Good News . . . For JPMorgan Chase: $3.6B Profit For Quarter

By Big Tent Democrat, Section Other Politics
Posted on Wed Oct 14, 2009 at 08:09:45 AM EST
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Economy got you down? Don't worry. Someone's making a lot of money. One of those someone's is JPMorgan Chase:

JPMorgan Chase said Wednesday that its profit surged to $3.6 billion in the third-quarter from strong trading results and a flurry of new deals, strengthening its position as one of the dominant banks to emerge from the financial crisis. [. . .] Although the recession weighed heavily on its businesses [Really???], JPMorgan appears to be taking advantage of the financial crisis to leapfrog over rivals in the investment banking rankings and expand its consumer lending franchise.

(Emphasis supplied.) It turns out when the government makes money free for banks who then turn around and charge exorbitant fees to their customers, the banks make a lot of money. TARP worked!! For the banks at least.

Speaking for me only

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Good News . . . For JPMorgan Chase: $3.6B Profit For Quarter | 22 comments (22 topical)

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AIG bonus pool (5.00 / 1) (#5)
by MO Blue on Wed Oct 14, 2009 at 08:45:43 AM EST

The Treasury Department is pressing bailed out insurance giant AIG "to reduce a $198 million bonus pool," according to a report by TARP inspector general Neil Barofsky. According to Barofsky, pay czar Kenneth Feinberg "has recommended to AIG that the full $198 million not be paid out in full," but "has not yet made a specific recommendation to AIG about how much the insurer should reduce the payments." link

Our tax dollars at work.

they be scammin' (5.00 / 1) (#11)
by Illiope on Wed Oct 14, 2009 at 10:16:45 AM EST

we have been scammed. as JPMorgan busies itself by sniffing cocaine off of gold ingots, we are left footing the bill. we gift them OUR money, and they increase their rates and fees.

JP should have gone out of business. Instead they were rewarded for their failures, and their part in the financial collapse, through one of the largest transfers of wealth from the citizens to the oligarchs.

you can almost taste a BIGGER financial crisis that is headed our way in the next several years.

instead of addressing the roots of the problem (mainly rampant securitization and irresponsible financial deregulation), the dual-neoliberal party has doubled-down, making the likelihood of a worse and more painful financial collapse all much, much, much more likely.

neither beg nor bow.

Why should JPMorgan (none / 0) (#13)
by gyrfalcon on Wed Oct 14, 2009 at 10:24:45 AM EST

have gone out of business, please? It'd be fine by me to permanently nationalize the banking business, but if we're not going to do that, why should a bank that weathered the financial collapse fairly well -- and by all accounts tried to refuse the TARP money, and then paid it back as soon as it was allowed to -- have gone out of business instead?


: Meanwhile (none / 0) (#17)
by Dadler on Wed Oct 14, 2009 at 10:51:24 AM EST

Meanwhile, banks like my wife's, smaller banks that did NOTHING to bring on this crisis, continue to suffer and shrivel and many more will eventually die, negatively affecting just as many people as those giants who couldn't possibly be allowed to die. The second you decide the big cannot die, or even be carved up and shrunk, you make the de-facto decision to kill those smaller institutions that largely played by the rules because they never had the buckets of cash to run the scams the bigger "players" did. And I use players in the sense of someone pulling slot machine levers with other people's money. But I'm biased, obviously, I have to listen to my wife worry, watch her wake up in the middle of the night stressed out. Ain't no help from the feds coming her way, only auditors looking to close them down because one or two of their "big" clients defaulted on a loan.

: battered (none / 0) (#18)
by Illiope on Wed Oct 14, 2009 at 11:10:19 AM EST

i don't consider an institution that needed (i think the only resistance to TARP funds was fear of the possible compensation/control issues initially proposed that never materialized) billions of govt hand-outs to have weathered the crisis all that well. they would have gone under had the "govt" not stepped in. they are also the ones responsible for inventing credit default swaps, and the cancer that they turned into.
After the Fannie Mae experience, covering their giant raft of CDSwap contracts, making huge payout's, JPMorgan was close to a bankruptcy. They needed to feed off another bank, to consume private deposits and thus shore up the balance sheet. Lehman Brothers was let go to fail, but its failure would surely trigger a gigantic wave of credit market fires. The Lehman CDSwap resolution has cost roughly $300 billion, paying 91 cents per dollar of coverage on their failed bonds. The Wall Street Powers permitted Lehman to fail, so as to prevent a JPMorgan failure, thus risking that the fires caused could be contained in CDSwap fallout.
http://www.marketoracle.co.uk/Article6826.html

Well (none / 0) (#1)
by Ga6thDem on Wed Oct 14, 2009 at 08:12:11 AM EST

now when can we expect to be paid back?

JPM paid back (none / 0) (#6)
by gyrfalcon on Wed Oct 14, 2009 at 09:09:16 AM EST

in June. Next question?

Oh, and the government made a profit of nearly $1B on the deal.


Not the point of my post (none / 0) (#7)
by Big Tent Democrat on Wed Oct 14, 2009 at 09:10:41 AM EST

Zero interest rates from the Fed to the banks.


Two points: (none / 0) (#9)
by steviez314 on Wed Oct 14, 2009 at 09:54:07 AM EST

$3.6B is not a lot...that's an annualized Return on Assets of .7%, and an annualized Return on Equity of only 6%. Hardly excess profits.
The FED has from the beginning of time worked to get the economy going by creating a very positive sloping yield curve. No economist would question the need for zero interest rates now. And a Prime Rate of 3.25% is hardly out of line with that.

The arguement instead is how much lending is Chase doing, and also are smaller regional banks also benefiting from the FED's low rates.


Bingo (none / 0) (#12)
by gyrfalcon on Wed Oct 14, 2009 at 10:18:13 AM EST

I still don't know how we find that out, do you?

Also, I thought this from the article was interesting.

"Chase's consumer businesses, however, are still bleeding from the rush of bad loans. Together, its credit card and retail banking business added more than $2 billion to cover future losses, bringing its total reserves to $31.5 billion. And that is from a bank that modified more than 262,000 loans in the second quarter, representing a big chunk of the industry's efforts. Chase mortgage and consumer banking operations posted a narrow $7 million profit while Chase's credit card division lost $700 million."

Think maybe those kinds of figures have something to do with why they might be reluctant to do a lot of lending?


Then why lend to them? (none / 0) (#15)
by Big Tent Democrat on Wed Oct 14, 2009 at 10:29:00 AM EST

The government should do some lending instead.

My gawd, do you not see how badly our economy is doing?


The government is doing some lending. (5.00 / 1) (#19)
by steviez314 on Wed Oct 14, 2009 at 11:16:39 AM EST

The FHA is now guaranteeing 25% of all mortgages written in 2009, versus only 2% in 2005.

What the gov't has not really done successfully is make sure small business credit is available, through expanding SBA guarantees. Similarly, they are taking a very cavalier approach to the impending bankruptcy of CIT, the biggest lender/factor around.


Is it still a lending crisis though? (none / 0) (#16)
by CST on Wed Oct 14, 2009 at 10:35:38 AM EST

I know that's what started it all, but it does seem to have morphed into an entirely different beast now. Companies have already cut their losses and need to borrow to some degree by laying everyone off. The existence of cheap capital won't change the fact that there is no consumer buying power. Which is why we need(ed) a bigger jobs program. Fixing the lending crisis might have worked if it had happened sooner, but it seems a bit late for that. I don't see people/companies taking out loans now even if they are available.


: Holy crap (5.00 / 3) (#20)
by Steve M on Wed Oct 14, 2009 at 11:35:30 AM EST

It is a HUGE lending crisis.

U.S. banks are reducing their lending at the fastest rate on record, tightening the credit squeeze and threatening to leave many otherwise viable businesses unable to borrow money to expand their businesses, meet their payroll or refinance their maturing debts.
More here on how the lending crisis is devastating small businesses across the country.
Heck, my parents' bank just informed them that it is freezing everyone's home equity line of credit until next year. Just like that! Imagine how that affects people.

Who lend to whom? (none / 0) (#22)
by gyrfalcon on Fri Oct 16, 2009 at 12:07:02 PM EST

No idea what your question is asking. If you're questioning the TARP money that was given to them, even though they didn't want or need it, we've been through the rationale for that over and over. It may or may not have been wise at the time, but there was a rationale other than "Let's just give our fat bankster friends a lotta dough."

Of course I know very well, probably better than you on a personal level, actually, how badly the economy is doing.

You say over and over very rightly "Pols are pols and do what they do." All I'm pointing out is that profit-making financial institutions are profit-making and they do what they do, so raging at them for putting major effort into the stuff that's profitable (ie, trading) and hunkering down on the stuff that's bleeding big losses (consumer credit) is like raging at the sun coming up in the east.

The entire financial system needs to be restructured from the ground up to try to put it more in line with the economic interests of the country as a whole. (So do a lot of other things.) I'd like to see that happen. I don't expect it to.

IOW, it's the pols' fault that it's working this way, not the banks'.


In a recession? (none / 0) (#14)
by Big Tent Democrat on Wed Oct 14, 2009 at 10:28:07 AM EST

My gawd.


Yep (none / 0) (#10)
by jbindc on Wed Oct 14, 2009 at 09:59:10 AM EST

Wonder when "we the people" could get loand with zero interest rates?


Good for them. (none / 0) (#8)
by Ga6thDem on Wed Oct 14, 2009 at 09:39:30 AM EST

Now onto the next.


And (none / 0) (#2)
by jbindc on Wed Oct 14, 2009 at 08:18:08 AM EST

Wall Street salaries are also doing well (paid link).

Major U.S. banks and securities firms are on pace to pay their employees about $140 billion this year -- a record high that shows compensation is rebounding despite regulatory scrutiny of Wall Street's pay culture.
Workers at 23 top investment banks, hedge funds, asset managers and stock and commodities exchanges can expect to earn even more than they did the peak year of 2007, according to an analysis of securities filings for the first half of 2009 and revenue estimates through year-end by The Wall Street Journal.

JP Morgan.... (none / 0) (#3)
by kdog on Wed Oct 14, 2009 at 08:25:28 AM EST

runnin' scams like a JT Marlin...well, I guess there is a school of thought that says it is the obligation of the hustler to part fools from their money...class hustlers don't use the arm (and arms) of the state to do it though, thats just awful form...no honor amongst these thieves.

$23 Billion just in the BONUS POOL for (none / 0) (#4)
by Inspector Gadget on Wed Oct 14, 2009 at 08:31:35 AM EST

Goldman Sachs.

News is pushing that the stock market is gaining value again and trying to encourage more people to play, too. Watch how many run as fast as they can into that trap, again.

now citibank... (none / 0) (#21)
by diogenes on Wed Oct 14, 2009 at 05:34:13 PM EST

Citibank is under the government's thumb, so it is hemorrhaging talent to JP Morgan.