Using Bank Deposits, JPMorgan Chase Lost $3.2 Billion Trading Stocks and Credit Derivatives in First Quarter

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via wallstreetonparade:

Imagine if every bank customer was greeted this week with a big sign just inside their Chase Bank branch that said this:

“Dear Customers: We lost $3.2 billion trading stocks and credit derivatives in the first quarter. We did that using your bank deposits. But don’t worry, that pales in comparison to the $6 billion we lost in 2012 in the London Whale mess.”

JPMorgan Chase is the largest bank in the United States. Each and every week, millions of Americans write out a check on their account at one of the more than 5,000 branches of Chase Bank; or drop into a branch to open a savings account for a grandchild; or to put money into their own retirement account; or to seek financial advice.

Everything looks very crisp, clean, consumer friendly and professional inside that individual bank branch. But there is a frightening picture serially occurring in the unaccountable management of this sprawling financial behemoth.

According to the latest quarterly report from the Office of the Comptroller of the Currency (OCC), JPMorgan Chase lost $2.4 billion trading stocks (equities) and $822 million trading credit derivatives, giving it a net loss among all of its trading in cash instruments and derivatives of $940 million. This is not what happened in the whole sprawling trading octopus of JPMorgan Chase, it’s just what happened in the taxpayer-backstopped, federally-insured bank.

Derivatives Trading at Federally-Insured Banks, First Quarter 2020

If you are new to Wall Street On Parade, you are probably thinking that it is an outrage that a bank could use federally-insured deposits to gamble for the house. And it is an outrage. But if you had been reading our reporting on the Wall Street mega banks for the past decade, you would realize that it is simply one more brick in a giant wall of outrage.

There are so many bricks to choose from in the JPMorgan Chase wall of outrage that it’s hard to know how to prioritize them. But we’ll give it a shot.

For starters, Jamie Dimon was the Chairman and CEO of this bank during the financial crisis when there was an insider whistleblower holding a law license, Alayne Fleischmann, that testified to the U.S. Department of Justice that she had observed “a massive criminal securities fraud” inside the bank involving the bogus mortgages the bank had sold in the billions of dollars to investors. But instead of using that first-hand evidence to prosecute the bank, Obama’s Justice Department under Eric Holder used that information to extract a large fine from the bank with no charges brought.

Dimon is caught on camera on September 26, 2013 strolling into the offices of Eric Holder to personally negotiate the terms of the settlement. Less than two months later, the Justice Department announced the toothless settlement on behalf of itself and other regulators. Holder said this at the time:

“The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability.”

 

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