JP Morgan Share Discussion Threads

[poppa wobbler] 18/12/2002 19:31

Dow Jones Business News
Barrick,JP Morgan Chase Accused Of Gold Market Manipulation
Wednesday December 18, 1:42 pm ET


NEW ORLEANS -(Dow Jones)- Barrick Gold Corp. and J.P. Morgan Chase & Co. have been accused of "unlawfully combining to actively manipulate the price of gold" and making $2 billion in short-selling profits "by suppressing the price of gold at the expense of individual investors."

The accusations were made in an anti-trust lawsuit filed Wednesday by Blanchard & Co. of New Orleans, the largest retail dealer in physical gold in the U.S., and by Blanchard clients who bought gold bullion.

In a news release, Blanchard & Co. said it's paying the costs of the lawsuit, which seeks to terminate the trading agreements between Barrick and J.P. Morgan Chase and other, as yet unnamed, bullion banks.

It said the suit also seeks the payment of treble damages to Blanchard's clients for the losses suffered as a result of Barrick's and J.P. Morgan Chase's "unlawful price manipulation, anti-trust violations and unfair trade practices."

[tromso] 09/11/2002 00:27

Here's the table, see the right hand credit exposure to capital ratio. CREDIT EQUIVALENT EXPOSURE OF THE 25 COMMERCIAL BANKS AND TRUST COMPANIES WITH THE MOST DERIVATIVES CONTRACTS JUNE 30, 2002, $ MILLIONS, RATIOS IN PERCENT NOTE:DATA ARE PRELIMINARY RANK BANK NAME TOTAL TOTAL FUTURE TOTAL CREDIT TOTAL CREDIT ASSETS DERIVATIVES EXPOSURE EXPOSURE EXPOSURE (NEW RBC FROM ALL TO CAPITAL ADD ON) CONTRACTS RATIO (%) 1 JPMORGAN CHASE BANK 581,407 25,910,300 181,617 256,318 589.4 2 BANK OF AMERICA NA 562,116 10,248,597 68,007 92,057 168.9 3 CITIBANK NATIONAL ASSN 487,074 7,397,644 59,442 93,228 199.3 4 WACHOVIA BANK NATIONAL ASSN 301,645 2,171,744 8,980 25,773 86.9 5 BANK ONE NATIONAL ASSN 183,869 1,071,785 5,528 8,816 48.5 6 WELLS FARGO BANK NA 147,687 793,026 1,112 6,347 39.2 7 BANK OF NEW YORK 78,102 443,702 1,331 3,128 42.2 8 HSBC BANK USA 84,183 411,001 2,656 5,943 88.2 9 FLEET NATIONAL BANK 178,020 306,258 1,582 5,437 27.4 10 STATE STREET BANK&TRUST CO 73,643 223,950 1,965 6,569 170.5 11 NATIONAL CITY BANK 38,395 138,532 937 2,208 55.3 12 MELLON BANK NATIONAL ASSN 24,841 83,514 406 1,927 64.3 13 STANDARD FEDERAL BANK NA 42,263 76,422 369 406 9.8 14 KEYBANK NATIONAL ASSN 72,640 76,228 367 1,751 21.7 15 NATIONAL CITY BANK OF IN 32,545 71,449 509 1,105 46.7 16 DEUTSCHE BANK TR CO AMERICAS 43,639 65,770 1,316 2,931 42.3 17 SUNTRUST BANK 105,158 62,358 347 1,404 13 18 LASALLE BANK NATIONAL ASSN 58,401 60,987 462 581 11.6 19 PNC BANK NATIONAL ASSN 59,279 50,528 288 1,088 16 20 FIRST TENNESSEE BANK NA 19,379 33,840 91 252 14.1 21 U S BANK NATIONAL ASSN 167,768 33,215 206 749 4.1 22 MERRILL LYNCH BANK USA 62,868 28,040 151 208 5.5 23 COMERICA BANK 37,393 20,000 94 726 14.6 24 IRWIN UNION BANK&TRUST CO 3,361 19,351 1 6 1.7 25 CAPITAL ONE BANK 18,129 17,955 160 160 5.6

[tromso] 09/11/2002 00:24

Energi,

See my posts 137 to 139 of 3rd July in the "A Shorters Quiz" thread replying to MT Glass about the "derivatives timebomb" concerning JP MorganChase



You can do your own research on the US banking derivatives markets here, the nominal amounts are staggering but the risk is more to do with more complicated factors like credit exposure to capital ratios, volatilty etc:



The latest report is here:


If you go to Table 4 on page 27 of this, you can see that in the 2nd Quarter, JPM's credit exposure to capital ratio was 589.4% (incidentally up from 545% in previous quarter. If it goes on increasing from even these high levels ...) with 25.9 trillion dollars of derivatives. JPM is obviously a much bigger player in this market, with far more exposure compared to its capital relative to the other banks. JPM, Bank of America and Citibank have most of the market between them. Hope they've learned the lessons of systemic risk from LTCM (which had Nobel prize winning economists working for them, but was sunk by the Russian financial crisis).

[energyi] 08/11/2002 13:35

Posted a note on this on WallStBear:


where: board/index.cgi?read=3301

[energyi] 08/11/2002 13:30

orchid and Tromso,
I agree that the high gearing gives JPM a huge exposure to the risk
of having its credit rating downgraded.

I ran some figures on Q2 earnings and saw that something like 50% of
earnings were coming from derivatives trading. Because JPM must be
using the lines of all their potential counterparties near the maximum,
a credit downgrade may get those lines cut, and make it virtually impossible
for them to trade "normally" anymore. That may be happening now.

If you see JPM shedding derivatives trading personnel, then their books
are being wound down, and a critical source of earnings has been lost.
I imagine Greenspan may be worrying about what to do about JPM on the
next credit downgrade. Their derivatives book is too big for anyone
to take over, apart from the Fed. Surely, Greenie would like to find a
way for them to survive, so the Fed is not left with the mess to clean up.

[orchid] 08/11/2002 08:39

Quoting total values is definitely scare-mongering. I think the main problem with derivatives firms is when their credit ratings get downgraded. This reduces the amount of premium they can rake in and, if they get downgraded again, reduces their ability to trade. If they can't trade then their mark-to-market starts to price in because they can't keep rolling their positions forward. No problem as long as they are perfectly hedged in markets, positions and time...

[energyi] 08/11/2002 08:13

NOW THAT YOU ARE FRIGHTENED...
Where is all that exposure? Is it gold?
NO way, Jose:


REMEMBER HOW THIS IS MEASURED:
In compiling these figures, the FACE AMOUNT of a Loan is taken
for interest rate derivatives. What does this mean?
Suppose there are two years left on an interest rate swap on
a $100mn Loan. That will be in the figures above as a $100mn
exposure. But is that realistic?

no, No, NO! And why not?
Because the real economic exposure is on the future interest payments,
not on the principal amount. In an interest swap, one side pays FIXED,
and receives FLOATING. The counterparty to the swap has the reverse
exposure. So let us look at a swap on $100 mn Face where the fixed
amount being paid is based on a 4% fixed rate. So the required payment
is 4% x $100mn (x 2 years remaining)= $8.0mn. And that part may receive:
Floating (say 1.5%) or: 1.5% x $100mn (x2)= $3.0mn. Net current economic
loss on that swap is: $8mn-3mn= $5mn. That is only 5% of the $100mn Face.

Remember, that interest swap will be hedged, probably fully hedged,
by swaps with other counterparties in the opposite direction. The banks
make money on these deals, by giving theg their customers what they
want. That is, the time frame and size deal the client wants, and charging
a small "edge" or profit for that. Thus, the $100mn Face Fixed-payer swap
over 2 years might be hedged by a $60mn Face Floating-payer swap over 3 years.
And the difference will be initially hedge by futures (for example) and
later managed by taking a swap with a professional counterparty when it
becomes available. Example: a $40mn, 18 months swap from Citibank.

In practice, the individual trades are not individually hedged. The entire
operation is run as a trading book, where the gross and net features of the
book are managed, not the individual trades.

Perhaps you begin to see how an active swaps trader can quickly build a huge
book. Though the net exposure may remain small.

WHY...
DO YOU NEVER SEE EXPLANATIONS like this in all the scare-mongering
articles that are out there???

[energyi] 08/11/2002 07:54

SLICES OF THE DERIVATIVES PIE


excerpt:
"As we delve into the often cryptic world of derivatives, it rapidly becomes apparent that the amounts of dollars of capital effectively controlled through derivatives is absolutely staggering. The notional amount pie in our first graph above is a monstrous $43,922 billion, or almost $44 TRILLION dollars. Rarely at a loss for superlatives, we cannot even think of enough to describe how large these numbers truly are!"
...

"JPMorganChase controls 12.6% of the total commercial bank and trust assets in the United States, but a whopping 59.8% of the total commercial bank and trust derivatives market. JPM's implied derivatives leverage on assets ratio is a colossal 43 to 1.
...
Long Term Capital Management had $3b in capital allegedly supporting $1,250b of derivatives notional value, an implied leverage ratio of 417 to 1. JPMorganChase, per its own reports filed with the US government, has $42b supporting $26,276b of derivatives notional value. Incredibly, JPM's implied capital leverage on its derivatives is far, far higher than LTCM's at 626 to 1. Isn't it disconcerting to realize JPM management has further leveraged its shareholder equity than even the infamous Long Term Capital Management?"

[energyi] 08/11/2002 07:48

GETTING WARMER?:
...another JPM/Derivatives post:


["Apparently, one sizeable bank (JPM*) active in this market has a gold derivatives book of $41bn, a significant part of which is attributable to its dealings with Barrick. Barrick's contract apparently has the option to defer any sale. If the gold price starts to accelerate, Barrick could choose to defer and the bank will have to find some other way to get the gold it needs to fulfil its own obligations.

How will it do that? It will have to buy the gold - potentially hundreds of millions of dollars worth - in the market. A forced buyer of that size would send gold rocketing to $400 or even $450 an ounce, prices not seen since the early 1980s.

You may have a question: How could a bank do something so risky? Eight words give a clue to that: Enron, Savings & Loans, Long-Term Capital Management."]

[dailos] 08/11/2002 07:47

mmmmm, jpm deny they have lost a lot of money buying gold, seems they've been following your posts on advfn energyi! :-)

[energyi] 08/11/2002 07:41

CONSPIRICY THEORISTS may like this: some of it fantasy:

(excerpted background):
Most Americans are unaware of the J.P. Morgan/Chase Manhattan merger and of its significance. Chase Manhattan is a major Federal Reserve shareholder, as is CitiBank.

Now, both J.P. Morgan Chase and CitiBank have their a$$ets hanging bare in the derivatives market. They have also been manipulating the price of gold and is the main reason they are in trouble now financially.

Just how massive is Morgan's derivative gamble? Get this -- it has a potential, or notional, value of $29 trillion. That is in addition to net credit exposure of $94.7 billion. Trillions in derivatives. That is no typo. As in three times the nation's entire annual gross domestic product. Citigroup, of which CitiBank forms a large part, has $9 trillion in derivative exposure.

The Chase and Citigroup investment banks are the financial cornerstones of the Rockefeller empire and of Enron.

JP Morgan Chase, one of Enron's two main bankers. It was involved in an offshore company used by the energy trader to move risk off its balance sheet. The disclosure of the existence of such off-balance-sheet arrangements accelerated the downward spiral in the company's share price and led to its eventual bankruptcy. The Securities and Exchange Commission is now investigating whether JP Morgan has also misled its shareholders by making loans to Enron in the form of oil and gas trading contracts. Insurers who face a claim from the bank on surety bonds that guaranteed the contracts allege that they were loans dressed up as trades to keep them off the bank's balance sheet. JP Morgan has already revised its estimate of its Enron exposure from $900m to $2.6bn (£620m to £1.8bn.)The SEC probe is adding to the criticism of risk control procedures at the bank, formed in 2000 by the merger of Chase Manhattan with the venerable House of Morgan. JP Morgan and Enron's other lead bank, Citigroup, are the largest of a new generation of banking groups formed by combining commercial banks and investment banks to provide a one-stop shop for big corporate clients.
...
More that half the shareholdings in the Federal Reserve are controlled by large New York City banks, including National City Bank (now CitiBank), National Bank of Commerce, First National Bank, Chase National Bank, and Marine National Bank. When Rockefeller's National City Bank merged with J.P. Morgan's First National Bank in 1955, the Rockefeller group owned 22 percent of the shares of the Federal Reserve Bank of New York, which in turn holds the majority of shares in the Federal Reserve System - 53 percent.

[poppa wobbler] 07/11/2002 04:50

"There are rumours of JPM having a massive 70 billion derivative fraud problem. If there is any truth to that, you can bet this rate cut has something to do with trying to solve that problem."

[poppa wobbler] 06/11/2002 01:17

From Bob Chapman:

We are seeing the largest divergence figures ever recorded on our comparison model of the DOW versus European indexes. The figure is minus 915, when deducted from the DOW it gives a true DOW figure of 7,454. Just after the 11/5/02 elections we expect a quick fall to 7,200 – 7,400. If the war begins in early December, as we expect it will and JP Morgan Chase is either indicted for criminal fraud or is sued for civil fraud, the market should then break down to 5500 to 6450. This has been a long time coming due to the market manipulation and gold suppression of the Working Group on Financial Markets, the Plunge Protection Team, and their partners in crime Goldman Sachs, JP Morgan Chase, Citicorp and AIG. This should be breakdown time for the DOW and breakout time for gold.

[archer1415] 04/11/2002 23:37

THE International Forcaster, Bob Chapman, in his November edition of the same name included this paragraph relating to Jim Willie CB's recent strange post from across the pond and highlighted by Energyi. Bob lives in Germany -well out of the way of the Feds. Hit the link for the full article. Bob reckons the Gold Dinar is in circulation in Scotland and has been since 1992 so don't forget to check your change when north of the border.

"Rumors abound that there is massive accounting fraud at JP Morgan Chase and they are under investigation. It seems the US attorney's office and the New York Attorney General have major investigations in progress. They are in the process of trying to prove criminal intent. The word is their losses, which have been covered up, run to $70 billion. It's expected the hammer will be dropped in the month of December. It's been reported that daily shipments by truck of Federal Reserve Gold out of NYC is covering a $170 billion fraud concealing $70 billion in losses. If this is true, and we believe it fits, then gold would skyrocket.

[moonblue] 30/10/2002 20:48

shorted it today

[hyper al] 30/10/2002 12:50

If any of this is true, then I'm glad I sold all my shares last week and that I have no money in the bank!

[mr ashley james] 30/10/2002 12:48

Energyi,

You are exposing yourself to a jail sentence IMHO when JPM craters.

Be careful!

Cheers

Ash

[archer1415] 30/10/2002 12:43

From Jim Willie CB's insider mate "Joe" energyi who may of dropped him right in the smelly stuff if its not true. ..."and the CFO will be doing jailtime by next year...". Would be ironic!

Read Jim Willie CB back tracking below.


To:jimsioi who wrote (20730)
From: Jim Willie CB Monday, Oct 28, 2002 11:51 AM
Respond to of 20914

sorry for confusion on JPM: $170B in total nonperf loans
I might have misstated this definition
the implication to earnings I did say was $50B from required assignment of real money to nonperforming reserves
that would be about 30% loan loss reserve

the total seemed high to me also
esp since the Brazil exposure by JPM is $4-5B
I thought I read Enron exposure by JPM was $5B
and WorldCom exposure by JPM was similar

I intend to followup with my friend Joe
I will press him on the amounts, citing Brazil, Enron, WCom
even if the story is 30-50% off, this very damaging
and enough to bring down the House of Morgan
/ jim

[energyi] 25/10/2002 09:31

"$170 billion in improperly reported Q3 interest payments"
The figure is way too big...
$170 million would be large for interest payments on three loans.
-- so i really wonder where all this comes from

[energyi] 25/10/2002 09:29

Ashley,
THIS MAY AMUSE you and others...
(but be careful about believing this type of scuttlebut):
From: Jim Willie CB Thursday, Oct 24, 2002 8:41 PM
View Replies (6) | Respond to of 20660

POTENTIALLY EXPLOSIVE INSIDE NEWS -- $170B JPM FRAUD
the same guy Joe in my apartment complex spoke with me again tonight about inside explosive news about a massive accounting fraud by JPMorgan

I pressed him for veracity of the source, like where he works
Joe said his friend Frank is an old college friend, whom he is in contact with 1-2 times per week
he said Frank works in the "same general business as JPMorgan"
I asked Citibank? no.. Morgan Stanley? no.. Goldman Sachs? no.. a major bank? no
Joe said "no, officially it is a govt business, but they are deeply involved in the mortgage finance business"
I asked FannyMae? and he smiled and said "cannot say" while nodding
so either Fanny or Freddie, I figure
word is flying around the NYC finance houses about this, impossible to contain, with investigations widening weekly

Frank tells him the noose is tightening bigtime on JPMorgan and the CFO will be doing jailtime by next year... the US Attorney General and NY Atty Genl are each well along in the investigation of $170 billion in improperly reported Q3 interest payments on three big loans...
WorldCom, Argentina, Russia

they all went bad, but JPM reported them as "performing loans" with fraudulent intent... the AG's are busy now "closing the dozen doors" that will demonstrate fraud and criminal intent... they want to be certain that JPM did not simply transfer the loans over to the London office or some thin offshore subsidiary... they are making progress eliminating these possibilities... the critical first criminal step was not listing these loans as "non-performing"

the misstatement makes WorldCom's $4B in improper statement look, well, pretty effing tiny... I asked about the impact to earnings, and Joe told me he heard around $60-70 billion in losses

I asked about why this is not out in the news, in the open... Joe said AG's must shut the doors, tighten the nose, be certain of the criminal actions

I asked about timing... Joe was told by Frank at FannyMae? that the prosecution steps begin in the first December week... I asked "around Pearl Harbor Day?"... he laughed, saying JPM is going to jail and this will blow wide open, that JPM is dead in the water... Frank claims actual revelation to the public and news media will take place around Christmas or immediately afterwards

I asked how we can observe definitive confirming signals from afar... Joe said "mass resignations, which have begun, but which will pick up in a big way"

Joe works in an international industrial pump/value company, and fully trusts his friend Frank in NYCity... back in July, I mentioned this Frank as confirming almost daily shipments by truck of Federal Reserve Gold out of the NYCity site, for the purpose of satisfying JPMorgan gold sales

so there you have it, MASSIVE $170B FRAUD CONCEALING $60B IN LOSSES, which will break within 75 days!!!

we will see
Joe said "100% certain this is unfolding, going to be death for JPMorgan, absolute death, with numerous indictments coming down, starting with that CFO"

too big to fail?
how about too big to bail?
certainly too big to protect from prosecution
Elliot Spitzer will dog them for sure
dunno about AttyGenl Ashcroft

gold should get a little lift by Christmas, eh
and we havent touched on Brazil yet
/ jim
:SOURCE:

[bab_youth] 19/10/2002 02:09

a think more down side with a correction north in the short term. $18 then up to $22 - banking sector to rally and drag up JP Morgan over next week.

USA Boards's sentiment similar.

JP Morgan would not take the risk with the derivatives if they were not confident of recovery too much exposure at too great a down side.

Not sure if the US markets could handle another huge corporate blow at such sensitive times

[magic] 19/10/2002 01:52

Continuing worries on JPM, nothing mentioned on large mortgage exposure as well.
But what is fair value, at such a low PE already?

--------------------------------------
J.P. Morgan Out of the Woods -- for Now

By Aaron L. Task
Senior Writer
10/18/2002 02:39 PM EDT

Immediate worries have diminished, but the crucial issue of how money managers should value J.P. Morgan remains. Optimists say current valuations represent attractive risk-reward levels and that lackluster third-quarter results will ultimately represent the nadir of J.P. Morgan's difficulties.

Skeptics counter that J.P. Morgan should be valued more as a hedge fund than a bank, owing to the firm's increasing reliance on interest rate bets and long-standing exposure to derivatives.

David Hendler, a financial services specialist at CreditSights, an independent research firm covering fixed-income securities, has attempted to sort through the details of J.P. Morgan's derivatives. He believes the firm is taking undue risk, particularly in its internal trading operations.

[jl202] 16/10/2002 13:55

7:34am 10/16/02
J.P. Morgan Q3 net plunges (JPM) By Greg Morcroft
J.P. Morgan Chase & Co. (JPM) Wednesday said its third quarter net income plunged from year ago levels as higher credit costs and lower trading results produced a "very disappointing" quarter. The bank posted third quarter operating earnings per share, excluding previously announced merger and restructuring charges and special items, of 16 cents, compared with 55 cents a year ago. Net earning per share, including restructuring charges and special items, were 1 cent per share, compared with 22 cents a year ago. J.P. Morgan also said it's cutting 2,000 jobs and taking $300 million of a projected total $450 million charge for severance in the fourth quarter of 2002. Morgan shares rose $1.73, to $18.61 on Tuesday.