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Wed Jun 5, 2013, 11:20 PM

JPMorgan’s Alabama Debacle Set to Cost Bank $1.6 Billion

Source: Bloomberg

JPMorgan Chase & Co. (JPM) may see as much as $1.6 billion go down an Alabama (BEESAL) sewer.

The biggest U.S. bank by assets agreed to forgive $842 million of debt owed to it by Jefferson County, Alabama, where it took the lead in arranging risky securities deals that pushed the county into the largest U.S. municipal bankruptcy, in November 2011.

That agreement follows a $722 million settlement in 2009 with the U.S. Securities and Exchange Commission related to the Jefferson County financing. JPMorgan’s total costs amount to a quarter of the $6.2 billion trading loss in 2012 from corporate-credit bets by a trader known as the London Whale.

Elizabeth C. Seymour, a bank spokeswoman, had no comment on the accord announced yesterday. If accepted by the court, it would cap almost a decade-long fiscal disaster in Alabama’s largest county, where JPMorgan initially reaped substantial fees arranging interest-rate swaps that subsequently proved tainted by municipal corruption and devastating to taxpayers during the 2008 credit crisis.

Read more: http://www.bloomberg.com/news/2013-06-05/jpmorgan-s-alabama-debacle-set-to-cost-bank-1-5-billion.html

9 replies, 2348 views

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Reply JPMorgan’s Alabama Debacle Set to Cost Bank $1.6 Billion (Original post)
TexasTowelie Jun 2013 OP
dixiegrrrrl Jun 2013 #1
Dustlawyer Jun 2013 #6
Stuckinthebush Jun 2013 #8
bluedigger Jun 2013 #2
Downwinder Jun 2013 #3
JDPriestly Jun 2013 #4
dixiegrrrrl Jun 2013 #9
Clouseau2 Jun 2013 #5
annabanana Jun 2013 #7

Response to TexasTowelie (Original post)

Wed Jun 5, 2013, 11:31 PM

1. Sweet music to my ears.

Altho they should have gotten criminal charges and jail time....
losing money speaks louder, I am sure.

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Response to dixiegrrrrl (Reply #1)

Thu Jun 6, 2013, 09:33 AM

6. No, jail time for the big wigs who approved of the criminal acts would speak louder!

If the top brass would start to be sentenced to jail terms this crap would stop! We unfortunately have 2 systems of justice now in America, one for the "Haves," and one for the "Have Nots!"

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Response to dixiegrrrrl (Reply #1)

Thu Jun 6, 2013, 11:38 AM

8. Agreed. This county is hurting because of both the bank and the elected officials

Many of those officials are now serving time. The same should apply to the bank execs.

Perhaps one day it won't take five hours to renew my car tag!

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Response to TexasTowelie (Original post)

Wed Jun 5, 2013, 11:59 PM

2. We'll have to figure out a way to make that good for them, then.

What are they suggesting?

Will they take a check, or do they want cash?

Let me go look in the couch - be right back.

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Response to TexasTowelie (Original post)

Thu Jun 6, 2013, 12:19 AM

3. There is no honor among thieves.

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Response to TexasTowelie (Original post)

Thu Jun 6, 2013, 02:19 AM

4. Here is why JP Morgan was required to forgo all those profits.

JP Morgan was the skunk in this matter. Here is what they were doing: tricking cities into entering into finance deals that were supposed to cut costs but didn't. Read further:

Such trades weren’t limited to the U.S. Italian Judge Oscar Magi in Milan ruled that JPMorgan, Deutsche Bank AG (DB), UBS AG (UBSN) and Depfa Bank Plc (DEP) tricked his city into agreeing to a financing deal that didn’t meet its objective of cutting borrowing costs, and misleading the city about derivative counterparties. The banks have said they will appeal the February decision.

In 2008, under Dimon, JPMorgan decided to get out of the business of selling derivatives to municipalities. In 2009, without admitting or denying wrongdoing, the bank agreed to pay $75 million and forgive $647 million in derivative fees owed by Jefferson County to settle with the SEC over the undisclosed payments made to local bankers.

In 2011, JPMorgan agreed to a $228 million settlement with federal and state regulators for allegedly rigging bids on investments that state and local governments buy with the proceeds of municipal bonds, which allowed the bank to pick up added profits. The employees involved had left JPMorgan by that time.

http://www.bloomberg.com/news/2013-06-05/jpmorgan-s-alabama-debacle-set-to-cost-bank-1-5-billion.html

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Response to JDPriestly (Reply #4)

Thu Jun 6, 2013, 12:42 PM

9. European ccountries are complaining of the same tricks.

Greece specifically said that is why it had such massive financial problems, but part of its solution to was to re-sell
tons of the bad debt to Cyprus.
Goldman Sachs is a HUGE pusher of bad finance deals in Europe, along with European based banks.

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Response to TexasTowelie (Original post)

Thu Jun 6, 2013, 02:31 AM

5. I first read that as ...

Instead of "initially reaped substantial fees" I read: "initially raped substantial fees"

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Response to TexasTowelie (Original post)

Thu Jun 6, 2013, 11:20 AM

7. Jefferson County, Alabama?

Why do I suspect that buckets of $$$ went to people who are NOT Don Siegelman?

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