Saturday, August 2, 2014

EPJ Week In Review - Week Ending 8/1/14

Below you'll find everything that has been published on EPJ for the week ended Friday August 1, 2014. The hottest posts for each day are highlighted in red.

Friday 8/1/14
Thursday 7/31/14
Wednesday 7/30/14
Tuesday 7/29/14
Monday 7/28/14
Sunday 7/27/14
Saturday 7/26/14


  1. Big Banks Still a Risk

    Big bankers are usually good at arithmetic. But when it comes to assessing the benefits of their too-big-to-fail status, their calculators tend to go haywire.

    And yet, taxpayers have a right to know exactly how much their implied guarantees are worth to these huge and politically powerful institutions. So it is unfortunate that the new study by the Government Accountability Office trying to quantify those benefits was such a muddle.

    The study, released last week, was requested by two senators: Sherrod Brown, a Democrat from Ohio, and David Vitter, a Louisiana Republican. They wrote a bill last year that would require big banks to set aside significantly more capital to protect against losses. Unfortunately, it has not moved forward.

    Central to the hearing is that six years after the financial crisis, it’s clear that some institutions remain too complex and interconnected to be unwound quickly and efficiently if they get into trouble.

    It is also clear that this status confers financial benefits on those institutions. Stated simply, there is an enormous value in a bank’s ability to tap the taxpayer for a bailout rather than being forced to go through bankruptcy.

    Today’s report confirms that in times of crisis, the largest megabanks receive an advantage over Main Street financial institutions,” Mr. Brown and Mr. Vitter said in a statement. “Wall Street lobbyists may try to spin that the advantage has lessened. But if the Army Corps of Engineers came out with a study that said a levee system works pretty well when it’s sunny — but couldn’t be trusted in a hurricane — we would take that as evidence we need to act.”

    In his testimony last week, Mr. Kane said bailouts should be viewed as equity investments whose risks deserve a return to taxpayers of at least 15 percent. “It is shameful for government officials to imply that too-big-to-fail bailouts were good deals for taxpayers,” he wrote.

    On the nature of taxpayer guarantees, Ms. Admati said: “The subsidies are real and they are very large.” She added: “The main problem with the guarantees is they reinforce and create perverse incentives and intensify the conflicts of interest between the banks and the rest of society.”

  2. July 29, 2014
    CFTC Charges J.P. Morgan Securities LLC with Repeatedly Submitting Inaccurate Large Trader Reports and Imposes a $650,000 Civil Monetary Penalty

    Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against J.P. Morgan Securities LLC (JPMS), a wholly-owned subsidiary of JPMorgan Chase & Co. and a CFTC-registered Futures Commission Merchant (FCM), for submitting inaccurate reports to the CFTC relating to the required reporting of positions held by certain large traders whose accounts are carried by JPMS. The reporting violations occurred despite the CFTC notifying JPMS of numerous errors in its reports. The CFTC Order requires JPMS to pay a $650,000 civil monetary penalty to address its unlawful conduct.

    The reports are known as the “large trader” reports and are used by the CFTC in order to evaluate potential market risks and monitor compliance with CFTC requirements.

    CFTC Director of Enforcement Aitan Goelman commented: “The large trader reports are vital to the CFTC’s role in monitoring market behavior and are important to members of the public, many of whom rely on that information in forming trading strategies. Therefore, submission of accurate and reliable data to the CFTC is essential. The CFTC will be vigilant in enforcing these rules in order to ensure the integrity of the regulatory structure and to maintain transparency in the markets.”

    cftc like a vaudeville act...all show.