JPMorgan Chase

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How I Know JPMorgan (NYSE: JPM) Was Complicit in the Biggest Ponzi Scheme Ever

Yesterday JPMorgan was ordered to pay yet another fine to atone for its bad behavior, this time for its role as an enabler of Ponzi scheme master Bernie Madoff. Since 2009, JPMorgan has paid more than $30 billion in fines for various misdeeds. That kind of consistent misbehavior is no accident.

Some might even call it criminal...

Five Scandals That Made JPMorgan Wall Street's Worst Villain

Wall Street's Big Banks are hardly known for their good deeds, but JPMorgan Chase (NYSE: JPM) may be the worst of the lot.

For a bank that used to be considered a model citizen among Wall Street institutions, the reversal of reputation has been stunning.

According to The New York Times, at least eight federal agencies are currently investigating JPM. And JPMorgan has more regulatory sanctions against it than any other major U.S. bank.

The damage to JPMorgan's reputation has gotten so bad that it has started to negatively affect the nation's largest bank by assets.

Increased regulatory scrutiny brought on by the scandals has slowed or halted about 60 new projects in JPMorgan's consumer unit, for example. The turmoil also has touched off a series of high-profile departures from the bank.

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Why JPMorgan Wants to See More Americans on Food Stamps

Every time an American signs up for food stamps in one of 23 states, JPMorgan Chase & Co. (NYSE: JPM) adds to its revenue stream.

That because JPMorgan Chase contracts to operate as the processor of the Electronic Benefits Transfer (EBT) cards in those states. JPMorgan earns a fee for each recipient, ranging from 31 cents to $2.30, depending on the state, every month for the term of the contract.

JPMorgan's seven-year Supplemental Nutrition Assistance Program (SNAP, the official name for the federal food stamp program) contract with New York state, for example, brought in more than $126 million of revenue to the big bank.

Florida has paid JPMorgan more than $90 million since 2007. Pennsylvania's seven-year contract exceeded $112 million.

It brings a whole new meaning to "corporate welfare."

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Money Morning Mailbag: Tobin Tax the Only Solution to Problems Posed by High Frequency Trading

An episode of the television news program "60 Minutes" that aired Oct. 10 highlighted investors' fears over the growing trend of high frequency trading (HFT) run by a world of "supercomputers."

The "60 Minutes" piece prompted this letter from a reader wondering if the technological shift means it's time to readjust investment strategy.

Sunday night on "60 Minutes" they had a story about high-speed computers that are out-trading humans. Is it time to refocus on the world stage and find tangible rather than paper investments to put your money in? A partnership in a retail or manufacturing venue surely is more transparent than the stock market.


Money Morning has been examining the effects of high frequency trading for years. In August 2009 Contributing Editor Martin Hutchinson said high frequency trading systems were front-running the market.

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AIG and Government Looking to Accelerate Exit Strategy

Government officials are huddling with executives from American International Group Inc. (NYSE: AIG) to hatch a scheme to accelerate the company's plan to regain its independence and repay in full what the insurer owes U.S. taxpayers, according to a report from The Wall Street Journal.

Under the plan, the Treasury Department is likely to convert $49 billion of AIG preferred shares it holds into common shares, a move that could bring the government's ownership stake in AIG to above 90%, from 79.8% currently, The Journal reported, citing sources familiar with the matter.

The common shares would then be gradually sold off to private investors, a move that would reduce U.S. ownership and potentially earn the government a profit if the shares rise in value.

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JPMorgan Shuts Prop Trading Unit as Banks Maneuver Around the Volcker Rule

JPMorgan Chase & Co. (NYSE: JPM) became the first investment bank to take steps to comply with the so-called "Volcker Rule" by shutting down its proprietary trading unit.

JPM, the second-biggest U.S. bank by assets, told about 20 traders who work on its commodities trading desk that the company will close the unit, Bloomberg News reported, citing an anonymous source.

The bank eventually will close all in-house trading to comply with new U.S. curbs on investment banks, said the person, who asked not to be identified because New York-based JPM's decision hasn't been made public.

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Plunge in Capital Spending Could Slow Hiring & Economic Recovery

Although initial claims for jobless benefits fell more than expected last week, a slowdown in U.S. business investment indicates hiring will continue to stall.

Applications for unemployment benefits dropped by 31,000 last week to 473,000, the Labor Department said yesterday (Thursday), providing some relief that the job market isn't deteriorating rapidly as the economy slows. Economists surveyed by Dow Jones Newswires had predicted filings would decline by 10,000.

But claims still remain elevated and aren't likely to boost confidence in the economic recovery.  The four-week moving average, which smoothes volatility in the data, rose by 3,250 to 486,750, the highest level since Nov. 28, 2009. And new claims for the previous week were revised upward to 504,000 from 500,000.

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The Tobin Tax: The Deficit-Busting Levy Wall Street Hates

After the Nov. 2 midterm elections, the Obama administration and Congress are going to have to scramble to fill a trillion-dollar hole in the U.S budget, and tax increases may be the only option.

A tax increase won't be good news for an already wheezing economic recovery that seems to get weaker with each new report or indicator that's issued. But the type of tax that's chosen will go a long way in determining just how much damage the U.S. economy will have to endure.

With a deficit in excess of $1 trillion, there aren't a lot of options. One possibility would be to allow the 2001 and 2003 Bush tax cuts to expire, which would have a depressing effect on the economy and most people's pocketbooks.

But a better option would be to devise some new taxes that may prove less damaging. Indeed, there's even one possibility that might even do some economic good if it's implemented correctly.

It's called a "Tobin tax."

To see how a reasonably set "Tobin tax" could help U.S. leaders to fix the nation's finances, please read on...

To see how a reasonably set "Tobin tax" could help U.S. leaders to fix the nation's finances, please read on...

World's Largest Steelmaker Warns of Slowing Economic Recovery

Lakshmi Mittal, the chairman of ArcelorMittal (NYSE ADR: MT), the world's largest steel company, yesterday (Wednesday) issued a warning about the slowing pace of the global economic recovery and lowered his company's third-quarter forecast.

ArcelorMittal posted a 146% rise in net profits in the second quarter compared with the same period last year as demand recovered. However, the company warned third quarter results would slump by as much as 30% - hit by a seasonal dip in demand during the European summer, slower growth in China, and higher costs for iron ore.

"The improved performance in the second quarter is in line with our expectations and reflects the continued slow and progressive recovery," Mittal told The Wall Street Journal. "The challenge for the second half of the year will be to pass on the full extent of cost increases to our customers."

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Gold Will Hit $5,000 an Ounce Long Term ... But the Near-Term Profit Prospects Are Even Bigger

Longtime commodities guru Peter Krauth touched off a real media buzz earlier this year when he publicly predicted that gold would hit $5,000 an ounce in the next few years - a projection he stands behind.

But here's the irony.

While Krauth's prediction would represent a total return of about 320% over that multi-year span, he says the potential returns on some of the near-term profit plays he's looking at are even bigger.

"These near-term opportunities are significant because the companies that explore and/or produce gold are leveraged to the price of gold," Krauth said in an interview with Money Morning. "So a 10% to 20% rise in gold's price could cause the share prices of some of these firms to gain 20% to 60% - or more - in a matter of months."

To see why gold is set to soar, read on...

Goldman Joins Chorus of Big Banks Reporting Weaker Earnings

Goldman Sachs Group Inc. (NYSE: GS) joined a chorus of big banks reporting weaker earnings for the second quarter as a weakening economy led investors to refrain from making deals.

Goldman's earnings plummeted 82% in the second quarter, hammered by the investment bank's settlement of Securities and Exchange Commission (SEC) fraud allegations and the U.K. tax on bank executive bonuses.

Strong trading and bond underwriting had bolstered the company's first-quarter results. But markets began to gyrate in April, and investor nervousness increased after the "flash crash" in May. Volatility has continued to rock the markets throughout the summer with investors' ongoing concerns about economies in Europe and fears that the U.S. recovery might be stalling.

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$13 Trillion in Obligations Show Shadow Banks Still Threat to Financial System

A report issued by the Federal Reserve Bank of New York shows that so-called "shadow banks" still hold more obligations than regular banks, representing a continuing threat to the financial system.

Three years after the beginning of the financial crisis, the shadow banking system had about $16 trillion of obligations in the first quarter, compared with $13 trillion for banks, the report said. The gap has narrowed from 2008, when obligations were $20 trillion and $11 trillion, respectively.

Throughout the early part of the decade, shadow banks grew in importance as they acted as intermediaries between investors and borrowers.   Familiar examples of shadow institutions include Bear Stearns and Lehman Brothers, which were swallowed by the financial crisis, as well as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

While this system became a huge and vital source of money to fuel the housing market and the rest of the U.S. economy, the subprime mortgage crisis and ensuing credit crunch exposed a major flaw.

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Taipan Daily: Spoiling Wall Street's Surprise

Sometimes I don't know whether to excoriate the Wall Street/Washington axis for its constant efforts at obfuscation - or thank it for all the smoke and mirrors.

Yes, there is something deeply troubling about a culture so utterly dedicated to the manipulation of facts. But then again, these distortions introduce exactly the sort of information gaps that power the most lucrative trading opportunities.

For example, we have recently read that British Petroleum (BP) - mired armpit deep in a cesspool of oil of unknown size and depth, and fully aware that it will be sued continuously unto the next generation - is rewarding loyal investors with a billion-dollar dividend and spending something like $100 million on a public relations campaign to somehow obscure its culpability and rescue its reputation.

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The Tobin Tax: The Fix-It Plan Wall Street Hates ... But Can't Seem to Kill

German Chancellor Angela Merkel recently came out in favor of a "Tobin tax" - a small tax on financial transactions, proportionate to the size of the transaction. The Tobin tax idea also has been proposed by Britain's former prime minister, Gordon Brown, and was proposed in Congress by U.S. Rep. Peter DeFazio, D-OR.

Every time a Tobin tax is proposed, it has failed to gain traction - which isn't surprising: Wall Street, with its international affiliates and legion of lobbyists, hates the idea.

Even so, the Tobin tax idea just refuses to die - which is a good thing, since it is probably the best way of curing some of Wall Street's pathologies.

To understand how the Tobin tax can benefit investors, please read on...