Jamie’s Cryin – Episode 3: Wherein Jamie Loses the Debit Swipe Battle & is Forced to Take Bernanke to Task for Raising Capital Requirements from the Floor of a Finance Summit
Update: I want to add that IMO Jamie is the best Bank CEO out there. He is brilliant. He is savvy, he is kewt, he is a capitalist, I dig it. I wanted him for Treasury Secretary and wrote about it in March of ’09. But the TBTF have refused to allow the consumer to deleverage from the crushing weight of their housing debt, and the TBTF helped create this problem.
They are the whiz kids in the room, Mom and Pop Homeowner need a HOLC, and the TBTF blocked it and continue to block it, assuring us a long, slow, slog through a Depression like forced deleveraging as the Fed continues to try to inflate its way out of this massive debt it used to prop the very same TBTF.
All unnecessary pain, if only the TBTF would take some of the responsibility they like to lecture about when they laughingly call principal writedowns moral harazrd after they made the Goddamned loans. (see Meredith Whitney ask Jamie about this on an earnings call in January 2010)
Lost juice Jamie? Have you Lost Hand? Did you think buying the POTUSship for Obama meant a free reign?
Did you think basing all our policies on what is best for a handful of TBTF bankstas was really a good way to GROW the American economy?
Oh woe is me. Cry me a river.
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PragmaticCapitalism has it:
(…) his bank was saved from the brink of disaster in 2008. The US government took extraordinary measures to ensure that he did not go down as one of the greatest bank failures of all-time. In fact, the US government did him a huge favor by making his bank the linchpin in the US economy.
Of course, this was done by making Mr. Dimon’s already too big to fail bank too bigger to fail. But none of this is enough. Saving someone’s career and ensuring that their bank is now an instrumental portion of the US economy is not enough. And in a fit of rage Mr. Dimon went and rewarded himself with a monstrous $16MM pay package last year. After all, he deserved it. But this is not enough.
It’s not enough to pay yourself outrageous sums of money when your company should be in a hole in the ground. It’s not enough to have the government by the throat and know that the taxpayers can never let your company fail. It’s not enough to have been a key player in helping the US banking system become the gigantic leach on the world’s largest economy. It’s not enough that you help pull our best and brightest minds out of productive fields and into finance where they will do nothing but think of new ways to help separate the middle class from their savings. It’s not enough that you helped build a banking system that nearly crashed a $15 trillion economy.
No none of this is enough. And when we pass an incredibly weak regulatory bill that does nothing to actually fix what caused the crisis you go and complain that the government is doing too much….
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Then today REALLY SUCKED for Jamie when he lost the Debit Card Swipe Fee battle to the retailers despite INSANE LOBBYING and Jon Tester- D-MT, Bob Corker R-TN last minute attempt to stave off the changes for a year.
This is a Fed set cap on swipe fees. Lowering avg fee charged to RETAILERS from .44 a swipe to .12 a swipe. TBTF are babied left and right, the retailers are going out of business left and right let the Fed baby someone else for a change Jamie. I’m sure Obama will give you another bailout any second now anyway.
…The fee cut could cost the card industry and banks billions of dollars, but nobody in the retail business is shedding any tears — it will save them money.
Bank stocks, up earlier in the day, flipped into the red on the news and ended down nearly 1%, making them among the worst performers in the market today….
Meredith Whitney & Jamie Dimon on principal forbearance in the JPMorgan Chase earnings call PLUS Are JPMC, BofA, Citi taking kickbacks for second liens on short sales?! & HAMP/MHA assisted a whopping 7% of those eligible last year..
Update: Short Sale Kickback video added
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In other great news, Diana Olick is breaking a HUGE story now on CNBC that the big servicers, JPMorgan Chase, Bank of America and Citi have demanded off-HUD, off ClosingStmt payments to release second liens they hold in short sales (against RESPA law).
Treasury told Diana they were unaware of this and will look into it. Good grief. and they wonder why the servicers dont want to do mods? THEY ARE GETTING KICKBACKS ON SHORT SALES! Plus they get an INCENTIVE PAYMENT to do short sales from Treasury (we the taxpayers) now. My Lord this is unreal.
Again this is the fault of the WH and Treasury. Treasury actually RAISED the cap on the ‘incentive fees’ the servicers can earn by doing their damn job as servicers today to 35 billion. Banks will do exactly what they can and no more. Sheila Bair at FDIC is the only one moving on principal forbearance, as usual she is ahead of the curve.
Plus the AP isn’t buying the BS spin anymore in its reporting of the much vaunted numbers Treasury is spinning today on their newly permanent mods (which they told the servicers to waive documentation for to achieve, the only thing the trial mods can be disqualified for now is ‘property’ disqualification, nice eh?):
The Obama administration’s mortgage relief plan provided help to only 7 percent of borrowers who signed up last year, another black mark for the struggling program.
Ouch that’ll leave a mark.
About 900,000 borrowers have enrolled in the $75 billion program since it launched in March, the Treasury Department said Friday. But as of last month, only about 66,500 homeowners had received permanent relief. Another 46,000 have been approved and should be finalized soon.The plan aims to make borrowers’ mortgages more affordable by reducing the mortgage interest rate to as low as 2 percent. They receive temporary modifications, which are supposed to become permanent after borrowers make three payments on time and complete necessary paperwork, including proof of income and a letter explaining the reason for their financial hardship.
The Treasury Department is pressing the 102 mortgage companies that are participating in the program to do a better job….
This is a great back and forth. I think we can confirm Treasury is doing exactly JACK SHXT about meaningful mods after hearing this discussion, so much for Obama being tough on those fat cats:
Here is an exchange between Meredith Whitney and Jamie Dimon on the JPMorgan conference call this morning (ht Brian):
Whitney: [W]e’re reaching a critical point in terms of all of the loan modification efforts and this is an industry question but then how it specifically affects your Company, given the fact that the industry feedback and statistics on the loan modification efforts are not good, so you question what’s the next initiative and the issue of principal forbearance. How much momentum do you think that has, can you comment on what stage we are in terms of obviously the extension ends [soon] with the last slug is over in February, so where do you think we are in terms of the government’s efforts to influence banks to do certain things?
Dimon: Well remember we do modifications of our own and we do the government modifications and I do think they’re kind of new, it was complex, and I think people will get better at it over time, Meredith. We have not thought of a better way to do it than loan by loan, which is does the person want to live there, can they afford to live there, and we really think that the payment, how much you’re paying is more important than principal. Even if you are going to do something on principal, to do it right you have to do it loan by loan and it effectively comes a similar kind of thing. The difficulty is the loan by loan part and we’ve asked the government and I think they tried to streamline a little bit to have programs because there’s too much paperwork involved in it so a lot of the reasons we’re not getting to final modifications half the time we don’t finish the paperwork, so they need the lower payments but they weren’t finishing the paperwork so we’re trying to get better at it, honestly, we rack our brains to figure out if there’s a better way to do it and you can do it more macro than loan by loan but once you start talking about macro, you’re going to get involved in a lot of issues about whether the people live there, whether they have the ability to pay, whether they were honest when they first told people how much their incomes were, so we’re working through it.
Whitney: Okay, do you get a sense that there’s something right behind HAMP, that there’s another solution for the government or is it more your efforts?
Dimon: We’re trying to do this, look, we’re trying to have ideas and they are trying to have ideas but if we had a brilliant one we would be very supportive of doing it. We want to do the right thing for the people.
Whitney: Okay, so a point of clarification on your answer, issue of principal forbearance is not something that people should be overly concerned about with respect to reserves and capital for the bank?
Dimon: No, I think if there’s a macro government force on something like that you could have a fairly significant effect on loan loss reserves and losses, etc.
Whitney: But is that a real, any momentum?
Dimon: Honestly Meredith you probably know as well as we do.
Whitney: I don’t know. I can’t help myself on that one.
Neither can we!
Update 3: 12:13pm: Angelides asking Blankfein what his responsibility was to the investor on those loans they securitized and sold, Blankfein is claiming they were sophisticated investors who sought that exposure. Basically, they deserved it? I dunno. Angelidies got an Agatha Christie analogy in, I always love those. He said maybe it is like Murder on the Orient Express and everyone did it, but still, how much responsibility is yours ….was your due diligence adequate? Blankfein trying to wiggle around it….good luck Lloyd…under oath, liability lawyers hanging on their chairs now….Phil says GS was doing more, they were also facilitating the market in which the products existed, Lloyd agrees to that extent they made that market…
Update 2: 10:07am: Phil Angelides questioning of Lloyd Blankfein was great. Lloyd keeps saying as a ;market-maker’ it is perfectly fine for GS to sell MBS derivatives to clients while simultaneously closing GS OWN position in those assets due to risk..Phil doesnt buy it.
BILL THOMAS! Vice Chair of the Commission just offered the American people his email if they want to submit a question to any of these CEOS!! Well I do!
email@example.com or some derivative thereof…send in your questions!
I really liked Moynihan’s opening statement, he is grateful to the American people, Blankfein needs to eat some of the humble pie Brian had before he arrived. (FD-MiM are BofA shareholders and are keenly interested in how Brian does today, his first big appearance since taking reins as BofA CEO)
Update 1: 9:07 am EST: WOW!! They put them under oath!! first time I have seen these bank CEOs be put under oath (except Ken Lewis on the BofA Merrill witchtrials)
CNBC should carry a livestream of the testimony here when it begins later today NOW LIVE (9:00 am EST, just began opening statements)
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Another day, another classic VH tune fits the lede, Jamie Dimon is pushing back against the ‘rising populist tide’ in re banker bonuses and pay. If you have been here before, you know we are big fans of Jamie and wanted him for Treasury Secretary. We like that he is a fighter.
But we also know the banking industry and Wall St selected obama as their candidate for a reason, and since it is Obama ginning up the faux populism and then slamming we Tea Party Patriots for being concerned about Government spending, well, Jamie needs to talk to the WH, not the people, WE are not the problem…..
…Jamie Dimon defended the bank’s pay policies on Monday and said he was “tired” of his employees being vilified over bonuses.
Rising bonuses have drawn criticism from politicians and others, who complain Wall Street’s losses seem to be socialized while its profits are privatized.
Dimon, along with the chief executives of Goldman Sachs Group Inc (GS.N), Morgan Stanley (MS.N) and other big banks, will be appearing this week before a commission created by Congress to look into causes of the financial meltdown.
JP Morgan pays its employees for sustained performance over multiple years, Dimon said on Monday.
“We do not have change-of-control agreements, special executive retirement plans, golden parachutes, special severance packages or merger bonuses,” he told a JP Morgan healthcare conference, adding that many of company’s employees are in client-facing jobs and work hard with small and mid-size businesses.
“I am a little tired of the constant vilification of these people,” he said….
PS Jamie says Commercial R.E. is a ‘train wreck’ but we knew that was coming…..
Jamie was one of our picks for Treasury Secretary to replace the tax challenged Timmeh (see our March post). Plus since we are shoveling money into, and making all our policy based on, protecting the banks, why not have someone with actual private sector banking experience?! Plus Jamie is actually, you know, SUCCESSFUL!
Jamie talks reality to Alistair Darling. JPMChase is about to enter a ginormous HQ on Canary Wharf in London. Maybe the ingenius Banker Bonus Tax that Gordon Brown and Alistair Darling have floated is NOT the best way to keep London as the European center of trading….
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Right on baby, Free the Markets!!!
Interview with Rep. Jeb Hensarling (R) of Texas (Bloomberg News)
CNBC reports that TARP payback DOES get these firms out from under executive compensation guidelines (until the new pay czar sets up suggestions for non tarp firms that is) however, the WARRANTS are still outstanding AND the restrictions on hiring foreign workers still seem to be in force….IOW Congress still has their hands in the pie….
Update: the who’s who of paybacks:
Golden Slacks $10b
Morgan Stanley $10b (John Mack was all if Golden pays back I get to pay back too dammit, good for Mack)
US Bancorp $6.6b
Capital One $3.55 b (this one makes NO sense to me, they also were NOT told to raise capital in the stress tests, bizarre with credit card delinquency rates rising rapidly, betcha we see more about ole capital one soon)
BB & T $3.1b
Bank of NY $3.0 b
State Street $2.6 b
Northern Trust $1.57b
Here is the shxtty part Timmeh has told Congress he and Team TOTUS believe they have LIMITLESS authority to REUSE ANY MONEY paid back into TARP INDEFINITELY for any purpose they damn well please..so NONE of this money will actually get back to taxpayers and reduce the ginormous deficit….
Rep. Jeb Hensarling (R-TX) is now proposing legislation to end the TARP program to try and stop them…right now they have an unlimites slush fund…
FREE THE MARKETS!
The part we need to watch is the warrants, can they buy them back..and is Treasury still planning to recycle the TARP funds endlessly as it sees fit….
Background from CNBC:
…The government is expected as soon as Tuesday to say which banks are on the list. The amount to be returned could be as much as $50 billion — twice the amount Treasury first estimated it would get back.
In addition to Morgan Stanley// and American Express banks expected to get the green light to pay back TARP money include Goldman Sachs Group JPMorgan Chase State Street and U.S. Bancorp
Meanwhile , Elizabeth Warren head of the TARP oversight panel says the banks need to be stress tested again right now, maybe she noticed that the stress test guidelines used a lower unemployment figure than we are currently experiencing….and since the banks refused to participate in PPIP, they are all still holding those toxic assets, the MBS on their books. Since FASB changed the mark to market rule they now have no impetus to sell those assets…we are right back where we were when Paulson initiated TARP….waiting for the housing fall to stop....
Steve Liesman breaking it on CNBC now..Charlie Gasparino has been calling TARP The Roach Motel..
FED: Supervisors now having discussions with several banks to repay TARP
Supervisors are requesting supplemental information for TARP repayment (WTH do they need after stress tests!)
No TARP repayment announcements expected until after June 8th
Supervisor will make recommendations on TARP repayment to the Treasury in batches (so no bank stands alone)
TARP repayment recommendations will be made to Treasury on monthly basis
Source: Treasury to announce process for auctioning TARP warrants in next several days
Treasury plans to spread out auction of warrants over several months
TEH ROOLZ TO REPAY TARP:
1. After repayment, still have to be able to pass stress test
2. Issue unguaranteed debt (no FDIC backup for you!)
3. Demonstrate ability to self-fund in the market (raising private capital)
4. Approval of supervisor
Dilution from repaying TARP: (Gov’t shares controlled by warrants as % of shares outstanding):
Morgan Stanley 5.22% (OUCH!)
Golden Slacks 2.42%
Update: Earnings analysis – Bloomberg
There’s our Jamie! We have been wondering where his fire went….
Chief Executive Jamie Dimon said the bank has the money to repay the $25 billion in taxpayer funds it received from the U.S. government in October…(JP Morgan Chase) reported better-than-expected first-quarter profit as improved investment banking performance offset increased losses from credit cards and other consumer debt, sending its shares up as much as 4.5 percent……
…JPMorgan was forced to take the bailout funds under the government’s Troubled Asset Relief Program…“We could pay it back tomorrow,” Dimon said on a conference call, adding that the bank is waiting for guidance from the government on when it can do so…
Jamie is calling the WH bluff, he says he will pay back TARP right NOW without raising capital, AND he said he will NOT sell assets into PPIP or buy any..he has ‘learned his lesson’ about dealing with the government…
He called the TARP the Scarlet Letter…heh heh heh…
…Still, Mr. Dimon says the firm is going to “await the results of the stress test and guidance from the government and see what happens” regarding a capital raise. He then added that “I don’t see why a company with that kind of capital would have to raise capital…we could raise it, and I, you know, what Goldman did is what Goldman did. It has nothing to do with us.”….
…Regarding the government’s private-public investment partnership program, the firm said it does not have plans to use it. “We’re certainly not going to borrow from the federal government because we’ve learned our lesson about that and — but I do think that a PPIP is properly executed, it could be good for the system because it could give some prices to certain loans and help some companies do things they might not otherwise have been able to do,” he says….
BWAAAAAHAAAAAAHAAA!!! Ball in your court Timmeh…heh heh heh….