat to potential reward.”

The episode has provided ammunition to those calling for new regulations, particularly the part of the Dodd-Frank financial reform act known as the Volcker Rule, or a ban on proprietary trading by federally insured banks. The rule is currently scheduled to take effect in July, though Federal Reserve Chairman Ben Bernanke has suggested regulators will probably miss the deadline. Part of the delay is due to a barrage of pressure from lobbyists, who have helped to complicate and water down the rule.

“This latest debacle at JPMorgan demonstrates that the banks cannot police themselves, and should not be trusted to do so,” said law professor Frank Partnoy, director of the Center on Corporate and Securities Law at the University of San Diego. “At minimum, they should be required to disclose details about their derivatives, so their shareholders can understand what risks they are taking.”

By Friday afternoon, lawmakers were starting to make a similar argument.

“If the regulators do what [the Volcker rule] says ... this activity would not be permitted,” Sen. Carl Levin (D-Mich.), one of the authors of the Volcker rule, told CNBC. “The purpose of Dodd-Frank was essentially to bring back a cop on the beat on Wall Street.”

Tabb Group’s Rhode went further.

“This makes the Volcker rule a foregone conclusion,” he said. “The entire financial community is holding their heads in their hands saying this JPMorgan event could not have happened at a worse time.”

The fact that the trading losses happened at JPMorgan, whose CEO, Jamie Dimon, has been an outspoken critic of financial reform, likely strengthens the argument of those pushing for more regulation.

"There's something delicious about this happening to JPMorgan," Rep. John Sarbanes (D-Md.) told The Huffington Post on Friday.

JPMorgan's troubles should help Dodd-Frank's cause, said Sarbanes, the son of former Sen. Paul Sarbanes (D-Md.), who co-sponsored the Sarbanes-Oxley financial regulation law that passed in 2002.

However, "people forget quickly," he cautioned. "The finance industry has a lot of sway."

What is difficult to tell is exactly how widespread the practices are that got JPMorgan into trouble -- partly because without financial reforms, the riskier corners of Wall Street are still just as murky as they were before the crisis.

“We never hear about these things if they profit from it," said William D. Cohan, a former managing director at JPMorgan who now writes frequently about the banks. "They never call a five o’clock press conference saying we made $4 billion on a London Whale trade.

"We’ll never know who else is doing it, and this is one of the big problems," he added. "It’s an opaque black box.”

The JPMorgan incident also highlights one other problematic trend still lingering from the crisis: Too-big-to-fail banks engaging in risky behavior that could possibly lead to government bailouts.

"We have to decide whether we want these banks to be large public utilities -- very safe, not generating humongous returns," said Alpert of Westwood Capital, "or do we want these institutions to engage in speculation and put our system at risk?”


There are lots of problems with the big banks and they haven't magically disappeared after the TARP bailout. The idea that we had to have a TARP to begin with is a sign that these banks are simply too big. Were the SEC to follow the law they would be broken up, much the same as other industries have in the past under the Anti-Trust laws.

To name a couple that have been broken up in the past are Standard Oil and AT&T. Both gained the status of 'TBTF' (To Big To Fail) and were holding the nation's economy hostage. With presidents and congress ever since Clinton all chipping in to remove the protections that the Anti-Trust laws provided.

Both Standard Oil and AT&T have nearly reassembled themselves from the broken up corporations to what they are today. Both mega conglomerates again seeking to gain the control they once had. It's what corporations do.

The issues with banks are a bit different. One is that there are two kinds of banks. One is the depositor bank, where mom and pop put their $50 or $100 a month in the savings accounts. Mom and pop expect to see their $3.48 or what ever put into their accounts as interest income. This is the sort of bank that bank managers hate. Nothing really happens beyond the loaning of money in the local economy for the new car or house. Financial risk taking is removed from this sort of banking and is drop dead boring to the manager. These were the banks originally protected by the federal government through FDIC.

The other kind of bank is investor bank. People have a few spare $1000s they drop into their account for someone to manage. Unlike the depositor bank, they can lose it all if the manager makes a bad decision. These types of banks were not protected by FDIC (but are now with the easing of the Anti-Trust laws and banking regulations. It's basically legalized gambling where someone takes your money and does the gambling. If they win, the manager gets a cut, the bank gets a cut, the investor makes a profit. If they loss, only the investor loses. It's exciting because there can be huge paydays for everyone. It's like having gambling fever but you get to spend someone's money, not yours.

This is what caused the housing bubble, the upcoming student loan bubble, and now we have recent in the news, JPMorgan Chase's $2 billion trading debacle. JPMorgan/Chase will be looking at how to get the taxpayer to fork it out again, because it's TBTF. Nothing has been done to make banks accountable for the crash of the economy they caused with the underwater mortgages. Nothing to prevent them from doing it again, as this shows.

Some things have been peculating through the states as reactions to this sort of stuff. Home owners in San Fransisco are teed because foreclosures are resulting in tons of run down houses, lowering the property values even further than the housing bubble did. Local home owners took it on themselves to clean up a foreclosed home and dump all the trash in front of the branch bank that did the foreclosure and are now pushing to charge banks $1000 a day on foreclosed homes in disrepair.

This would solve the ignored part of the TARP that banks just will not do. In the agreements to accept TARP was that underwater home owners would be able to renegotiate their loans to the current value of the home with current interest rates. Banks have been playing games around that, wanting instead to refinance at the current face value of the current loan at higher interest rates and points rather than honor the agreement they made to refinance at current value.

The whole mess shows banks on a rampage for double digit profits. No longer content with making single digit increases in income. The only way to get that is to gamble. But gambling with another's money should have some restrictions on it so that the investors have a right to know (instead of it being hidden) what the rules of the game are. Banks such as Goldman Sacs have already shown they can't be trusted on that either. While offering to the investor what was claimed to be high value, good risk, investments, Goldman was secretly betting on them to fail, while doing the selling of investments, using their insider knowledge to profit at the expense of the investor.

Either we will have restrictions on these banks or we will enter another Great Depression and whether those restrictions are put in place, may not be soon enough to keep us out of the impact that has already hit the economy.
__________________

You can help this site, by clicking on the link below to buy a Premium Account.
& Thank you for helping us. Click;




photostill is offline  
Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiTweet this Post!
Reply With Quote
Post New ThreadReply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On



Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.
SEO by vBSEO 3.5.2
Designed by: vBSkinworks