Tuesday, June 19, 2012

Another Murder of Crows: JPMorgan Chase & House Finance Committee

 A Murder of Crows

JPMorgan’s Connections to the House Finance Committee - ProPublica


According to ProPublica 
JPMorgan has two in-house lobbyists with connections to the House Financial Services Committee.
There are also three former congressional staffers with committee ties at firms currently lobbying for JPMorgan:
  • Collins Lionel is a lobbyist at Jones, Walker et al., and a former staff member on the committee. JPMorgan hired the firm this year.
  • Nicholas Leibham, who works JPMorgan lobbying firm K&L Gates, was formerly an aide to Gary L. Ackerman, D-N.Y., another committee member.
  • Bart Gordon also works at K&L Gates. He's a former Democratic congressman from Tennessee who, back in the 1980s, sat on the committee.
Data compiled by the Center for Responsive Politics also shows how representatives on the committee have benefited from the generosity of JPMorgan's employees and PACs.
In the 2012 election cycle, JPMorgan's PACs and employees have so far given $168,000 to members of the committee. About 80 percent of that came from one of the bank's PACs.
  • JPMorgan's PAC and employees have been the second-largest contributors to committee chairman Spencer Bachus, R-Ala., since 1993, donating a total of $119,000 to the congressman's campaigns — $11,000 so far this election cycle. (These numbers don't include contributions to Super PACs or other outside groups.)
  • The committee's vice-chair,  Jeb Hensarling, R-Texas, has received a relatively modest $50,000 from JPMorgan since 2003. Overall, commercial banks have been his largest campaign contributor.
  • Other big Republican career recipients include Steve Stivers of Ohio, who has only served since 2010 but has already received more than $70,000.
  • On the Democratic side, JPMorgan's PAC and employees have given ranking member Barney Frank, D-Mass., $84,500 since 1989, making them his 4th biggest donor overall.
  • JPMorgan is number one for Carolyn Maloney, D-N.Y., with more than $100,000 since 1993.

Bachus: Capital Protects Taxpayers Against Too Big to Fail Banks

Washington, Jun 19 - Financial Services Committee Chairman Spencer Bachus today delivered the following statement at the committee's hearing on bank supervision and risk management in relation to the recent JPMorgan Chase trading loss:

"Today the Committee meets to examine bank supervision and risk management in light of the recent trading loss at JP Morgan Chase.

"When America’s largest bank reveals it has suffered an unexpected loss of more than $2 billion, it understandably generates concern and raises questions not only about the bank’s risk management controls and corporate governance but also the action – or inaction as the case may be – of the regulators.

"While the size of the reported loss is a small fraction – just 1/1000th of JP Morgan’s total assets – this episode serves as a reminder that no institution – no matter how well managed – is immune from mistakes that are, to use Mr. Dimon’s words, 'stupid,' 'sloppy' and the result of 'bad judgment.'

"But even more importantly, this should remind all of us about the importance of making sure it is the bank and its shareholders -- not the taxpayers -- who pay for such mistakes.

"Fortunately, these losses are not being borne by the taxpayers, but by JP Morgan.  Since the losses were disclosed, the company has lost $23 billion in market capitalization and suffered reputational harm in the marketplace, and employees involved in the problematic trades have lost their jobs.

"This is how the system is supposed to work:  those who take the risk are the ones who suffer the loss or realize the gain.  It stands in stark contrast to the regime of taxpayer-funded bailouts with privatized profits and socialized losses we’ve experienced in the cases of AIG, GM, Fannie Mae, Freddie Mac and Solyndra.

"Because the bank has more than sufficient capital, taxpayers are protected from a bailout and the overall financial system is protected from being brought down by the mistakes of an institution that is deemed Too Big to Fail.

"That is why the most important lesson to be learned from this incident has nothing to do with any of the 400-plus rules found in the 2,300-page Dodd-Frank Act.  The most important lesson is how central capital is to the safety and soundness of individual banks and our overall financial system.

"A bank with sufficient capital is able to absorb losses, whether those losses are caused by external factors beyond the institution’s control or internal problems caused by poor risk management.  A bank with sufficient capital is not a threat to the financial system even if regulators fail to do their jobs.  And a bank with sufficient capital can take risks without putting taxpayers in jeopardy.

"Just as JP Morgan should be (and is being) held accountable for its risk management failures, accountability must also be demanded of the Federal regulators who oversee the bank’s activities.  Unfortunately, because the Dodd-Frank Act failed to consolidate and streamline the current convoluted and chaotic regulatory structure, as House Republicans proposed, achieving regulatory accountability is every bit as difficult now as it was during the height of the financial crisis. 

"How inefficient and fragmented is the current regulatory framework? Well, sitting before us today are five different regulators, all of whom have some supervisory responsibility over these trades and several of whom have examiners embedded at JP Morgan – but none of whom, apparently, was either aware of the bank’s hedging strategy or raised concerns about it.   

"Perhaps the complexity – of the trades, of the regulatory structure, of the rules themselves – makes it impossible for the regulators to adequately do their jobs.  After all, the Volcker Rule proposal is, by itself, staggering in its length and complexity.  And, more than a month after this loss was disclosed, the regulators still cannot say whether the Volcker Rule would have prevented JP Morgan from making these trades.

"Contrast this complexity with the simplicity of capital.  Capital is our greatest protection against the systemic risk posed by institutions that are Too Big to Fail.  I am pleased we will have the opportunity to discuss this issue today with our witnesses, and I thank them for being here. 

"Before closing, once again I want to re-emphasize the point that JPMorgan and its shareholders – not the bank’s clients, and more importantly, not the taxpayers – are the ones paying for the bank’s mistakes.  This is how the system is supposed to work."

House Financial Services Committee Members

Spencer Bachus, AL, Chairman
Jeb Hensarling, TX, Vice Chairman
Peter T. King, NY
Edward R. Royce, CA
Frank D. Lucas, OK
Ron Paul, TX
Donald A. Manzullo, IL
Walter B. Jones, NC
Judy Biggert, IL
Gary G. Miller, CA
Shelley Moore Capito, WV
Scott Garrett, NJ
Randy Neugebauer, TX
Patrick T. McHenry, NC
John Campbell, CA
Michele Bachmann, MN
Thaddeus G. McCotter, MI
Kevin McCarthy,CA
Stevan Pearce, NM
Bill Posey, FL
Michael G. Fitzpatrick, PA
Lynn A. Westmoreland, GA
Blaine Luetkemeyer, MO
Bill Huizenga, MI
Sean P. Duffy, WI
Nan A. S. Hayworth, NY
James B. Renacci, OH
Robert Hurt, VA
Robert J. Dold, IL
David Schweikert, AZ
Michael G. Grimm, NY
Francisco "Quico" Canseco, TX
Steve Stivers, OH
Stephen Lee Fincher, TN
Barney Frank, MA, Ranking Member
Maxine Waters, CA
Carolyn B. Maloney, NY
Luis V. Gutierrez, IL
Nydia M. Velázquez, NY
Melvin L. Watt, NC
Gary L. Ackerman, NY
Brad Sherman, CA
Gregory W. Meeks, NY
Michael E. Capuano, MA
Rubén Hinojosa, TX
Wm. Lacy Clay, MO
Carolyn McCarthy, NY
Joe Baca, CA
Stephen F. Lynch, MA
Brad Miller, NC
David Scott, GA
Al Green, TX
Emanuel Cleaver, MO
Gwen Moore, WI
Keith Ellison, MN
Ed Perlmutter, CO
Joe Donnelly, IN
André Carson, IN
James A. Himes, CT
Gary C. Peters, MI
John C. Carney, Jr., DE

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