Mr Cooper Group Inc (COOP)

[VivaLasVegas]

Dimon Lied to Investors/Dodged Regulators Senate Report Says-

Think he lied during any testimony regarding the collapse of Washington Mutual/Lehman/others?
Oh I doubt it. LOLLLLLL
I'm waiting for RICO Penalties to be enforced.

Cheers and ENJOY Sit Back Have some Blue AgaveTequila and a case of Beer,,, back!



http://www.bloomberg.com/news/2013-03-14/jpmorgan-misled-investors-dodged-regulators-senate-report-says.html


JPMorgan Misled Investors, Dodged Regulators, Senate Report Says
By Dawn Kopecki - Mar 14, 2013
JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon sought to hide escalating trading losses that surpassed $6.2 billion by misleading investors and dodging regulators as the bank's position deteriorated last year, a Senate probe found.

The largest U.S. bank “mischaracterized high-risk trading as hedging,” and withheld key information from its primary regulator, sometimes at Dimon’s behest, according to a report today by the Senate Permanent Subcommittee on Investigations. The 301-page document also shows how managers manipulated internal risk models and pressured traders to overvalue their positions in an effort to hide growing losses in a “monstrous” credit derivatives portfolio in London.

“We found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public,” Chairman Carl Levin, a Michigan Democrat, told reporters today after his investigators spent nine months combing through 90,000 documents and interviewing current and former executives.

Former Chief Investment Officer Ina Drew, 56, among Wall Street’s most powerful women until she resigned in May four days after the bank disclosed the initial trading losses, will testify tomorrow at a subcommittee hearing in her first public appearance since leaving the New York-based bank. Lawmakers have pushed banks to halt so-called proprietary trading, and regulators are weighing tightening exemptions for hedging.

‘High Risk’

“Mr. Dimon has not acknowledged that what the SCP morphed into was a high-risk proprietary trading operation,” according to the report, referring to the synthetic credit portfolio.

JPMorgan has “repeatedly acknowledged mistakes” in handling the loss, Mark Kornblau, a spokesman for the bank, said in an e-mail.

JPMorgan Chase Whale Trades: Read the Senate Report

“Our senior management acted in good faith and never had any intent to mislead anyone,” Kornblau said. The bank cooperated with the investigation and has “already identified many of the issues cited in the report,” he said. “We have taken significant steps to remediate these issues and to learn from them.”

JPMorgan, regarded on Wall Street as one of the best- managed banks in the world, lost more than $6.2 billion over nine months last year in a bet using derivatives, in which the bank wagered on the creditworthiness of companies. The portfolio became “huge” and “monstrous,” according to excerpts of e-mails and recorded conversations from trader Bruno Iksil, nicknamed the London Whale because his portfolio was so large it moved markets.

Synthetic Credit

Bloomberg News first reported on April 5 that Iksil had built an illiquid book of derivatives. The Federal Reserve and Office of the Comptroller of the Currency sought additional information about the trades following media reports.

The portfolio had a $415 million loss on April 10, the first trading day after news reports appeared. JPMorgan’s communications officer met with reporters to say that the activities were for hedging purposes and that regulators were fully aware of them, “neither of which was true,” according to the subcommittee’s report.

“Prior to the media reports in early April 2012, the synthetic credit portfolio had not been mentioned by name in any JPMorgan Chase public filing; over the next month, the SCP received sustained attention in the bank’s public filings, investor calls, and media communications,” the subcommittee wrote in the report.

‘No Hope’

Iksil’s book more than tripled from a net notional size of $51 billion in late 2011 to $157 billion by the time trading was shut down in late March of last year, the report says.

“There’s nothing that can be done, absolutely nothing that can be done,” Iksil said, according to a transcript of a March 16 call with a colleague. “There’s no hope.”

JPMorgan “dodged federal regulators and misled the public by hiding losses, by mismarking credit derivatives’ values,” Senator John McCain, the subcommittee’s ranking Republican, told reporters at a press briefing.

The OCC noticed that JPMorgan began withholding the chief investment office’s daily profit-and-loss report, which shows how much money the unit made or lost on a given trading day, in late January or early February of last year, according to the report. Dimon told executives to stop sending the data “because he believed it was too much information to provide to the OCC,” the report said, citing an interview with JPMorgan’s head OCC examiner Scott Waterhouse.

Risk Downplayed

The bank also said there was a data breach that prompted the company to limit the disclosures. When Dimon found out that then Chief Financial Officer Douglas Braunstein agreed to resume the reports, the CEO “reportedly raised his voice in anger” the report said.

“In contrast to JPMorgan Chase’s reputation for best-in- class risk management, the whale trades exposed a bank culture in which risk limit breaches were routinely disregarded, risk metrics were frequently criticized or downplayed, and risk evaluation models were targeted by bank personnel seeking to produce artificially lower capital requirements,” according to the report.

Dimon and Drew were among bank managers who spoke with the panel’s investigators. Several ex-employees refused to be interviewed, including Achilles Macris and Iksil. The panel said it couldn’t require them to cooperate because they live outside the U.S.

‘Voodoo Magic’

Senate investigators said they found little evidence showing what the bets would have protected against. Dimon told senators last year that the wagers were intended to cushion losses on other holdings in the event of a credit crisis.

Drew said the credit derivatives were intended to hedge JPMorgan’s entire balance sheet, while others said they protected against losses on investments held by the CIO, according to the report.

Patrick Hagan, at one point the CIO’s senior quantitative analyst, told investigators that he was never asked to analyze the bank’s other assets, which would have been necessary to use the bets as a hedge, according to the report.

The credit bets were called a “make believe voodoo magic ‘composite hedge,’” by an examiner at the OCC, according to the report.

The CIO group e-mailed a presentation to Dimon and other executives on April 11 that showed the credit bets were no longer working to protect against losses, the Senate investigators said. It included a chart that showed the portfolio would lose money in a financial crisis.

Days later, Braunstein told investors and analysts on a call to discuss earnings that the credit bets were a hedge that lowered risk. Dimon that day dismissed accounts of the loss as a “tempest in a teapot.”

Levin’s Response

“None of those statements made on April 13 to the public, to investors, to analysts were true,” Levin said. “The bank also neglected to disclose on that day that the portfolio had massive positions that were hard to exit, that they were violating in massive numbers key risk limits.”

Braunstein, who stepped down in January as CFO and is still at the bank, will join Drew before the panel tomorrow. Ashley Bacon, JPMorgan’s acting chief risk officer, and Michael Cavanagh, who led the internal review of the losses and is now co-CEO for the corporate and investment bank, also are scheduled to testify.

To contact the reporter on this story: Dawn Kopecki in New York at [e-mail]

To contact the editor responsible for this story: David Scheer at [e-mail]; Maura Reynolds at [e-mail]


OTHER RELATED ARTICLES JUST OUT-

http://www.zerohedge.com/news/2013-03-14/complete-history-jpmorgans-monstrous-derivative-risks-and-abuses-full-senate-report

http://www.zerohedge.com/news/2013-03-14/too-big-regulate-jp-morgan-lied-and-deceived-regulators-investors-and-public-senate-



"Too Big To Regulate" JP Morgan "Lied" And "Deceived" Regulators, Investors And Public, Senate Finds
Submitted by Tyler Durden on 03/14/2013 17:24 -0400

Comptroller of the Currency Jamie Dimon JPMorgan Chase Lehman Office of the Comptroller of the Currency OTC Prop Trading


Moments ago, ahead of tomorrow's 9:30 am Senate hearing on JP Morgan's 2012 attempt to corner the IG9 market through its London-based CIO office using depositor cash which as everyone now knows went horribly wrong, titled "JPMorgan Chase Whale Trades: A Case History of Derivatives Risks and Abuses,” the Permanent Subcommittee on Investigations has released its comprehensive 300 pages review of the London Whale fiasco. The report, in a nutshell, finds that both Jamie Dimon and JP Morgan lied and misled investors, regulators and Congress, that it forced its traders to hide growing losses, that it hid trades banned by the Volcker rule (just as we first said in April 2012 in "Why JPM's "Chief Investment Office" Is The World's Largest Prop Trading Desk: Fact And Fiction") and that JP Morgan may, by extension, be "too big to manage" or "too big to regulate" as Carl "Shitty Deal" Levin summarized.

From the FT:

Mr Dimon had initially played down the significance of credit derivatives trading activity in the bank’s London chief investment office during an earnings call in April last year, saying it was “a tempest in a teapot”.

However, the Senate report found that he was “already in possession of information about the?.?.?.?complex and sizeable portfolio, its sustained losses for three straight months, the exponential increase in those losses during March and the difficulty of exiting the?.?.?.?positions”.

Additional disclosures from Mr Braunstein, now a vice-chairman at the bank – including that regulators were given “information on those positions on a regular and recurring basis” – are described in the report as “inaccurate at best, and deceptive at worst”.

The panel said Mr Braunstein may have misled investors and, overall, “the written and verbal representations made by the bank were incomplete, contained numerous inaccuracies, and misinformed investors, regulators, and the public”.
It gets worse as the accusations of lying are very much direct:

Mr McCain accused the bank of lying when it told Senate investigators it had been fully transparent with regulators.

The report quotes an examiner at the Office of Comptroller of the Currency, JPMorgan’s regulator, saying he felt the bank had “lied to” and “deceived” the agency over the question of whether the bank had mismarked its books to hide the extent of losses. It also reveals that the OCC lowered its “CAMELS” measure of bank strength, a key and usually secret metric, due to concerns over management and internal “oversight deficiencies”.

The bank’s chief risk officer John Hogan told the OCC that there was no mismarking of asset valuations but the bank later acknowledged that there had been mismarking. Mr Hogan said he had not been aware of this when he gave his answer to the OCC, the report said. However, the panel said the bank mismarked to hide losses. It also criticised the OCC for insufficient oversight.
Some more from MarketWatch:

The report does have one example showing that Dimon intentionally sought to cut off regulators from critical daily profit and loss trading data at a time that it could have started to provide damaging information about trading losses at the firm.

Specifically, in late January, 2012, as losses were increasing, the report said Dimon ordered the bank to stop providing a daily investment bank profit and loss report to the Office of the Comptroller of the Currency, the institution’s chief regulator, because he believed it was too much information to provide to the OCC.

However, Douglas Braunstein, J.P. Morgan Chase’s chief financial officer at the time, restored the daily report soon afterward at the OCC’s request. But, according to the investigation, “Dimon reportedly raised his voice in anger” at Braunstein and disclosed that he had ordered the halt to the reports. Dimon said the OCC didn't need daily profit and loss figures for the investment bank, according to the report.
...
Meanwhile, there were many examples of trader warnings going unheeded. In one recorded conversation from March, Iksil, the “London whale,” told Julien Grout, a junior trader, that their supervisor, Javier Martin-Artajo, was expecting a reworking of their calculation of losses. In the email Iksil said “I can’t keep this going …. I think what he’s [Javier Martin-Artajo] expecting is a re-marking at the end of the month …. I don’t know where he wants to stop, but it’s getting idiotic.”

At one point in March, Iksil characterized the huge losses as “hopeless” and he predicted that “they are going to trash/destroy us” and “you don’t lose 500 million without consequences.”
Finally, Carl Levin who is known to bluster a lot, if act not so much, said that "there’s a lot of evidence" that JPMorgan may be "too big to manage" or "too big to regulate". The bank has $2.4tn in total assets and Mr Levin’s statement adds to an intensifying Washington debate over whether the government should forcibly restructure large financial groups. As Marthwatch reports: "Levin told reporters that he will decide after a hearing scheduled for Friday, where top regulators and J.P. Morgan executives are scheduled to testify, whether it will push the Justice Department to investigate the firm. Dimon was not called to testify on Friday and Levin defended the decision, arguing that he plans to hear from the individuals with the most knowledge of the trades."

Of course, nothing will ever happen to JPM, and no TBTF banks in the US will ever be split up. Why? Because doing so would reveal the 1000-to-1 exposure of outstanding derivative notional to collateral, and would necessitate an immediate collapse in the $600 trillion OTC derivative market, leading to fare more catastrophic consequences than the Lehman bankruptcy. And a loss of DC's indulgence collection from Wall Street of course. Because what is D.C. if not the bought and paid for muppets of the very firm that is the subject of this article?

Either way, tomorrow's senatorial theater, which we will cover, where Jamie Dimon and his presidential handcuffs will be absent, promises to be quite entertaining, and JPM's sacrificial pig, Ina Drew will be summarily crucified, even if her boss - the man who made it all happen, will be comfortably hundreds of miles away.