JP Morgan Chase Smith Barney whatsis

[AdmiralKird]

$2 billion may not be much to JPM, but is this going to spread to any other banks, like dominoes (like it did in 2008)?

You answered your own question.

A domino effect cannot occur if there isn't a starting domino to fall.

[pioneer98]

But none of the "dominoes" from 2008 actually fell, except Lehman Brothers....we (taxpayers) caught them and stood them back up at a steep cost.

Who was on the other side of this $2 billion trade (a.k.a. the "winner")? Do we even know?

Sorry, since no one knew this kind of trading was even going on at JPM, any reassurance about this being a "small" loss at this point is hollow. I stick by my earlier questions - What else is going on inside JPM? And if JPM is doing this, what are Goldman Sachs and the others doing? Probably way worse. In fact, I'm 99.9% sure they are doing much worse. They'd never be the last ones to the party.

[AdmiralKird]

But none of the "dominoes" from 2008 actually fell, except Lehman Brothers....

Are you kidding me? Hundreds and hundreds of banks failed besides Lehman Brothers.

we (taxpayers) caught them and stood them back up at a steep cost.

TARP has made a huge amount of money for the government and taxpayers

Who was on the other side of this $2 billion trade (a.k.a. the "winner")? Do we even know?

Other Hedge Funds. That Money is pretty much in the exact same spot, and $1.00 is still worth $1.00, unlike the impaired houses that banks assumed onto their balance sheets

What else is going on inside JPM? And if JPM is doing this, what are Goldman Sachs and the others doing? Probably way worse. In fact, I'm 99.9% sure they are doing much worse. They'd never be the last ones to the party.

Probably orgies.

Look, JP Morgan takes out a boat load of trades it shouldn't, and they push the price a certain way with that much capital. They push their own expected return down just to get someone to buy the other side of that deal. The other financial traders then take advantage of recognizably absurd prices. You will probably see all the other banks have record quarter profits.

[Freed Roger]

http://www.latimes.com/business/money/l ... 0867.story

I don't understand this thing half as much as I should, but when I heard clips of the JPMorgan leader Dimon recently, my BS detector went beserk. above article ratifies that my bs detector is working.

[cpebbles]

TARP made money for the government, if you ignore all the machinations of the Fed and pretend the bailout was just a simple loan.

JP Morgan already stated that they expect the loss to go up from the $2 billion they're acknowledging for now. There are some rumors that the loss is going to go waythehell up, but that's not a credible rumor yet.

[greenback44]

TARP made money for the government, if you ignore all the machinations of the Fed and pretend the bailout was just a simple loan.

Even with that caveat, SIGTARP has been pretty adamant that TARP has not made money:

http://www.sigtarp.gov/Quarterly%20Repo ... ngress.pdf

After 3½ years, the Troubled Asset Relief Program (“TARP”) continues to be an active and significant part of the Government’s response to the financial crisis. It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost).

Continuing in SIGTARP's most recent quarterly report, with discussion relevant to current events...

A recent working paper from Federal Reserve economists confirms that TARP encouraged high-risk behavior by insulating the risk takers from the consequences of failure – which is known as moral hazard. The Federal Reserve economists reported how the large banks that received Government bailouts through TARP are now taking more risks than banks that did not receive taxpayer money. According to the Federal Reserve economists, the loans that the bailed-out banks are making today are riskier than those of their non-bailed-out counterparts. In contrast, the Federal Reserve study indicates that community banks that received TARP funds are taking fewer risks than their larger counterparts, in part because they use the TARP funds to bolster their capital. Many of the same large banks have greatly increased their executive compensation despite the fact that regulators have stated that compensation played a role in causing the crisis by encouraging risky behavior.

It's totally different in that this specific hedging strategy isn't something being used by the overall market.

How do you know that? Their CEO didn't even know they were doing this stuff.

I think it's worse than that. They knew what was going on, but didn't understand it. I don't buy the domino theory here, but it's discouraging to read this WRT JP Morgan because they and Goldman Sachs are supposed to be the two big boys on Wall Street that actually know what they're doing.

[Freed Roger]

Can we just put the CEO Dimon in stocks in the village square and let the commoners throw rotten fruit and vegetables at him?

[AdmiralKird]

TARP made money for the government, if you ignore all the machinations of the Fed and pretend the bailout was just a simple loan.

Even with that caveat, SIGTARP has been pretty adamant that TARP has not made money:

http://www.sigtarp.gov/Quarterly%20Repo ... ngress.pdf

After 3½ years, the Troubled Asset Relief Program (“TARP”) continues to be an active and significant part of the Government’s response to the financial crisis. It is a widely held misconception that TARP will make a profit. The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost).

Continuing in SIGTARP's most recent quarterly report, with discussion relevant to current events...

A recent working paper from Federal Reserve economists confirms that TARP encouraged high-risk behavior by insulating the risk takers from the consequences of failure – which is known as moral hazard. The Federal Reserve economists reported how the large banks that received Government bailouts through TARP are now taking more risks than banks that did not receive taxpayer money. According to the Federal Reserve economists, the loans that the bailed-out banks are making today are riskier than those of their non-bailed-out counterparts. In contrast, the Federal Reserve study indicates that community banks that received TARP funds are taking fewer risks than their larger counterparts, in part because they use the TARP funds to bolster their capital. Many of the same large banks have greatly increased their executive compensation despite the fact that regulators have stated that compensation played a role in causing the crisis by encouraging risky behavior.

1) Even if it does lose $60 by their estimation, that is a huge win. The cost of not having the program would be a depression at least three times worse, three times longer. For the price of half a percent of GDP... thats a bargain. Was the whole situation regrettable and preventable? Yes. Should TARP have ever been needed? No. But it did what it was supposed to remarkably well, and the program is not something to hate.

2) Banks that didn't need TARP:
a) probably were more conservative fiscally and didn't need the money as much
b) probably were also politically conservative and rejected the money on principal knowing they wouldn't be able to do as well in the aftermath, but wanted to stand up for their beliefs.
c) Historically, what is the difference between risk the types of firms being measured? How great? Are the TARP receivers taking more risk than they were in 2007? What determines the measurability of a firm being a TARP receiver? Some paid the government back in months, others years. Are they weighted by the amount of TARP used and time duration relative to each firm's assets?

It's totally different in that this specific hedging strategy isn't something being used by the overall market.

How do you know that? Their CEO didn't even know they were doing this stuff.

I think it's worse than that. They knew what was going on, but didn't understand it. I don't buy the domino theory here, but it's discouraging to read this WRT JP Morgan because they and Goldman Sachs are supposed to be the two big boys on Wall Street that actually know what they're doing.

http://www.reuters.com/article/2012/05/ ... ews&rpc=43

[KyCardinalFan]

Speaking of real estate, does anyone else get a kick out of the ad with the concerned old grandpa, worried that his grandson may never be able to own a home? For the first time, the dream of home ownership is threatened!!! Except that it is an incredible buyer's market right now--good deals and incredible interest rates.

I chuckle at that ad too, but mostly because I think, "Geez Grandpa! If you're really that concerned, why don't you leave the kid your house!"

[Freed Roger]

[expletive]