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FWIW,
I-Hub as well as MM's/short sellers, posters galore to be OUR FRIEND? makes me wonder,
Nah, not any more as garnered a lot of IPS's from them.
Will prosecute now!
PTiHubber,
IMO, TPS it's JPIG's problem now and was before but thrown under the RUG by no other then ROSENFART and going forward they need to deal/pay them separately from the estate/claw-back of some more fees coming up!
Jane Leamy will be replaced shortly and kicked out on her A$$.
GYS
hardasset, I agree (have 5 accounts with various clearing agencies) there seems to be a global effort to diffuse and downright CLEAR/SELL without my consent!
Going after them now.
GYS
gold-nugget, well then wouldn't we ALL?
Your "fly" on the wall was just a distraction and had NO say!
ROFLMAO!
wall_street61, come and try again??
I would welcome at this point.
GYS
PS: Loser HF's!
Jerle, I agree with you, but then there is another legal arm to fire HER for ineptness/just another leach from the Government teat and cannot/WILL NOT be tenured!
GYS
FWIW, MM's and shorts as well as traders (CICI?) are taking advantage now of this indecision/limbo for the next few weeks.
Expect a major down-turn in the PPS =
1: traders who expected some results will sell!
?
2: LT holders who are fed-up with the system will sell!
?
3: L-3 holders will love you ALL.
GYS
jackfburns, heck wondered
where you've been hiding all along.
AMEN!
livefree_ordie, gotta SUE the oversight committee first which was:
Frank Barney +
Christopher Todd.
However Lisp-lip was voted in again by MASS voters, therefore NO comment!
....who 3 months (June 2108) earlier "spewed" that everything was fine and dandy - heck, Rains collected his 9mil bonus for serving just 1 year, getting them into a bigger HOLE and this administration didn't even question it!
Disgusting what's happening.
As to WAMUQ, I am starting to have my doubts now as to the forces on hand/to be and unloaded some last week. No Q. as to what contribution the EC and S+G did so far and I applaud them for all they do.
As to WGM/B.Rosen, there is an internal revolt against them/him and will have to be taken up by the BOD as well as the AG IF HE is he still able...? YOU figure it out.
It will get nasty I was told!
MF Global.... 650mil of client monies parked at JPM none found previously?
I wonder WHEN it was parked there if ever but in the meantime read up:
http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-399.pdf
more than an interesting read to be sure.....
http://www.zerohedge.com/news/cme-goes-margin-defcon-1-makes-maintenance-margin-equal-initial-everything
Did Jamie Dimon Just Stop Jon Corzine From Going To Jail?
Submitted by Tyler Durden on 11/04/2011 13:36 -0400
Jamie Dimon MF Global POMO
Last week we heard of glitches which resulted in Germany finding $55.5 billion in missing "debt" and a €3.6 billion error in Irish debt. It was only a matter of time before MF Global also uncovered a "glitch"
MF ACCOUNT WITH $658.8M IN CLIENT FUNDS SAID TO BE AT JPMORGAN
MF GLOBAL'S MISSING CLIENT FUNDS SAID TO BE LOCATED AT JPMORGAN
Ignore the fact that MF admitted it had commingled and abused client funds. After all, the big boys take care of their own. And what is $660 million to JPM? Here's what - less than the taxpayer money profit the bank makes on one POMO.
And yes, absolutely nobody could have seen this coming:
http://www.zerohedge.com/news/did-jamie-dimon-just-stop-jon-corzine-going-jail
ROFLMAO!
The Missing MF Millions Turn Up In An Account At JP Morgan
Bloomberg is reporting that missing money from MF Global's customer accounts have been found in a custodial account at JP Morgan - approximately $658.8 million, to be exact.
This is certainly an interesting turn of events.
The missing funds was originally discovered during the due diligence process over the weekend when Interactive Brokers was in discussions to buy the now-bankrupt firm, and the discovery promptly cut off the deal. DealBook first reported on the missing funds Monday.
At first, the amount missing was estimated to be at around a billion dollars, but the figure got narrowed down to between $600 million to $700 million.
The Commodity Futures Trading Commission, one of the regulators of MF Global, has been scrambling to find the funds ever since its discovery. Two days ago, CFTC sent subpoenas to PricewaterHouse Coopers, MF Global's accountant, for data on brokerage's clients' accounts in a further escalation of the investigation.
Yesterday, CNBC reported that a source close to the company had said all of MF Global's funds were there - but had gotten mixed up in a speedy liquidation process.
Read more: http://www.businessinsider.com/found-the-missing-mf-millions-in-an-account-at-jp-morgan-2011-11#ixzz1ckCtq3nc
http://www.businessinsider.com/found-the-missing-mf-millions-in-an-account-at-jp-morgan-2011-11
Forum Post: Is Jamie Dimon a hero or the Biggest Thief from Wall Street?
Posted Nov. 2, 2011, 5:51 p.m. EST (1 day ago) by conscientioushonest
This content is user submitted and not an official statement
Wall Street's most dishonest businessman, the biggest thief Jamie Dimon now becomes a “hero” of world financial crisis, because everybody lost in 2008 financial crisis except him. How did Dimon get rich in the crisis? He got rich through his personal relation at the expense of WaMu shareholders. With the collusion of Ms. Bair, Mr. Dimon stole WaMu’s 307 billion asset and 2239 profitable branches virtually for free. Later Mr. Dimon stole another $29 billion from American taxpayers by claiming tax credit on behalf of WaMu’s loss. American middle class shareholders were totally wiped out and got nothing.
Below is Dimon’s confession. http://files.shareholder.com/downloads/ONE/220162815x0x283417/92060ed3-3393-43a5-a3c1-178390c6eac5/2008_AR_Letter_to_shareholders.pdf Dimon confessed in his annual report to shareholders that he was the only bank prepared to act immediately (within a couple of hours because he was the only one who could get inside information from Ms. Bair. He pretended to be a buyer of WaMu in public, while getting information from Ms. Bair everyday behind the curtain. It was a premeditated conspiracy, only Bair – Dimon knew when to pull the trigger). Dimon confessed that he acquired WaMu’s 2,200 branches, $240 billion of assets, $160 billion in deposits and $38 billion in equity for merely $1.9 billion (a penny on the dollar). This great deal was accretive to earnings $2 billion immediately and later claimed another $29 billion tax credit from U.S. government and American taxpayers. Even if home prices go down another 20%, he thinks the transaction will remain a very profitable great deal.
What is a hero? A hero is someone who sacrifices himself to save others or risks himself to speak out for others. Dimon was the only winner in 2008 world financial crisis because he was a thief who knew how to bribe the government officials to help him to steal from millions of American middle class who invested at WaMu. If we have more people like Dimon, our nation will become a corruptor zoo. "For what if he shall gain the whole world and lose his soul?" Mark 8:36
Unfortunately, over the past three years media did not have power to touch this conspiracy because We the People, the victims are so unimportant. The elected Senators and Congressmen all keep silent and did not wants to touch these powerful influential persons involved because of personal interests.
The government and the Congress did not investigate the “rape-artist”, Dimon and Bair, but instead investigated the “rape victim”, WaMu, why wearing short skirt and bikini. The Wall Street thief, Mr. Dimon still frequently goes to the White House as a distinguished guest and financial Crisis hero.
For three years, the voice of We the People, American middle class were too weak to be heard. Now it is the time for the voice of American Middle Class to be heard. The fraud and misconduct of the culprits of world financial crisis, Ms. Bair and the conspiracy and collusion between Mr. Dimon and Ms. Bair to wipe out WaMu shareholders should be investigated. American Middle Class - WaMu victims should be compensated by Wall Street grand thief JP Morgan Mr. Dimon.
http://occupywallst.org/forum/is-jamie-dimon-a-hero-or-the-biggest-thief-from-wa/
new omnibus dates, 2012 here we come:
compliments from gov/ Y board
http://www.kccllc.net/documents/0812229/0812229111101000000000003.pdf
ROFLMAO!
seeking protection/limiting the relief........ etc?
Funny how they cry foul when the shoe is on the other foot!
JPMorgan cries foul on MF Global
By Aaron Smith @CNNMoney November 1, 2011: 2:31 PM ET
JPMorgan to MF Global: Hands off the cash
MF Global CEO Jon Corzine faces objections from JPMorgan Chase about his firm's bankruptcy filing.
NEW YORK (CNNMoney) -- JPMorgan Chase, MF Global's largest creditor, cried foul Tuesday about the brokerage firm's bankruptcy filing.
In an objection filed in federal bankruptcy court in New York, JPMorgan (JPM, Fortune 500) said it wants "to limit the relief" that MF Global is seeking from the court to protect the value of its cash collateral.
MF Global filed for Chapter 11 protection Monday. The company, led by former New Jersey governor Jon Corzine, said it has more than $2.2 billion in debt.
Most of the debt is held by unsecured creditors JPMorgan, which is owed more than $1.2 billion, and Deutsche Bank (DB), which is owed more than $1 billion. An additional $10 million is divided among 45 other creditors, including American Express (AXP, Fortune 500), KPMG and PricewaterhouseCoopers.
"JPMorgan is willing to the work with the debtors, but, in these circumstances, the debtors have to recognize their burden of giving JPMorgan as much adequate protection as they can provide," said JPMorgan, in the court filing.
JPMorgan requested limits on MF Global's use of cash collateral during the bankruptcy process and asked for priority over other creditors in going after the brokerage's assets.
MF Global, a brokerage for commodities and derivatives, is closely followed by Wall Street analysts and investors, not the least because of its high profile chief executive Corzine, once the CEO of Goldman Sachs (GS, Fortune 500) and a former U.S. Senator.
MF Global was getting close to a deal with Interactive Brokers, which was considering a purchase of the brokerage. But the merger fell through during the vetting process, when Interactive Brokers (IBKR) took a close look at MF Global's finances.
MF Global may have millions missing
"MF Global informed the regulators that the transaction had not been agreed to and reported possible deficiencies in customer futures segregated accounts held at the firm," said the Commodity Futures Trading Commission and the Securities and Exchange Commission in a joint statement on Monday.
The New York Times reported that $700 million was missing from MF Global's balance book.
A spokeswoman from MF Global has not returned messages from CNNMoney regarding the missing money or any other information about the case. A spokesman for Interactive Brokers declined to say whether his company will pursue a post-bankruptcy merger.
BofA axes $5 monthly debit fee
Anthony Sabino, business professor at St. John's University in New York, said that "a great deal of explaining needs to be done" by Corzine and others at MF Global.
"MF Global will have to answer these charges in court before what is already a group of angry creditors," Sabino said. "These are not charges of mere rule infractions, but allegations of violations of some of the most basic rules for safeguarding client funds in a brokerage firm situation, rules long established and well known to Mr. Corzine and his people."
MF Global has been, in part, laid low by the fallout from Europe's financial sector, which spread its contagion to Wall Street stocks on Tuesday. The brokerage was among firms that were forced to take write-offs as part of last week's deal to resolve the debt crisis in Europe. To top of page
First Published: November 1, 2011: 2:13 PM ET
http://money.cnn.com/2011/11/01/news/companies/mf_global_jpmorgan/
isn't that the truth which has been hidden from JOE SHMO.
http://www.streetace.com/summary.php
955, appreciate your enthusiasm, however you only linked to a Y-thread.
Please post the actual filing of where JMW disallowed the GSA.
I would certainly like to read this.
TIA
GYS
Civil War General, LOL
>>What do you think Jamie said? <<
Get her done at no costs to us! You know that you are on our pay-roll, right?
GYS
lluther, fits to a TEE.
Tanks for this.
GYS
clawmann, well said.
Weath distribution comes to mind and not from the banks/HF's etc.... but from everyday folks who invested only to see their holdings paid to some unscrupulous WS banker/HF as to some in Congress and Senate mind you.
SLV And Silver Manipulation
Written by Jeff Nielson Sunday, 23 October 2011 13:25
JP Morgan is the largest silver short-seller in the history of the world. JP Morgan is the “custodian” for the largest “long” silver fund in the history of the world, making this one of the largest conflicts of interest in all of history.
If the unit-holders of the iShares Silver Trust (or “SLV”) make a small amount of profit on their holdings (per unit), JP Morgan suffers massive losses on its “short” position in the futures market – and then at least one hundred times that amount of additional losses on its unimaginably huge, leveraged, silver derivatives. We know this thanks to the loquacious banker, Jeffrey Christian, formerly of Goldman Sachs and now head of the CPM Group, one of two “consultancies” who are quasi-official record-keepers for the gold and silver markets. Obviously JP Morgan has a gigantic personal incentive to try to make sure that holders of SLV units make as little as possible on their investment.
This alone should disqualify JP Morgan from serving as “custodian” for all of the silver JP Morgan supposedly holds on behalf of those unit-holders. Amazingly, with JP Morgan claiming to be sitting on the two largest, single silver-holdings in all the world it has never been required to have both of those holdings audited/verified. Thus JP Morgan has been able to indulge in this blatant conflict of interest while so-called “regulators” actually help it to conceal its activities.
However, the absurdity of allowing the world’s largest “silver fox” to guard the world’s largest “silver henhouse” with absolutely no public scrutiny is only the beginning of this outrage. Those who follow the silver market will have noted an amazing “coincidence” in recent years since the creation of SLV: JP Morgan’s massive short position always closely mirrors the size of the total holdings of SLV.
This led me immediately to a rather obvious conclusion. Each time someone purchases a unit of SLV, JP Morgan uses the proceeds to acquire that one ounce of silver (as it is supposed to do). However, instead of that silver being used to “back” that unit of SLV (in JP Morgan’s role as “custodian”), JP Morgan increases its short position by one more ounce – and then uses the new silver to back its own short position (in JP Morgan’s role as “greedy banker”).
Note that as long as the supposed “regulator” of the silver market (the CFTC) never requires JP Morgan to demonstrate that it has enough silver to “back” both its own, massive short position and its own, massive custodian obligation, then there is nothing stopping JP Morgan from permanently/perpetually using the “long” investors of SLV to fund and “back” virtually its entire shorting operation in the Comex futures market.
Should an ordinary individual acquire the power of invisibility, and thus be able to monitor JP Morgan’s secret silver hoard inside its bullion vault, what they would undoubtedly see is an impressive mountain of silver. On 364 of the 365 days of the year, there would be a sign in front of that stack of bullion reading “JP Morgan’s short position”, while on that other day of the year (when SLV’s “auditor” shows up to supposedly verify that JP Morgan is honouring its duty as “custodian”) the sign in front of the bullion is changed to read “iShares Silver Trust”.
It is a neatly symmetrical scam, and one only made possible in the U.S.’s “world” of faux-regulators. However, one aspect of this sham always bothered me despite its wonderful symmetry. Knowing how Wall Street banksters love to leverage everything they touch by at least 30:1 (and in the case of silver derivatives by more than 100:1) it always seemed oddly conservative that JP Morgan’s SLV sham was leveraged by a mere 2:1. Enter (again) Jeffrey Christian.
It was Jeffrey Christian who helped to confirm the existence of gold manipulation in “The Great Gold Debate” between himself and GATA stalwart, Bill Murphy. Immediately after Christian claimed that he had “never seen” any evidence of gold manipulation in all of his years as a banker, he then proceeded to describe some of those acts of manipulation. One example Christian gave was how the bullion banks would (falsely) spread rumors that a particular European central bank was about to dump more gold onto the market, in order to “spook” the longs and depress the price.
When I heard that Murphy and Christian were going to reprise their roles in a second debate (at the current “Silver Summit”), this time with greater emphasis on the silver market, I couldn’t wait for what new revelations would slip past Christian’s lips. I wasn’t disappointed, as Christian was kind enough to supply the reasoning behind JP Morgan’s mere 2:1 leveraging of SLV’s silver (i.e. 100% of the silver for JP Morgan, 0% of the silver for SLV unit-holders).
The explanation is found in one of the last remaining “weapons” which the banksters can use to manipulate the gold and silver markets: calling up their good friends who run the Comex (the CME Group) and “complaining” that margins need to be raised again in the gold and/or silver markets. Christian observed that when it comes to the impact of raising margin requirements there is an important distinction between whether the various players in this market have “backed” or “naked” positions:
“…increasing margins [with] a rising price is actually harder on the shorts unless they have physical silver against those positions.” [emphasis mine]
He further explained that “naked” players must post additional “collateral” each time margins are raised, while those whose position is “backed” by actual metal do not. Thus what Christian is telling us is that JP Morgan uses the silver which it claims to be holding on behalf of the unit-holders of SLV as a “shield” to protect itself from the impact of increases in margin requirements, while “long” traders in that market (who don’t personally have their own bullion vault) feel the full brunt of each and every increase.
Christian’s latest revelation provides an answer to a question which has obviously been burning in the minds of long investors especially in recent months: why do margin increases always seem to impact longs much more severely than the shorts – as demonstrated by the precipitous drops in price which occur with each and every margin increase?
Hopefully Christian’s explanation of this mystery will help ease the rattled nerves of the newer investors to this sector, especially since (as I’ve observed before) this is another one-shot weapon for the banksters (much like dumping their bullion). The CME Group can crush all of the leverage out of these markets (by moving margins steadily toward 100%) – and then have no means of controlling the market at all – or it must give back those margin increases through reversing margins lower.
When Jeffery Christian claimed that the “purpose” of raising margin requirements was purely to address “increasing volatility” in the gold/silver markets, Bill Murphy shrewdly observed that the silver market had seen its volatility plummet in recent weeks (as the price has been trapped in a narrow trading range) – and yet the CME Group had refused to lower silver-margins in response.
Note also what is implied in Christian’s remarks. The only way that increases in margin requirements could be “harder on the shorts” (as a matter of simple arithmetic) is if the positions of the shorts were much larger. The interesting aspect to that obvious observation was that Christian made his assertion immediately after claiming that there was not “undue concentration” in the size of silver short-positions (despite the overwhelming evidence to the contrary).
The Great Silver Debate is now history. While Bill Murphy had to once again contend with Jeffrey Christian’s tenuous relationship with “the truth”, I’m sure that he woke up today smiling. After all, with “enemies” like Jeffrey Christian, who needs “friends”?
http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=22646:slv-and-silver-manipulation&catid=49:silver-commentary&Itemid=130
HOLY BAILOUT - Federal Reserve Now Backstopping $75 Trillion ........
....... Bank of America didn't get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to "give relief" to the bank holding company, which is under heavy pressure.
This is a direct transfer of risk to the taxpayer done by the bank without approval by regulators and without public input. You will also read below that JP Morgan is apparently doing the same thing with $79 trillion of notional derivatives guaranteed by the FDIC and Federal Reserve.
What this means for you is that when Europe finally implodes and banks fail, U.S. taxpayers will hold the bag for trillions in CDS insurance contracts sold by Bank of America and JP Morgan. Even worse, the total exposure is unknown because Wall Street successfully lobbied during Dodd-Frank passage so that no central exchange would exist keeping track of net derivative exposure.
This is a recipe for Armageddon. Bernanke is absolutely insane. No wonder Geithner has been hopping all over Europe begging and cajoling leaders to put together a massive bailout of troubled banks. His worst nightmare is Eurozone bank defaults leading to the collapse of the large U.S. banks who have been happily selling default insurance on European banks since the crisis began.
http://dailybail.com/home/holy-bailout-federal-reserve-now-backstopping-75-trillion-of.html
JPMorgan Seeks to Seal Court Papers in $6 Billion Fight With Lehman
By Linda Sandler - Mon Oct 24, 2011
JPMorgan Chase & Co. (JPM), fighting Lehman Brothers Holdings Inc. over $6 billion in claims it filed against the defunct firm, asked a judge to allow continued sealing of some information in court papers, saying secrecy was needed to protect entities from harm.
JPMorgan’s claims against Lehman and its brokerage are “significantly overstated,” Lehman said in August. The bank, a go-between for the brokerage’s repurchase agreements with short- term investors after the parent’s Sept. 15, 2008 bankruptcy, failed to sell collateral securing the loans in a “commercially reasonable manner,” it alleged in a filing where passages were blacked out.
Lehman asked the judge to hold a hearing on the issue and then cut the claims as he considered appropriate.
JPMorgan later agreed to let Lehman publish a mostly uncensored version of its objection to the claims, the New York- based bank said in a filing today. The information that is still blacked out includes names and account numbers of JPMorgan’s trading partners, phone numbers and certain e-mail addresses, it said.
Potential Harm
“The bankruptcy code provides courts with the power to issue orders that will protect entitles from potential harm that may result from the disclosure of certain confidential information,” it said in the filing in U.S. Bankruptcy Court in Manhattan.
In the partially uncensored objection to JPMorgan’s claim, Lehman gave details about the sale of collateral. On the morning the Lehman brokerage went into liquidation, JPMorgan started to sell the securities, calling the plan “Project Tassimo,” after a coffee maker owned by a bank employee involved in the transactions, it said.
The sale was handled “without any limits or safeguards ensuring a fair price,” Lehman alleged.
Joseph Evangelisti, a spokesman for the largest U.S. bank, declined to comment on the allegations. Kimberly Macleod, a Lehman spokeswoman, declined to comment.
Separately, JPMorgan is contesting an $8.6 billion lawsuit by Lehman, saying it was protected by so-called safe harbor law when it took collateral from the defunct firm in 2008. Congress created the law to protect banks lending to faltering companies, JPMorgan has said.
Fraud Allegations
JPMorgan, which lent $70 billion to Lehman’s brokerage around the time of the September 2008 bankruptcy, sued Lehman back, alleging it defrauded its lender into making the loan.
The brokerage, Lehman Brothers Inc., is being separately liquidated from its parent, Lehman Brothers Holdings Inc., after going into liquidation four days after its parent.
The main case is In re Lehman Brothers Holdings Inc. (LEHMQ), 08- 13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).The lawsuit is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
http://www.bloomberg.com/news/2011-10-24/jpmorgan-seeks-to-seal-court-papers-in-6-billion-fight-with-lehman.html
ora123,
YOU forgot this....
and was "scooped up/paid by" the adversaries = you fill in the blank/blank! to do an about face in reporting.
IMO, anything she has/had to say after "this" went to DEAF ears, mine as well as others.
Buying/reading her book, nah, not even if given for free.
But then again,,,,
Once tainted, she ain't going to make it in the Publishing world or any other news station, period.
'nough said.
GYS
VIVA, probably the only remedy the EC has to flush out the shorts, naked or otherwise and make sure every share to be accounted for in someone's account.
The naked shorts, well heck, either their broker (GS,JPIG, AIG.... etc,... will have to cough up the monies or make the client do this. Depending what relationship they have with their clients and I'm taking big clients here.......and look into the future,,,,,,, they'll either EAT the loss or scrap the client.
But does the EC have the authority/where-with-all/power/willingness to do this?
GYS
WC, how quaint again!
And what if the "investor/short seller" NEVER files the worthless stock cert. on/with their taxes..................
Got an answer for this?
IMO you can cite all of the SEC's and other rules, they are worthless unless there is a mechanism put in place to enforce them, period and so far NOTHING was/is enforced.
ROFLMAO!
Lawrence 147, LOL
I knew about this a long time ago and WHY the heck the SEC doesn't stop this, nah, too busy watching porn!......?
To fsshon and others. Germany was a hot bed for naked shorts/shorters over many years and finally was only stopped in May of 2011.
Companies had no input or weren't aware that their shares were "naked shorted" in the German Markets (Berlin + Bremen SE the biggest culprits), these crafty SE's just took it upon themselves to do just that and were very successful for many years.
However some CEO's of American Co's did fight back majorly against this practice/never having authorized their shares being traded on some other exchange but the US to be sure. Some were successful (Overstock.com), some were not as it took a lot of monies in legal fees to fight this.
Therefore I do not believe that WASHINTON MUTUAL shares were placed there intentionally or with their knowledge. Hence I do suspect the Hedge Funds to have done this in order to reap rewards on both sides.
I should know since I was involved in a couple of them, that is being shorted to death in the German markets.
IMO, the run to almost .70 March 2010 was the last hurray for them, hence the "covering".
GYS
gophilipgo,
as to Zecco, as well as SCOTTrade, ETC.... they are majorly short, got "their" posters ISP's on this IHUB posting galore/ and FWIW IHUB facilitated this and other stuff!
Rosenfart + WGM +the 4 horsies paying MUCHO!
GYS
Derivatives: The $600 Trillion Time Bomb That's Set to Explode
October 12, 2011
By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning
Do you want to know the real reason banks aren't lending and the PIIGS have control of the barnyard in Europe?
It's because risk in the $600 trillion derivatives market isn't evening out. To the contrary, it's growing increasingly concentrated among a select few banks, especially here in the United States.
In 2009, five banks held 80% of derivatives in America. Now, just four banks hold a staggering 95.9% of U.S. derivatives, according to a recent report from the Office of the Currency Comptroller.
The four banks in question: JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC) and Goldman Sachs Group Inc. (NYSE: GS).
Derivatives played a crucial role in bringing down the global economy, so you would think that the world's top policymakers would have reined these things in by now - but they haven't.
Instead of attacking the problem, regulators have let it spiral out of control, and the result is a $600 trillion time bomb called the derivatives market.
Think I'm exaggerating?
The notional value of the world's derivatives actually is estimated at more than $600 trillion. Notional value, of course, is the total value of a leveraged position's assets. This distinction is necessary because when you're talking about leveraged assets like options and derivatives, a little bit of money can control a disproportionately large position that may be as much as 5, 10, 30, or, in extreme cases, 100 times greater than investments that could be funded only in cash instruments.
The world's gross domestic product (GDP) is only about $65 trillion, or roughly 10.83% of the worldwide value of the global derivatives market, according to The Economist. So there is literally not enough money on the planet to backstop the banks trading these things if they run into trouble.
Compounding the problem is the fact that nobody even knows if the $600 trillion figure is accurate, because specialized derivatives vehicles like the credit default swaps that are now roiling Europe remain largely unregulated and unaccounted for.
Tick...Tick...Tick
To be fair, the Bank for International Settlements (BIS) estimated the net notional value of uncollateralized derivatives risks is between $2 trillion and $8 trillion, which is still a staggering amount of money and well beyond the billions being talked about in Europe.
Imagine the fallout from a $600 trillion explosion if several banks went down at once. It would eclipse the collapse of Lehman Brothers in no uncertain terms.
A governmental default would panic already anxious investors, causing a run on several major European banks in an effort to recover their deposits. That would, in turn, cause several banks to literally run out of money and declare bankruptcy.
Short-term borrowing costs would skyrocket and liquidity would evaporate. That would cause a ricochet across the Atlantic as the institutions themselves then panic and try to recover their own capital by withdrawing liquidity by any means possible.
And that's why banks are hoarding cash instead of lending it.
The major banks know there is no way they can collateralize the potential daisy chain failure that Greece represents. So they're doing everything they can to stockpile cash and keep their trading under wraps and away from public scrutiny.
What really scares me, though, is that the banks
think this is an acceptable risk because the odds of a default are allegedly smaller than one in 10,000.
But haven't we heard that before?
Although American banks have limited their exposure to Greece, they have loaned hundreds of billions of dollars to European banks and European governments that may not be capable of paying them back.
According to the Bank of International Settlements, U.S. banks have loaned only $60.5 billion to banks in Greece, Ireland, Portugal, Spain and Italy - the countries most at risk of default. But they've lent $275.8 billion to French and German banks.
And undoubtedly bet trillions on the same debt.
There are three key takeaways here:
There is not enough capital on hand to cover the possible losses associated with the default of a single counterparty - JPMorgan Chase & Co. (NYSE: JPM), BNP Paribas SA (PINK: BNPQY) or the National Bank of Greece (NYSE ADR: NBG) for example - let alone multiple failures.
That means banks with large derivatives exposure have to risk even more money to generate the incremental returns needed to cover the bets they've already made.
And the fact that Wall Street believes it has the risks under control practically guarantees that it doesn't.
Seems to me that the world's central bankers and politicians should be less concerned about stimulating "demand" and more concerned about fixing derivatives before this $600 trillion time bomb goes off.
http://moneymorning.com/2011/10/12/derivatives-the-600-trillion-time-bomb-thats-set-to-explode/
Lehman says JPMorgan botched securities sale
Tue Oct 11, 2011 5:55pm EDT
* Lehman accuses JPMorgan of unfair liquidation
* Says JPMorgan's actions put it on hook for $6.3 bln
By Nick Brown
Oct 11 (Reuters) - Lehman Brothers Holdings Inc accused JPMorgan Chase , its former banker, of mishandling the sale of more than $27 billion worth of securities as Lehman was collapsing in 2008.
Lehman, in court papers made public on Tuesday, lobbed myriad allegations at the bank as part of the companies' ongoing dispute in Lehman's bankruptcy proceeding.
Lehman painted an unflattering picture of JPMorgan's methods for selling certain securities held as collateral for facilitating repurchase deals for Lehman's U.S. brokerage, Lehman Brothers Inc (LBI).
A spokesman for JPMorgan declined to comment. A lawyer for the bank did not return a call seeking comment.
In court documents filed in U.S. Bankruptcy Court in Manhattan, Lehman said JPMorgan traders made improper profits on the sales by "flipping" securities -- selling them to themselves at low prices and reselling to third parties at higher prices, Lehman said.
Lehman is hoping to avoid or reduce a $6.3 billion claim from JPMorgan related to the securities.
JPMorgan demanded roughly that sum from Lehman to help cover $25 billion in losses it incurred through its role in the LBI repurchase deals, saying the securities alone did not generate enough cash to make it whole.
But Lehman said the securities had a market value of more than $27 billion, and would have covered JPMorgan's losses if not for JPMorgan's improper sale process.
"Perhaps because JPMorgan believed it could look to the extra LBHI collateral it held as a 'cushion,' JPMorgan rushed to liquidate the LBI collateral without any procedures to ensure it was sold at a fair market price," Lehman said in the filing.
Lehman, in the court papers, said JPMorgan dubbed the liquidation process "Project Tassimo" in honor of one JPMorgan employee's coffee maker. The project was assigned to JPMorgan's "Special Situations Group," whose members had little to no actual experience liquidating collateral, Lehman said.
The bank incentivized employees to make quick deals on the securities rather than good ones by refusing to compensate its traders, Lehman said. At the same time, it failed to effectively regulate traders who sought their own profits by flipping securities, Lehman said.
JPMorgan also did not set a formal floor for prices, saying only that bidders who offered a "fraction of a cent" should not be considered, according to Lehman's argument.
Details of the filing had been redacted when it was first filed in August. The parties disagreed about whether the information should be made public, with Lehman filing a motion to unseal.
JPMorgan never responded to the motion. Lehman filed its unredacted motion on Tuesday.
The Lehman bankruptcy is In re Lehman Brothers Holdings Inc, in the same court, No. 08-13555.
Lehman Makes More Accusations Vs J.P. Morgan Over Claims
Last update: 10/12/2011 3:50:28 PM
By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
Lehman Brothers Holdings Inc. (LEHMQ) said J.P. Morgan Chase & Co. (JPM) hastily liquidated securities at below-market prices in the days after Lehman's 2008 bankruptcy filing and named the project after a coffeemaker owned by the inexperienced employee in charge of the selloff.
In a mostly unredacted version of a filing Lehman made back in August, the failed investment bank gave more detailed assertions about why it thinks a portion of J.P. Morgan's nearly $30 billion in claims should be sharply reduced.
In "Project Tassimo," named after the coffeemaker, the employee in charge of the selloff "had only minimal experience with collateral liquidations, having only advised CDO traders before in a single liquidation involving fewer than 10 securities." A J.P. Morgan spokeswoman didn't immediately respond to a request for comment.
Since the beginning of the three-year-old case, J.P. Morgan has held the dual role as both a key Lehman adversary and one of the largest holders of claims from both the Lehman parent company and its subsidiaries. With Lehman's updated liquidation plan now in the hands of its creditors, the failed investment bank's lawyers are identifying claims they can reduce in order to clean up how the money will be divvied up among those seeking recoveries.
Despite the new, unredacted details, Lehman's overarching argument remains the same: It found instances of J.P. Morgan selling securities for "commercially unreasonable prices," which is the standard to which a seller is held in such transactions. Some of the specific transactions are spelled out.
Lehman had previously challenged J.P. Morgan for insisting on significant redactions in court filings because of "commercially sensitive information," asking the court to overrule the redaction request and make the full filing available in public records. A judge had agreed, and the new version of the filing redacts only the names of some counterparties in the J.P. Morgan trades.
In its filing, Lehman also gave details of J.P. Morgan selling itself corporate bonds at below-market prices and then later profiting from those securities.
The J.P. Morgan relationship is one of the more complicated ones in Lehman's bankruptcy.
J.P. Morgan already has reached a settlement agreement on its claims with Lehman Brothers Inc., the brokerage portion of Lehman that was sold to Barclays PLC (BARC.LN, BCS) in the tumultuous days of September 2008. In regard to that settlement, Lehman Brothers Holdings Inc. reserved its right to still fight J.P. Morgan over claims in its case.
The two sides are also involved in a suit and countersuit over a 2008 loan J.P. Morgan made to Lehman. J.P. Morgan claims Lehman used "collusion and deception" when it told the bank that the loan, made in the days following Lehman's September 2008 bankruptcy filing, was secured by $70 billion in securities. In its original suit, filed in May 2010, Lehman alleged that J.P. Morgan illegally siphoned billions of dollars from Lehman as it collapsed in September 2008.
J.P. Morgan said earlier this year that Lehman tricked it into taking on "goat poo" securities, one of the more colorful phrases found in Lehman's ever-growing bankruptcy docket.
Since Lehman's collapse in September 2008, a team of hundreds of bankruptcy professionals under the direction of Alvarez & Marsal Inc. has managed Lehman's assets--which include real-estate holdings, corporate debt and derivatives--for the benefit of creditors.
Lehman estimated earlier this year that it likely would have $322 billion in allowed claims against the estate, with $272 billion from the parent company and about $50 billion from its various subsidiaries. It hopes to get its plan confirmed by the end of the year, with what promises to be a multiday confirmation hearing set to begin Dec. 6.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com
(END) Dow Jones Newswires
October 12, 2011 15:50 ET (19:50 GMT)
here you go:
Lehman Makes More Accusations Vs J.P. Morgan Over Claims
Last update: 10/12/2011 3:50:28 PM
By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
Lehman Brothers Holdings Inc. (LEHMQ) said J.P. Morgan Chase & Co. (JPM) hastily liquidated securities at below-market prices in the days after Lehman's 2008 bankruptcy filing and named the project after a coffeemaker owned by the inexperienced employee in charge of the selloff.
In a mostly unredacted version of a filing Lehman made back in August, the failed investment bank gave more detailed assertions about why it thinks a portion of J.P. Morgan's nearly $30 billion in claims should be sharply reduced.
In "Project Tassimo," named after the coffeemaker, the employee in charge of the selloff "had only minimal experience with collateral liquidations, having only advised CDO traders before in a single liquidation involving fewer than 10 securities." A J.P. Morgan spokeswoman didn't immediately respond to a request for comment.
Since the beginning of the three-year-old case, J.P. Morgan has held the dual role as both a key Lehman adversary and one of the largest holders of claims from both the Lehman parent company and its subsidiaries. With Lehman's updated liquidation plan now in the hands of its creditors, the failed investment bank's lawyers are identifying claims they can reduce in order to clean up how the money will be divvied up among those seeking recoveries.
Despite the new, unredacted details, Lehman's overarching argument remains the same: It found instances of J.P. Morgan selling securities for "commercially unreasonable prices," which is the standard to which a seller is held in such transactions. Some of the specific transactions are spelled out.
Lehman had previously challenged J.P. Morgan for insisting on significant redactions in court filings because of "commercially sensitive information," asking the court to overrule the redaction request and make the full filing available in public records. A judge had agreed, and the new version of the filing redacts only the names of some counterparties in the J.P. Morgan trades.
In its filing, Lehman also gave details of J.P. Morgan selling itself corporate bonds at below-market prices and then later profiting from those securities.
The J.P. Morgan relationship is one of the more complicated ones in Lehman's bankruptcy.
J.P. Morgan already has reached a settlement agreement on its claims with Lehman Brothers Inc., the brokerage portion of Lehman that was sold to Barclays PLC (BARC.LN, BCS) in the tumultuous days of September 2008. In regard to that settlement, Lehman Brothers Holdings Inc. reserved its right to still fight J.P. Morgan over claims in its case.
The two sides are also involved in a suit and countersuit over a 2008 loan J.P. Morgan made to Lehman. J.P. Morgan claims Lehman used "collusion and deception" when it told the bank that the loan, made in the days following Lehman's September 2008 bankruptcy filing, was secured by $70 billion in securities. In its original suit, filed in May 2010, Lehman alleged that J.P. Morgan illegally siphoned billions of dollars from Lehman as it collapsed in September 2008.
J.P. Morgan said earlier this year that Lehman tricked it into taking on "goat poo" securities, one of the more colorful phrases found in Lehman's ever-growing bankruptcy docket.
Since Lehman's collapse in September 2008, a team of hundreds of bankruptcy professionals under the direction of Alvarez & Marsal Inc. has managed Lehman's assets--which include real-estate holdings, corporate debt and derivatives--for the benefit of creditors.
Lehman estimated earlier this year that it likely would have $322 billion in allowed claims against the estate, with $272 billion from the parent company and about $50 billion from its various subsidiaries. It hopes to get its plan confirmed by the end of the year, with what promises to be a multiday confirmation hearing set to begin Dec. 6.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com
(END) Dow Jones Newswires
October 12, 2011 15:50 ET (19:50 GMT)
JPMorgan traders profit by flipping...corporate-ethics-trickle-down
Lehman said JPMorgan traders made improper profits on the sales by "flipping" securities -- selling them to themselves at low prices and reselling to third parties at higher prices, Lehman said.
http://www.reuters.com/article/2011/10/11/lehman-idUSN1E79A13E20111011
The bank incentivized employees to make quick deals on the securities rather than good ones by refusing to compensate its traders, Lehman said. At the same time, it failed to effectively regulate traders who sought their own profits by flipping securities, Lehman said.
JPMorgan also did not set a formal floor for prices, saying only that bidders who offered a "fraction of a cent" should not be considered, according to Lehman's argument.
Nightdaytrader, if shares go to "0"/get cancelled, the short sellers (regular + naked ones) NEVER have to cover and hence do NOT have to PAY TAXES on their gains.
GYS
garyhalvo, even though the courts are closed today he was required to file electronically today by 4:00pm EST as requested by JMW (transcript)
GYS
Large Green, I fully agree with your assessment of the "mediator". However that being said I suspect that "mediation" will fail and S+G will be off to trial IMO.
GYS
http://news.goldseek.com/InternationalForecaster/1318255211.php
** In the middle of all this we find that Irish banking officials have presented evidence to the European Commission that will lead to an indictment of JPMorgan Chase and its CEO Jamie Dimon for massive derivative fraud, which ties into the Fed’s operation twist. This operation was not only to maintain the short end of the Treasury market and to buy the long end with new credit created out of thin air, but also to depress gold and silver prices, which we believe won’t work. In addition Irish officials are conducting a major audit of Allied Bank looking for more incriminating evidence of fraud. The criminality seems to never end.**
News as per TDA:
Washington Mutual, Inc. Confirms Release Of Securities Tendered Into Accounts With DTC
Last update: 10/7/2011 4:06:02 PM
GYS