Too bad the government didn't shutdown before it damaged its best friend in banking, J.P. Morgan-Chase;
JPMorgan’s earnings were eroded, in large part, by a legal expense of $9.2 billion.
“While we had strong underlying performance across the businesses, unfortunately, the quarter was marred by large legal expense,” Jamie Dimon, the bank’s chief executive, said in a statement.A large part of that legal expense coming in the aftermath of Jamie Diamond's acquiescence toTim Geithner's requests for help resolving financial firms' problems in 2008
JPMorgan “continues to seek a fair and reasonable settlement with the government on mortgage-related issues – and one that recognizes the extraordinary circumstances of the Bear Stearns and Washington Mutual transactions, which were undertaken at the request or encouragement of the U.S. government,” Mr. Dimon said.
Mr. Dimon’s reference to a “fair and reasonable settlement” evokes his earlier statements, which have called the government’s investigations related to Bear Stearns unfair. JPMorgan purchased the flailing bank during the depths of the financial crisis, a deal that was blessed by the federal government.Not just blessed. Instigated. The government came, hat in hand to Dimon in March 2008 after he had turned down Bear Stearns' CEO plea for help. Without the government's pressure, Dimon wouldn't have been involved with Bear at all. Similarly, Morgan took over WAMU at government request.
We're from the government, we're here to ask for your help...then try to ruin you for it.
Here is another instance of our Dear Government taking the money of investors who were encouraged to help revive a quasi-government entity.ReplyDelete
Treasury's Fannie Mae Heist
July 2013 - WSJ by Theodore B. Olson
The government asked investors to shore up the two mortgage giants. Now those investors are being stiffed.
When the government intervened in Fannie and Freddie in 2008, it agreed that conservatorship was the best chance of stabilizing the mortgage market and repaying the taxpayers for their investment.
Today, Fannie and Freddie are back. Last quarter, Fannie announced a quarterly profit of over $8 billion; Freddie made $7 billion.
Rather than allow private investors to share in these profits, the federal government unilaterally decided to seize every dollar for itself. Last summer the government changed the terms of its investment from a fixed annual dividend of 10%—a healthy return in this market—to a dividend of nearly every dollar of the companies' net worth for as long as they remain in operation.
This reminds me of the scene "Bust the joint out" from the movie Goodfellas. You don't want the mob or the government as your partner, unless you are well connected.
Although unaware of how to run a restaurant, Paulie (mob boss) promises to offer protection by becoming a partner. Sonny (restaurant owner) is now committed and beholden to Paulie:
Narrator: Now the guy's got Paulie as a partner. Any problems, he goes to Paulie. Trouble with a bill, he can go to Paulie. Trouble with the cops, deliveries, or Tommy, he can call Paulie.
But now the guy's got to come up with Paulie's money every week. No matter what. Business bad? F--k you, pay me. Oh, you had a fire? F--k you, pay me. The place got hit by lightning, huh? F--k you, pay me.
Paulie could do anything. Especially run up bills on the joint's credit. And why not? Nobody's gonna pay for it anyway. And, as soon as the deliveries are made in the front door, you move the stuff out the back and sell it at a discount. You take a two hundred dollar case of booze and you sell it for a hundred. It doesn't matter. It's all profit. And then finally, when there's nothing left, when you can't borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.