JPMorgan Chase bank fraud documented

This video is called US senators grill JPMorgan over hidden losses.

By Barry Grey in the USA:

Senate report documents fraud and lawbreaking by JPMorgan Chase

16 March 2013

The Senate Permanent Subcommittee on Investigations released a 300-page report Thursday documenting systematic fraud and deception by JPMorgan Chase, the biggest US bank, in connection with over $6.2 billion in losses from high-risk speculative trades in financial derivatives in 2012.

The losses, incurred by the bank’s London-based Chief Investment Office (CIO) and a trader dubbed the “London whale” because of the size of his bets, were concealed from investors, analysts, regulators and the public by the bank’s top management, including its chairman and CEO, Jamie Dimon.

The report details from emails, phone conversations and interviews with bank officials the use of accounting gimmicks to vastly understate the scale of the losses in the first quarter of 2012, the withholding and falsification of information on the trading activities in reports made to the chief federal regulator of JPMorgan, the Office of the Comptroller of the Currency (OCC), and misrepresentations and lies from top bank officials in public statements issued beginning last April, when press reports of the massive bets being made by the CIO’s Synthetic Credit Portfolio began to emerge.

The report also documents the complicity of federal regulators, led by the OCC, in the bank’s fraudulent activities. The OCC gave its stamp of approval when JPMorgan informed it in January 2012, as the losses at its Chief Investment Office were piling up, that it was altering its calculation of risk so as to free up more funds for speculative investments. The regulator did nothing when the bank stopped providing it with profit and loss reports from its CIO division concerning its Synthetic Credit Portfolio.

At a press conference Thursday, Senator Carl Levin (Democrat of Michigan), the chairman of the Permanent Subcommittee on Investigations, said investigators “found a trading operation that piled on risk, ignored limits on risk taking, hid losses, dodged oversight and misinformed the public.”

The report demonstrates that nothing has changed on Wall Street since the financial meltdown four-and-a-half years ago that was triggered by rampant speculation and illegality on the part of the banks. The same types of exotic bets and parasitic wheeling and dealing—in the case of JPMorgan, with depositors’ money—that brought the global financial system to the point of collapse and ushered in a world slump, continue unabated. The bets that backfired for JPMorgan in early 2012 were a form of gambling on credit default swaps.

Likewise, the role of the government and regulatory agencies as protectors of the financial criminals remains unchanged.

Two years ago, the same Senate committee released a 630-page report on the practices that led to the banking crash of September 2008, documenting the role of major banks, regulatory agencies and credit rating firms. At the time, Senator Levin said his investigation had found “a financial snake pit rife with greed, conflicts of interest and wrongdoing.” Yet not a single bank or high-ranking bank executive has been criminally charged, let alone convicted and sent to prison.

The report issued Thursday lays out a prima facie case for the criminal prosecution of the top executives of JPMorgan, including CEO Dimon. The cover-up of losses, use of accounting tricks to deceive investors, and issuing of false statements to regulators and the public are violations of federal securities statutes punishable by fines and jail terms.

But the report carefully avoids accusing the bank or any of its executives of breaking the law. The New York Times on Friday reported that the Federal Bureau of Investigation (FBI) was looking into the JPMorgan “London whale” losses and planned to interview top executives in the coming weeks, including Dimon. It added, however, that “authorities do not suspect the chief executive of wrongdoing.”

Britain: The Banking Standards Commission selects three scapegoats for the capitalist crisis: here.

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