JPMorgan’s Board Made Jamie Dimon a Billionaire as the Bank Rigged Markets, Laundered Money, and Admitted to Five Felony Counts

JPMorgan’s Board Made Jamie Dimon a Billionaire as the Bank Rigged Markets, Laundered Money, and Admitted to Five Felony Counts

 By Pam Martens and Russ Martens: January 21, 2022 ~

Jamie Dimon Being Sworn In at House Financial Services Committee Hearing, May 27, 2021

Yesterday’s headline making the rounds was that JPMorgan Chase’s Board had given its Chairman and CEO, Jamie Dimon, a pay raise to $34.5 million for 2021 that was 10 percent more than 2020.

That headline provides an instructive lesson in what passes for breaking news today at mainstream media outlets when it comes to Wall Street’s megabanks. The majority of Americans aren’t outraged and demanding that Congress reform Wall Street because mainstream media has overtly decided to keep the public in the dark.

The real breaking news is that despite JPMorgan Chase admitting to five criminal felony counts brought by the U.S. Department of Justice over the past 7 years for rigging markets and laundering money for Bernie Madoff, the financial criminal of the century, the Board of JPMorgan Chase has not sacked Dimon, the man who sat at the helm during this unprecedented crime spree. Instead of sacking Dimon, the Board of the largest federally-insured, taxpayer-backstopped bank in the United States has made Dimon a billionaire.

The Board of JPMorgan Chase seems to have adopted a compensation model based on “the more felony counts, the bigger the paycheck.” Consider the following: On September 29, 2020, the Justice Department charged JPMorgan Chase with two felony counts, to which it admitted, and fined the bank $920 million of shareholders’ money to settle its fourth and fifth felony counts since 2014. One felony count was for rigging the precious metals markets while the other was for rigging the U.S. Treasury market – the market that allows the federal government to pay its bills.

Rigging the U.S. Treasury market used to be a big deal with splashy headlines. But on September 29, 2020 the Justice Department didn’t even hold its usual press conference to announce the charges against JPMorgan Chase and not one newspaper thought to mention that these were the fourth and fifth felony counts during the tenure of Dimon. Nor did any newspaper mention that the bank had admitted to all five criminal counts while being repeatedly put on probation by the Justice Department but continuing its crime spree. (See JPMorgan Chase’s unprecedented rap sheet under Dimon here.)

Now here’s where you need to pay close attention. Just 10 months after the bank admitted to its fourth and fifth felony counts, the Board of JPMorgan Chase gave Dimon a bonus of 1.5 million stock options, which had a value of $50 million on paper, according to a specialist cited at Bloomberg News. In its filing with the SEC announcing the stock award, the Board wrote this:

“This special award reflects the Board’s desire for Mr. Dimon to continue to lead the Firm for a further significant number of years. In making the special award, the Board considered the importance of Mr. Dimon’s continuing, long-term stewardship of the Firm, leadership continuity, and management succession planning amidst a highly competitive landscape for executive leadership talent.”

If JPMorgan Chase had a properly functioning Board, and the Justice Department had a properly functioning criminal division, Dimon would have been forced out in 2013 when the U.S. Senate’s Permanent Subcommittee on Investigations released a 300-page report detailing how the bank had lied to its regulators as it used depositors’ money from its federally-insured bank to gamble in derivatives in London and lose $6.2 billion. The FBI investigated that matter and yet the Justice Department brought no criminal charges.

The JPMorgan Board had its second opportunity to fire Dimon when the bank admitted to its first two felony counts in 2014 for its outrageous handling of the business bank account of Ponzi-schemer Bernie Madoff.

The Board had its third chance to fire Dimon the very next year when the bank pleaded guilty to its role in a bank cartel (actually called “The Cartel”) that rigged the foreign currency market.

Based on the bank’s fourth and fifth felony counts in 2020 and the $50 million bonus to Dimon from the Board 10 months later to keep Dimon at the helm for “a significant number of years,” it’s pretty clear that criminal activity is perceived by the Board of JPMorgan Chase as an accepted business model as long as the stock price keeps going up. (The outside Board members at JPMorgan Chase receive an annual stock award of $250,000 on top of other fees. In 2020, five members of JPMorgan Chase’s Board received over $400,000 in total annual compensation.)

The words “independent director” appears 73 times in the most recent proxy statement that JPMorgan Chase filed with the SEC. The bank calls all non-management members of its Board of Directors “independent,” writing in its proxy statement year after year that they “had only immaterial relationships with JPMorgan Chase and accordingly were independent directors.”

In October of 2020, we took a close look at those “immaterial” relationships some of the Board members had with the Bank. You can decide for yourself if this is a Board that you would feel comfortable calling “independent.”

LINK

A Bloomberg Column Says the Macho Culture and Risk-Taking on Wall Street Is Dead – in the Same Year that It Blew Up Archegos with 85 Percent Margin Loans

 

A Bloomberg Column Says the Macho Culture and Risk-Taking on Wall Street Is Dead – in the Same Year that It Blew Up Archegos with 85 Percent Margin Loans

By Pam Martens: December 22, 2021 ~

Two interesting things happened this week just one day apart. On Monday, the Office of the Comptroller of the Currency, the regulator of national banks, released its quarterly report on “Bank Trading and Derivatives Activities” which documented insane levels of risk at four federally-insured banks, which have merged themselves with Wall Street’s trading casinos to form Frankenbanks. The very next day, an opinion columnist at Bloomberg News, Jared Dillian, wrote a column lamenting the “loss of risk-taking” on Wall Street which he appears to blame on “excessive compliance and regulation.” The column was given the pity-party title: “The Wall Street That I Once Knew No Longer Exists.”

Compare these two very disparate views of the reality on Wall Street today. The OCC’s report shares this:

“The total notional amount of derivative contracts held by banks in the third quarter increased by $978.0 billion (0.5 percent) to $184.5 trillion from the previous quarter…The four banks with the most derivative activity hold 89.3 percent of all bank derivatives….”

So let that sink in for a moment. Four banks, out of the thousands that exist in the U.S., hold 89.3 percent of $184.5 trillion in derivatives – or an unfathomable $164 trillion in the same derivatives that blew up Wall Street in 2008, requiring the largest bailout of Wall Street in U.S. history.

Those four banks are JPMorgan Chase with $52.3 trillion in notional (face amount) derivatives; Goldman Sachs Bank USA with $48.3 trillion in notional derivatives (versus just $387 billion in assets); Citibank with $44.37 trillion in notional derivatives; and Bank of America with $19.6 trillion in notional derivatives.

Citibank’s parent is Citigroup, which blew itself up with derivatives and off-balance-sheet debt in 2008 and became a 99-cent stock in early 2009. It was resuscitated with then secret revolving loans from the Fed totaling a cumulative $2.5 trillion over more than two years according to a subsequent audit conducted by the Government Accountability Office.

The trading house, Goldman Sachs, the parent of Goldman Sachs Bank USA, would have also likely failed in 2008 had its billions of dollars in derivatives with the giant insurer AIG not been bailed out by the U.S. government taking over AIG and paying Goldman Sachs and numerous other banks 100 cents on the dollar for these dubious deals with a counterparty that was not reserving for losses.

JPMorgan Chase is the bank whose Chairman and CEO, Jamie Dimon, was hauled before the U.S. Senate in 2012 to explain how his bank had used depositors’ money from its federally-insured bank to gamble in derivatives in London and lose $6.2 billion in what became infamously known as the London Whale scandal. The U.S. Senate’s Permanent Subcommittee on Investigations released a 300-page report on that insane level of risk-taking at a hearing on March 15, 2013. At that hearing, the late Senator John McCain made the following remarks:

“Traders at JPMorgan’s Chief Investment Office, the CIO, adopted a risky strategy with money they were supposed to use to hedge, or counter, risk. However, even the head of the CIO could only provide a ‘guesstimate’ as to what exactly the portfolio was supposed to hedge. And JPMorgan’s CEO Jamie Dimon admitted that the portfolio had ‘morphed’ into something that created new and potentially larger risks. In the words of JPMorgan’s primary Federal regulator, it would require ‘‘make-believe voodoo magic’ to make the portfolio actually look like a hedge.

“Top officials at JPMorgan allowed these excessive losses to occur by permitting the CIO to continually breach all of the bank’s own risk limits. When the risk limits threatened to impede their risky behavior, they decided to manipulate the models. Disturbingly, the bank’s primary regulator, the OCC, failed to take action even after red flags warned that JPMorgan was breaching its risk limits. These regulators fell asleep at the switch and failed to use the tools at their disposal to effectively curb JPMorgan’s appetite for risk. However, JPMorgan actively impeded the OCC’s oversight. The CIO refused to release key investment data to the OCC and even claimed that the regulator was trying to ‘destroy’ the bank’s business.”

Did JPMorgan Chase rein in its macho/risk-taking culture after the London Whale episode of 2012-2013? Not according to federal prosecutors. JPMorgan Chase admitted to two felony counts brought by the U.S. Department of Justice in 2014 for ignoring serious money laundering warning signs for decades with the Bernie Madoff business account it held that was at the center of his Ponzi scheme. In 2015 the bank admitted to another felony charge for its traders’ role in rigging foreign exchange markets. In September 2020 the bank admitted to two more felony charges as a result of its traders engaging in “tens of thousands of instances of unlawful trading in gold, silver, platinum, and palladium…as well as thousands of instances of unlawful trading in U.S. Treasury futures contracts and in U.S. Treasury notes and bonds…” according to Justice Department prosecutors.

The macho risk-taking was so extreme in the rigging of the precious metals markets that for the first time that veterans on Wall Street can remember, three traders at JPMorgan Chase were charged under the Racketeer Influenced and Corrupt Organizations Act (RICO) statute, which is typically used to charge members of organized crime.

It should also be noted that this week marks the 9-month anniversary of the family office hedge fund, Archegos Capital Management, blowing up as a result of a handful of Wall Street banks providing it with as much as 85 percent margin loans through ginned up derivative contracts that disguised the true owner of heavily concentrated stock positions. That matter remains under investigation by the Securities and Exchange Commission and, potentially, other regulators.

No one with even a remote understanding of the brazen crimes that continue to take place on Wall Street could seriously believe that there is a “loss of risk-taking.” Bloomberg News provides this comment in the bio of the author of this column, Jared Dillian: “He may have a stake in the areas he writes about.”

https://wallstreetonparade.com/2021/12/a-bloomberg-column-says-the-macho-culture-and-risk-taking-on-wall-street-is-dead-in-the-same-year-that-it-blew-up-archegos-with-85-percent-margin-loans/