"We don’t need no regulation. We don’t need no Fed control," opined Jamie Dimon, not too long ago…hah…this kind of reminds me about the opening lines to Pink Floyd’s classic album, Brick in the Wall.
Well, guess what Dimon? You need it – you need even more regulation and control, because bankers, like you, are out of control and because your team have been busy making dodgy trades, which have just caught up with you and have now been made public – totalling over two billion dollars’ worth of losses, which have just been tipped into the garbage can.
And, when the word finally got out – over twenty billion dollars was wiped off the value of the company – in the space of a few trading day hours. So how come you are still in a job as the head of J.P. Morgan Mr. Dimon?
Most people, I know, for causing losses in a company – even a small amount would have been fired by now and even facing the possibility of court action. But not, it seems, if you are the CEO of a huge bank, which has just fallen into a multi-billion dollar black hole and a banking scandal.
Your company’s team players were busy making highly dodgy trades and on your watch. The buck stops with you Dimon, as the captain of the J.P. Morgan ship and you need to equally take the blame and the fallout – along with the fellow members of your crew, who were involved in these shadowy dealings – all in the hope of making a very nice buck.
The losses stem from bets some of the bank's London-based traders made on indices made up of credit-default swaps (CDS's) on individual companies.
Credit default swaps act like an insurance contract in which the buyer is paid if a company or country defaults on its debt, while the seller receives a regular stream of interest payments.
"I'd push them (CDS's) off the planet," said Ms Bair, who was head of the Federal Deposit Insurance Corporation for five years before stepping down last summer. "The CDS market is very volatile and very opaque. From a safety and soundness point of view, I'm uncomfortable with that."
The trades that backfired were placed by JPMorgan's chief investment office, which is tasked with investing the bank's excess deposits and helping to manage the company's overall risk exposure. Ms Bair said that the pressure on banks to generate returns on their excess deposits is something that should also be on regulators' radars.
Jamie Dimon and J.P. Morgan deserve the tsunami of lawsuits coming their way…perhaps they shall finally learn the lesson…there is no such thing as a quick and cheap buck.
The cases are Baker v. Dimon, 12-CV-03878; and Saratoga Advantage Trust - Financial Services Portfolio, 12-CV-03879, US District Court, Southern District of New York (Manhattan).
By Victor Romain