Fannie Mae-No Politics (FNMA)

[chessmaster315]

No. You are not getting it.

If JPM gives FNMA "poor advice" which costs sharholders money, then JPM could be sued in the amount of that loss.

This is why financial advisors are generally VERY conservative and dont recommend more speculative investments, because they are risking their own capital by recommending speculation.

Instead financial advisors are risking far more than "just their fee"...they have engaged FNMA in a fiduciary responsibility as advisor, and people hire a financial advisor for one reason:

They expect their portfolio of investments to perform better than they did before hiring an advisoor..

OR, there is no other reason to hire a financial advisor. FNMA is not hiring JPM so that FNMA's CEO can date Jamie Dimon's daughter!!!

People dont sue their financial advisor when that advice makes them money, they sue when they lose money!!!!

JPM is "betting" they can increase pps so that fnma shareholders dont sue JPM. If JPM's advice is bad, and shares tank, I and other shareholder will be lining up to sue JPM.

By accepting payment as financial advisor fees, JPM is providing a legal "warranty" on that advice.

Its the same with a lawyer. If I hire a lawyer, and take his advice, and things go south, that lawyer can be held accountable for his advice. That is one reason lawyers charge so much.

Not "just doctors" get sued for poor performance!!!

By accepting compensation from that patient the doctor exposes himself to lawsuits on that patients care. The family can sue the doctor if the patient dies.

In a similar way, FNMA shareholders can expect..and demand..performance by JPM.

Of course, not "every" peice of advice will result in favorable perfomance, BUT, overall, people expect their finances to improve by hiring a financial advisor. And that advisor is accepting liablity with his advice.