News: JPM sued by AG Schneiderman, New York

Jamie Dimon, head of J.P Morgan Chase Bank was whining again before attending the World Economic Forum in Davos, Switzerland a week ago. Maybe he was just out of sorts because JPM had such bad results for the last quarter. He complained that the "vilification" of large banks is unfair and a form of, well, discrimination. He said, "I have disagreed from the beginning with this blanket blame of all banks. It's a form of discrimination." Seems he doesn't like keeping bad company with other banks.  

At least Dimon has moved on from his position at last year's Davos meeting where he was trying to cover for himself and the misbehaving eleven other banks with the credulity-straining statement that "only the undiversified banks failed". This year, as Dimon cleared bad company from his palatial dining room, Schneiderman showed up at the guard's shack with a summons. Damn, will this discrimination never end? Well, yes---the summons includes lots of other banks. 

Schneiderman is suing JPM and affiliates plus BofA, Wells Fargo, MERS and others. #19 in the alleged misdoings states: "By creating this bizarre and complex end-around of the traditional public recording system, banks achieved their primary goal---over 70 million mortgage loans, including millions of subprime loan, have been registered in the MERS system and the industry has saved more than $2 Billion in recording fees. In addition, over the last several years, banks rapidly securitized and sold off millions of loans, often misrepresenting the quality and nature of the mortgage being transferred."

The details of the summons can be easily referenced at the Naked Capitalism website and elsewhere and it is the specific indictment and force of clarity that many of us wanted two years ago. 

What is really not clear is how Schneiderman' suit relates to the 50 states' AG suit which has been expected from the Justice Dept. for the past two weeks. That suit is aimed at foreclosure practices and includes a MERS component.  Beau Biden has already sued MERS, a Delaware Corp. for deceptive practices.

In a separate venue, Schneiderman has been named to Obama's new Task Force. The objective there is to investigate fraudulent practices in the origination and securitization of the MBS's, not the follow-on foreclosure practices.

AND IN ANOTHER DEVELOPMENT. OMG, will this discrimination never end? The Swiss Competition Commission, COMCO, has just opened an investigation into Derivatives Traders activities at the Swiss Banks---and traders at JPM and other U.S. Banks. Seems traders may have been manipulating LIBOR rates and then colluding in the trading of derivatives based on LIBOR. How is a mere CEO to keep up with the possible transgressions of rogue traders in such a diversified bank as JPM. Might have to close down another profit center. Pretty soon JPM will be back to an institution which takes in deposits and makes loans to small businesses. 

So what's the resplendent banking CEO, Jamie Dimon, to do?  Particularly in light of the fact that most likely many of the offenses occurred in companies which were acquired by JPM. 

Well, Jamie, it's like when you and Mitt Romney keep reminding us that what happened on Obama's watch happened on his watch. So, sorry, it's your responsibility. But it's possible that you might sidetrack some of this unpleasantness by getting Romney elected and shutting down the newly formed Task Force. So send more campaign donations to Romney, and hope for the best. The NY summons will be hard on your myth-making career and you may feel justified, but no more whining. Think of how much worse it would be if the guy at the guard shack had a sheriff's order to throw your belongings out on the street rather than a mere summons for fraudulent foreclosure practices by the bank you supposedly manage.