Daily Archives: June 24, 2012

This Is What Happens When A Mega Bank (JP Morgan Chase) Is Caught Red-Handed


Back on May 10, when JPMorgan announced its massive CIO trading loss (which may or may not have been unwound courtesy of a risk offboarding to another hedge fund which may or may not be backstopped by the Fed as the massive IG9 position was not novated but merely transferred) JPM also disclosed something else which may have bigger implications for the broader, and just downgraded, banking sector. As a reminder, in the 10-Q filing, the bank reported a VaR of $170 million for the three months ending March 31, 2012. This compared to a tiny $88 million for the previous year. According to the company, “the increase in average VaR was primarily driven by an increase in CIO VaR and a decrease in diversification benefit across the Firm.” What JPM really meant is that after being exposed in the media for having a monster derivative-based prop bet on its books, it had no choice, as it was no longer possible to use manipulated and meaningless risk “models” according to which the $2 billion loss, roughly 23 sigma based on the old VaR number, was impossible (ignoring that VaR is an absolutely meaningless and irrelevant statistical contraption). Turns out it is very much possible. Which brings us to the latest quarterly Office of the Comptroller of the Currency report, and particularly the chart on page 7. More than anything it shows what happens when a big bank is caught red-handed lying about its risk exposure. We urge readers to spot the odd one out.

More from Zerohedge.

Chinese Data Mask Depth of Slowdown, Executives Say

From the NYT:

As the Chinese economy continues to sputter, prominent corporate executives in China and Western economists say there is evidence that local and provincial officials are falsifying economic statistics to disguise the true depth of the troubles.

Record-setting mountains of excess coal have accumulated at the country’s biggest storage areas because power plants are burning less coal in the face of tumbling electricity demand. But local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown, power sector executives said.


Electricity production and consumption have been considered a telltale sign of a wide variety of economic activity. They are widely viewed by foreign investors and even some Chinese officials as the gold standard for measuring what is really happening in the country’s economy, because the gathering and reporting of data in China is not considered as reliable as it is in many countries.

But an economist with ties to the agency said that officials had begun making inquiries after detecting signs that electricity numbers may have been overstated.

Another top corporate executive in China with access to electricity grid data from two provinces in east-central China that are centers of heavy industry, Shandong and Jiangsu, said that electricity consumption in both provinces had dropped more than 10 percent in May from a year earlier. Electricity consumption has also fallen in parts of western China. Yet, the economist with ties to the statistical agency said that cities and provinces across the country had reported flat or only slightly rising electricity consumption.

New disclosures on U.S. lawmakers’ stock trading

WASHINGTON (MarketWatch) – More than 100 members of Congress routinely traded stock in companies lobbying on bills that came before their committees between 2007 and 2010, according to an analysis published by the Washington Post on Sunday. The practice is permitted under current congressional ethics rules. The lawmakers bought and sold a total of $85 million to $218 million worth of shares in 323 companies registered to lobby on legislation that appeared before them, the report concluded. Earlier this year, Congress barred lawmakers from trading on inside information acquired on Capitol Hill. But the law does not bar lawmakers from investing in firms that could be impacted by their congressional committee actions.

Source: Marketwatch

Men Behaving Badly. SunTrust Banks Hit With Sexual Harassment Lawsuit By EEOC

SunTrust Banks, one of the nation’s largest financial services providers, plans to “vigorously defend” itself against a sexual harassment lawsuit brought by a federal agency in a Florida court last week. The suit alleges that a branch manager in Sarasota subjected female employees to “unwelcome, sexually graphic and vulgar sexual harassment” over three years.

Court filings from the Equal Employment Opportunity Commission describe an escalating pattern of “sexually offensive comments and conduct” that continued for years despite multiple complaints by employees, who were later fired or left their jobs. The alleged perpetrator, however, still works for SunTrust. He was recently transferred to a branch on the other side of Sarasota, where HuffPost reached him by phone Wednesday.

Between the lines of dry legalese, the EEOC documents portray a workplace that sounds more like “Mad Men” than a 21st century corporation, where an all-powerful supervisor could degrade and grope the “office girls” with impunity. The allegations paint a vivid picture of the kind of corporate culture that was deemed acceptable just 40 years ago. They also underscore the gulf that still exists between carefully worded corporate sexual harassment policies and what can actually happen in the real world

Read on.

Georgia Wrongful Foreclosure Law July 1- But Will They Prosecute?

The Georgia Wrongful Foreclosure law that passed (HB 237) will become law on July 1, 2012.

The original bill has been extremely watered down from it’s initial conception. To begin with, Wrongful Foreclosures will only be investigated and prosecuted going forward. This means that ALL the unlawful foreclosures that have taken place prior to July 1, 2012 will not be prosecuted under this Law. Damn shame.

Georgia Attorney Samuel Olens now has the power to prosecute Foreclosure Mills and Attorneys for Wrongful Foreclosures.

Georgia is currently the number one state in the nation for foreclosures– overshadowing Nevada, Florida, California and Arizona.

Read on.

Wells Fargo puts ‘no ceilings’ on mortgage lending

Wells Fargo shows no sign of slowing down its mortgage lending.

The risk of rising interest rates continue to loom over what has been a successful first quarter.

Well’s mortgage income grew 42% from the previous year to $2.9 billion in its Q1 earnings report, especially with a growing share of businesses from correspondent lender.

“If you are a community bank and depend on Wells Fargo as a correspondent bank, you are unfortunately at their control,” said Ron Haynie, executive vice president at the Independent Community Bankers of America.

Read on.