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Entries in JP Morgan (10)

Friday
Jul132012

Dow Rallies: Financial Stocks Close Higher, Led by JPMorgan Earnings

John Foxx | Thinkstock(NEW YORK) -- Friday proved to be a good day for stocks across the board, after six straight losing sessions.

The Dow finished the day up almost 204 points, and the Nasdaq and S&P indeces picked up 42 points and 22 points, respectively.

It was banks led by J.P. Morgan Chase & Co. that pushed up financial-sector stocks Friday. The nation's largest bank reported a net income of $5 billion last quarter, even though it also revealed the loss from those risky trades overseas was $5.8 billion, almost three times as much as initially reported.

Wells Fargo also added to Friday's S&P rally after posting a 17 percent increase in profits last quarter, according to the Wall Street Journal.

Copyright 2012 ABC News Radio

Thursday
Jun212012

Five of America's Biggest Banks Downgraded

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Moody’s Investors Service announced Thursday that it had downgraded the credit ratings of 15 banks, including five of America's biggest financial institutions: Goldman Sachs, Bank of America, Citigroup, JPMorgan and Morgan Stanley.

As The New York Times explains, a downgrade like this could have “serious implications for a bank’s bottom line, potentially increasing the cost of borrowing and eroding the confidence of customers and lenders. Trading partners may opt to move their business elsewhere."

Moody's lowered credit ratings were due to less confidence in the banks' long-term profit and growth prospects because of so many international debt problems.

While the action does make it more difficult for banks to fund investment activites because of a hike in short-term borrowing costs, Moody's action is not expected to have much of an impact on Wall Street Friday.

For the most part, the banks were anticipating the downgrade from Moody's and have been putting away cash on the side to deal with it.

Ultimately, however, consumers can expect a more difficult time getting loans for small businesses, cars and mortgages -- a development that will further slow down economic growth.

Copyright 2012 ABC News Radio

Tuesday
Jun192012

Robin Hood Activists Look to Make Fairy Tale a Reality

(NEW YORK) -- When it comes to tax reform heroes, Warren Buffett, that self-made billionaire who pushes for higher taxes on millionaires, is so yesterday. The new champion of the progressive tax movement is a bit more mythical, a touch less law-abiding and frightfully more fashionable.

Robin Hood, the fictional outlaw famous for stealing from the rich to give to the poor, has emerged as the face of a new tax movement, one that calls for a 50-cent sales tax on every $100 traded on Wall Street.

"We are taking back from the wealthy what they have taken from our communities," said Matt Kavanagh, the director of U.S. advocacy at Health Gap, an AIDS-prevention group that is part of the coalition of progressive groups pushing for the Robin Hood tax.

Using the star power of actor Mark Ruffalo, Rage Against the Machine's Tom Morello and Coldplay's Chris Martin, the Robin Hood tax movement kicked off a nationwide protest outside JP Morgan offices in 15 cities on Tuesday with a Web video.

The nearly five-minute spot promotes the tax as a "small change for big banks, big change for us" and urges supporters to draw a Robin Hood hat and mask onto the image of George Washington on the $1 dollar bill as a symbol of the movement.

"Revolution happens one buck at a time," Morello says in the video, holding up his marked-up bill as Coldplay's "Viva la Vida" drums in the background.

Advocates for the tax claim the one-half of 1 percent tax on financial transactions would bring in up to $350 billion in federal revenue each year, which could then be used to fund programs in such areas as education, health care, HIV/AIDS prevention and climate change.

"My taxes have been paying for Wall Street to be bailed out. It's about time they start contributing to my community," said Joseph Cassidy, an emergency room nurse who sported a green Robin Hood style hat while protesting outside JP Morgan's Washington, D.C., offices Tuesday.

As the group of about 40 Robin Hood hat-clad protesters chanted outside the JPMorgan offices, the bank's CEO Jamie Dimon testified before Congress about the company's multi-billion-dollar trade loss announced last month.

Despite the $2 billion to $5 billion loss, Dimon said the company would post a profit this quarter, a fact that Kavanagh said proved that Wall Street titans like JPMorgan could afford the Robin Hood tax.

"If JPMorgan can lose $2 billion and 'Whoops, sorry!' we know there is money there for our communities," Kavanagh said while protesting outside the bank's D.C. offices.

While the Robin Hood tax may be based on a fairy tale figure, the idea of a tax on financial transactions may not be a fiction for long. The European Union is considering this type of tax, but with a lower rate of 10 cents for every $100 traded.

And U.S. Sen. Tom Harkin, D-Iowa, Rep. Peter DeFazio, D-Ore., introduced a financial transaction tax bill in Congress last November that would collect 3 cents on every $100 traded.

"This could be in the cards in the future," said Steve Rosenthal, a tax lawyer and visiting fellow at the Tax Policy Center.

But Rosenthal warned if the U.S. instituted the tax and the EU did not, it "could cripple the U.S. financial services industry" because bankers would shift their transactions overseas.

"The only way this type of tax on financial trades would be effective is if it was implemented on a global scale," Rosenthal said. "Otherwise any country that does it on their won would just lose its financial transaction center."

That type of corporate exodus did not happen, though, when Britian instituted a scaled-down version of the Robin Hood tax the 1980s, Kavanagh said. The U.K.'s stamp tax imposes a one-half of one percent tax only on stock sales, leaving other types of financial transactions such as selling bonds and derivatives untaxed.

"The bottom line is companies aren't locating themselves in New York because of the scenery," Kavanagh said. "There are massive benefits to being based in the U.S. and those don't go away when you implement a tiny tax."


Copyright 2012 ABC News Radio

Thursday
Apr052012

JP Morgan CEO: ‘Confusing’ Rules Hurt Consumers

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- In a letter to shareholders, banking giant JP Morgan said Thursday that a confusing tangle of overlapping regulations and oversight are increasing costs for consumers and strangling lending. The latest round of financial reforms has cost JP Morgan $3 billion.

“We have hundreds of rules, many of which are uncoordinated and inconsistent with each other,” JP Morgan CEO Jamie Dimon wrote in the letter. “While legislation obviously is political, we now have allowed regulation to become politicized, which we believe will likely lead to some bad outcomes.  And we have been very slow in finishing rules that are critical to the health of the system.”

“And while we need reform, we must be very careful not to throw the baby out with the bathwater. Clear, fair and consistent rules  need to be put in place as soon as possible so  that our economy, once again, can grow and meet its potential,” Dimon writes.

“The rules under which mortgages can be underwritten and securitized still have not been completed three and a half years after the crisis began. This is unnecessarily keeping the cost of mortgages higher than they otherwise would be, slowing down the recovery.”

A cap on debit-card transaction fees in the Dodd-Frank Act is “price-fixing by the government that will have the unfortunate consequence of leaving millions of Americans unbanked,” the letter states.

Stricter capital rules will make it “prohibitively more expensive” for banks to lend to consumers with credit scores below 640, about 40 percent of all Americans.

JP Morgan was one of the big banks that agreed to pay part of a $25 billion industry-wide settlement with state and federal officials over abusive foreclosure practices.  The bank also got a $12 billion bailout from the U.S. government in 2008, when shoddy lending practices led to a near meltdown of the worldwide financial system.

And although the bank claims the regulatory burden is high, profits are strong.

“Your company earned a record $19.0 billion in 2011, up 9 percent from the record earnings of $17.4 billion in 2010,” the letter begins.

[ READ THE FULL SHAREHOLDER LETTER HERE ]

Copyright 2012 ABC News Radio

Friday
Oct282011

Big Banks Don't Follow Bank of America's Charge

Davis Turner/Getty Images(NEW YORK ) -- Where Bank of America goes, others are not following.

Last month’s decision by Bank of America to charge customers five dollars a month for using their debit cards to make purchases was widely criticized. 

Now, following months of consumer testing -- and plenty of customer outcry at BoA -- JP Morgan Chase has decided not to follow Bank of America.

The Wall Street Journal says other big banks such as U.S. Bancorp, Citigroup Inc, PNC Financial Services Group Inc, and KeyCorp have also announced they won’t impose similar charges. 

Copyright 2011 ABC News Radio

Tuesday
Jun212011

J.P. Morgan Settles With SEC, Agrees to Pay $153.6M

STAN HONDA/AFP/Getty Images(WASHINGTON) -- J.P. Morgan has agreed to pay $153.6 million to settle charges that it misled investors in Collateralized Debt Obligations (CDOs) tied to the housing market.

The Securities and Exchange Commission alleged that J.P. Morgan did not tell investors that hedge fund Magnetar helped select assets in the CDO portfolio and was betting that those assets would lose value. As a result, the hedge fund was poised to benefit if the CDO assets it was selecting for the portfolio defaulted.

J.P. Morgan did not admit or deny the allegations but agreed to a final judgment.  As part of the agreement,  J.P. Morgan agreed to improve the way it reviews and approves mortgage securities transactions.

The affected investors included:

  • Thrivent Financial for Lutherans, a faith-based non-profit membership organization in Minneapolis.
  • Security Benefit Corporation, a Topeka, Kan.-based company that provides insurance and retirement products.
  • General Motors Asset Management, a New York-based asset manager for General Motors pension plans.
  • Financial institutions in East Asia including Tokyo Star Bank, Far Glory Life Insurance Company Ltd., Taiwan Life Insurance Company Ltd., and East Asia Asset Management Ltd.


Copyright 2011 ABC News Radio

Friday
Feb042011

Lawsuit: JP Morgan Chase Aided Bernie Madoff's Ponzi Scheme

Photo Courtesy - Mario Tama/Getty Images(NEW YORK) -- Allegations have been made that the primary Wall Street bank for disgraced financier Bernie Madoff "aided and abetted" his massive fraud.

The trustee liquidating Madoff's illegally gained fortune claims JP Morgan Chase bankers turned a blind eye to what they knew was likely a fraudulent ponzi scheme.  The court complaint, filed in December and unsealed Thursday, quotes a JP Morgan risk officer in 2007 saying there was a well-known cloud over Madoff then.

The trustee claims JP Morgan has suspected for years that Madoff was a fraud, and not only did the bank do anothing about it, but it also allowed suspicious transactions to take place.

Copyright 2011 ABC News Radio

Thursday
Feb032011

JP Morgan Suspected Madoff, Kept Doing Business With Him

Photo Courtesy - Getty Images(NEW YORK) - Documents obtained by ABC News show that two months before Bernie Madoff's arrest, JP Morgan Chase suspected that his investment returns were probably "too good to be true." The bank, however, was still doing business with Madoff when federal authorities discovered his Ponzi scheme.

Lawyers representing the victims of Madoff's massive investment fraud filed a $6.4-billion lawsuit against JP Morgan Chase Thursday, claiming the bank continued its relationship with Madoff despite having documented suspicions about him.

The lawyers' complaint remains sealed, and lawyers did not specify in a public statement on the lawsuit how JP Morgan had documented those suspicions, but ABC News has obtained a "Suspicious Activity Report" that the London office of JP Morgan Chase filed with the U.K.'s Serious Organized Crime Agency in October 2008, two months prior to Madoff's arrest.

The document shows that the company was already removing its money from funds that did business with Madoff by the time it alerted the British government to its concerns. The London office did not issue a similar alert to U.S. authorities, and an Inspector General's Report from the U.S. Securities and Exchange Commission issued in the wake of Madoff's arrest did not mention any warnings from JP Morgan.

Madoff was arrested by U.S. authorities on Dec. 11, 2008 and charged with fraud.

Copyright 2011 ABC News Radio

Friday
Dec032010

JP Morgan Suspected Madoff Months Prior to Arrest

Photo Courtesy - Mario Tama/Getty Images(NEW YORK) -- Documents obtained by ABC News show that two months before Bernie Madoff's arrest, JP Morgan Chase suspected that his investment returns were probably "too good to be true."  The bank, however, was still doing business with Madoff when federal authorities discovered his Ponzi scheme.

Lawyers representing the victims of Madoff's massive investment fraud filed a $6.4 billion lawsuit against JP Morgan Chase Thursday, claiming the bank continued its relationship with Madoff despite having documented suspicions about him.

The lawyers' complaint remains sealed, and lawyers did not specify in a public statement on the lawsuit how JP Morgan had documented those suspicions, but ABC News has obtained a "Suspicious Activity Report" that the London office of JP Morgan Chase filed with the U.K.'s Serious Organized Crime Agency in October 2008. The document -- filed two months prior to Madoff's arrest -- specifically notes Madoff's investment returns were most likely "too good to be true."

The report shows the company was already removing its money from funds that did business with Madoff -- so-called "feeder funds" -- by the time it alerted the British government to its concerns.  The London office did not issue a similar alert to U.S. authorities, and an Inspector General's Report from the U.S. Securities and Exchange Commission issued in the wake of Madoff's arrest did not mention any warnings from JP Morgan.

The company filed the report, an attorney for JP Morgan would later say, after a representative of a Madoff feeder fund became angry when JP Morgan began removing money from the fund.  The representative of Geneva-based Aurelia Finance, which was acting as an advisor to one of the feeder funds, allegedly hinted at violence against a JP Morgan employee involving Aurelia's "Colombian friends" who could "create havoc."

But the report also emphasizes concerns about Madoff based on "the investment performance achieved by its funds which is so consistently and significantly ahead of its peers year-on-year, even in the prevailing market conditions, as to appear too good to be true -- meaning it probably is."

It also cites Madoff's "lack of transparency" surrounding his trading techniques, the "implementation" of Madoff's investment strategy, the "identity" of its over-the-counter (OTC) option counterparties, and Madoff's "unwillingness to provide helpful information."

As a result, the report says, JP Morgan has "sent out redemption notices in respect of one fund, and is preparing similar notices for two more funds -- referring funds Lagoon, Fairfield Sentry/Sigma Ltd., and Herald Fund SPC."

While the London office of the bank sent its warning letter to British authorities, and withdrew its funds from the Madoff feeder funds, it did not send a similar notification to U.S. authorities.

Copyright 2010 ABC News Radio

Wednesday
Dec012010

Banks Pressured to Buy Back Billions in Sour Home Loans

Photo Courtesy -- Getty Images(NEW YORK) – Banks who made failed mortgages that contributed to the housing market meltdown may be forced to buy back billions in bad mortgages.

The Financial Times reports that Assured Guaranty, a bond issuer which has been one of the biggest claimants against banks like JP Morgan and Bank of America, has demanded that such banks hand over information that will help determine just how many of their mortgages failed to meet underwriting standards.
 
If underwriting standards fell short, the banks would be required to buy back the mortgages. Assured Guaranty alone uncovered $4.7 billion in mortgage loan breaches after reviews of $5.3 billion in files.

It has not been determined what amount of those loans banks will be forced to repurchase.

Copyright 2010 ABC News Radio







ABC News Radio