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January 14, 2011, 7:16 am Investment Banking

JPMorgan Posts Strong Profit as Crisis Fades

Jamie Dimon, JPMorgan's chairman and chief, said the bank's earnings results showed the foundation of a good recovery.Michael Falco for The New York Times
Jamie Dimon, JPMorgan’s chairman and chief, said the bank’s earnings results showed the foundation of a good recovery.

EDITOR’S COMMENT: The top 0.5% of the country is doing very well. The rest are in varying degrees of distress, emotionally wrung out, grieving, hopeless and depressed. The article in this month’s Atlantic (I recommend you pick up a copy or go to their site THE RISE OF THE NEW GLOBAL ELITE).

The only comparable circumstances in history have been in countries where dictators and a ruling class of a few hundred people took everything, including American foreign aid and moved into Swiss Bank accounts. Each one of those stories ends with people fleeing he country, assassination, coup d’etat (seems like our mega banks already did that here), or the old time favorite, bloody revolution.

I know it seems like an exaggeration and I hope it is, but the real president of our country, or perhaps the king, is Jamie Dimon. In my opinion he should be in jail. But with Daley whispering in the ear of Obama, it doesn’t seem like we are headed for a peaceful course correction.

Perhaps the most disturbing thing about this article are the headline words “as crisis fades.” Are they kidding? Because JPMorgan increased its already bloated profit by half, we should celebrate? How can we as a society rejoice in policies in which most of the country is suffering? How stupid do they think we are? This crisis has not even started to “fade.”

Just ask the millions who are in, near or were in fraudulent foreclosure proceedings, or the millions of people who are unemployed or underemployed, or the tens of millions who have been so poorly educated and trained they really don’t have a chance in the marketplace to earn a decent wage.


NY Times

JPMorgan Chase kicked off the banking industry’s earnings season on Friday with news that its profits surged 48 percent last year amid signs that consumers and businesses had slowly regained their balance in the aftermath of the financial crisis.

The bank posted a $17.37 billion profit in 2010, up from $11.73 billion a year earlier, as losses on troubled loans eased.

That strength held up in the fourth quarter, when JPMorgan handily beat Wall Street estimates with earnings up 47 percent, to $4.83 billion, or $1.12 a share, from $3.28 billion, or 74 cents a share, in the quarter a year earlier.

The rosy report could pave the way for JPMorgan to increase its dividend by as much as a dollar.

Wall Street has been anxiously awaiting JPMorgan’s earnings report, hoping for a signal that plump shareholder payouts will return in 2011.

“We do think dividend increases are in the cards for some,” said Jason Goldberg, a senior analyst at Barclays Capital, who added that “JPMorgan will be in that grouping.”

The bank’s earnings set off a modest rally for bank stocks on Friday as investors look ahead for other financial institutions to report more good news next week. Shares of JPMorgan rose 1.03 percent, or 46 cents, on Friday, closing at $44.91.

The solid results show how JPMorgan has emerged from the bailout era as one of the nation’s most powerful banks and seems poised to take further advantage of its position as the economy rebounds. Indeed, 2010 was the most profitable year in the history of JPMorgan, surpassing its earnings even at the height of the boom.

Jamie Dimon, JPMorgan’s chairman and chief executive, offered what was perhaps his most upbeat assessment in three years, heralding signs of stability returning to the markets. “You are hopefully starting to see the foundation of a good recovery,” he said in a conference call with reporters.

Yet the fine print of JPMorgan’s report indicates some lingering concerns for the bank.

Despite the resurgent profits, the bank’s revenue for the year rose slightly, to $102.68 billion, from $100.43 billion in 2009. And the profits, though strong, were padded by the bank’s release of its reserves and an unusually large investment gain.

“JPMorgan is just now returning to an acceptable level of performance,” said Jim Sinegal, an analyst with Morningstar. “It’s more an indication the economy has stabilized rather than rebounded.”

JPMorgan, meanwhile, faces billions of dollars in potential legal claims stemming from the mortgage crisis. It is among several banks ensnared in state investigations and private lawsuits over questionable foreclosure procedures. Some investors are also seeking to recoup their losses on troubled loans and securities that banks sold.

JPMorgan put aside another $1.5 billion last quarter to cover potential legal claims from private investors who bought faulty mortgage-related securities. That increased its overall litigation reserves by more than $6.7 billion in 2010. The bank previously set aside a separate reserve of more than $5.6 billion to cover expected losses stemming from the repurchase of faulty loans that it sold to Fannie Mae and Freddie Mac, the government-controlled housing finance companies.

Banking analysts say the mortgage problem could cost the bank up to $10 billion. But armed with those reserves, bank executives say they have ample resources to cope with the coming wave of claims.

“It’s going to be a long, ugly mess, but it won’t be life-threatening to JPMorgan,” Mr. Dimon said in a conference call with analysts. “We will be talking about this for every quarter over the next three years.”

JPMorgan produced solid results in the fourth quarter across most of its core businesses, illustrating just how powerful the bank has become in the postbailout era.

Chase’s corporate bank reported profits of $530 million, up $306 million from the fourth quarter of the previous year. Bank officials said that they saw a lift in the number of midsize businesses seeking credit.

Chase Retail Financial Services, its consumer banking arm offering everything from mortgages to checking accounts, reported profits of $708 million in 2010, in contrast to a loss of $399 million the previous year.

Profits also rebounded at Chase’s credit card unit, though those gains were somewhat skewed by the bank’s decision to release about $2 billion it had previously set aside to cover losses on credit cards. Bank executives said this business was benefiting from the slowdown in job cuts and bankruptcy filings.

Earnings at JPMorgan’s investment bank, meanwhile, fell 21 percent in the fourth quarter. Stock underwriting fees and deal advisory fees dipped during the quarter, despite an otherwise solid year.

“All these numbers are still bad, but they’re a lot better than they were a year ago,” said Paul Miller, an analyst with FBR Capital Markets.

Across the company, bankers expect to reap the benefits, even if their 2010 paychecks are slightly smaller than they were in 2009. The bank earmarked $28.1 billion to compensate its workers, much of which will be paid out as bonuses. That means they can expect to earn, on average, about $117,000, down from $129,000 in 2009.

Workers in JPMorgan’s investment bank, on average, earned $369,000, compared with roughly $380,000 in 2009. Top producers, however, can still expect to collect multimillion-dollar bonus checks.

JPMorgan’s report on Friday was the beginning of a crucial earning season. Citigroup will report its earnings on Tuesday. Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo will follow later in the week.

Good news for the banks could translate into higher hopes for the broader economy.

“It’s not like issues from the financial crisis are going away, but we think we’ll see positive overtones as to how the economic recovery is taking hold,” said Moshe Orenbuch, an analyst at Credit Suisse.

10 Responses

  1. lucy,

    Everyone here should be paying attention to what is going on in NJ.

    Apparently, the court is trying to hold attorneys responsible for the information they provide to courts — by a certification or affidavit by the attorneys themselves. And, the attorneys would have to provide information as to the source (an individual) for the claim by the actual foreclosing plaintiff. That is, not the servicer if the servicer is not the plaintiff — but the party foreclosing, which is most often the trustee for the trust. Attorneys do not want to do this — and, neither do the Trustees to Trusts. It is a direct challenge to the Robo-signing that has been fraudulent.

    Hope NJ does not back down by pressure from the banks — who are likely horrified at this (can tell this from their responses). They like things just the way they are — thank you – and do not want anyone to intervene in their “practice.”.

  2. Dividends…yeah right. Let’s see them get the FDIC kitty back to solvent before we start paying dividends…FDIC gonna need a much bigger kitty for the next leg down and it is currently insolvent. God forbid CNBC or someone might report that however…

  3. Source foreclosureblues

    WikiLeaks was founded in 2006 with a moral dimension. “The goal is justice,” wrote founder Julian Assange on the homepage, “the method is transparency.” What WikiLeaks has given us is truth, including rare and precious insight into how and why so many innocent people have suffered in reigns of terror disguised as wars, and executed in our name; and how the United States has secretly and wantonly intervened in democratic governments from Latin America to its most loyal ally in Britain.

    Javier Moreno, the editor of El Pais in Spain, wrote, “I believe that the global interest sparked by the WikiLeaks papers is mainly due to the simple fact that they conclusively reveal the extent to which politicians in the West have been lying to their citizens.”

    The US Justice Department has established a secret grand jury just across the river from Washington in the eastern district of the state of Virginia. The object is to indict Julian Assange, founder of WikiLeaks, under a discredited espionage act used to arrest peace activists during the first world war, or one of the “war on terror” conspiracy statutes that have degraded American justice. Judicial experts describe the jury as a “deliberate set up”, pointing out that this corner of Virginia is home to the employees and families of the Pentagon, CIA, Department of Homeland Security and other pillars of American power.

    “This is not good news,” Assange told me when we spoke this past week, his voice dark and concerned. When we met in London last year, I said, “You are making some very serious enemies, not least of all the most powerful government engaged in two wars. How do you deal with that sense of danger?” His reply was characteristically analytical. “It’s not that fear is absent. But courage is really the intellectual mastery over fear – by an understanding of what the risks are, and how to navigate a path through them.”

    For his part, Julian Assange is just as worried about what will happen to Bradley Manning, the alleged whistleblower, being held in horrific conditions which the US National Commission on Prisons calls “tortuous”.

    “Cracking Bradley Manning is the first step,” Assange told me. “The aim clearly is to break him and force a confession that he somehow conspired with me to harm the national security of the United States. In fact, I’d never heard his name before it was published in the press. WikiLeaks technology was designed from the very beginning to make sure that we never knew the identities or names of people submitting material. We are as untraceable as we are uncensorable. That’s the only way to assure sources they are protected.”

    And what of the propaganda about the “damage” caused by WikiLeaks? In a letter to Congress, Secretary of Defense Robert Gates has admitted that no sensitive intelligence sources have been compromised. McClatchy Newspapers reported that “US officials conceded they have no evidence to date that the [prior] release of documents led to anyone’s death.” NATO in Kabul told CNN it could not find a single person who needed protecting.

    [Excerpt of John Pilger article]

  4. Thanks Anonymous,

    As you are aware of what is happening in NJ, and although things are moving at a very slow pace at least it’s moving!!!

    I’ve been going through the Max Gardner’s alumni’s list in NJ and met with couple of them.

    I’ve been fortunate enough to meet with Mr. Bruce Levitt and his wife and they were very knowledgeable in foreclosure as well as bankruptcy, and we had a long consultation and went over our options.
    . As you know he is responsible for the Kemp vs. BAC, countrywide debacle regarding original note issue.

    Anyways, As you know NJ rule and order for Jan.19th has been moved to Feb. 4th,2011,
    Have you heard anything else?

  5. Lucy

    So glad to see you back!!!


    An Insider Spills Swiss Bank Secrets—and Wikileaks Gets The List
    at 6:00 AM
    The Julius Bär Gruppe—also known as simply Julius Baer—is one of the most powerful Swiss banks. It is certainly one of the most discreet: As a private bank, its financials are not public knowledge.

    Who its clients are? A wind and a rumor—

    —until now: The former COO of its Cayman Islands operations, Rudolf Elmer, has just handed over to Wikileaks some discs with the banking details of some 2,000 high net worth individiauls and corporations.

    That’s right: Two thousand. Rich people, corporations, even other banks.

    Elmer is on his way to Switzerland, to stand triel for violating Swiss banking secrecy regulation—but the cat’s out of the bag.

    According to The Observer, which is all over this story, and got an interview with Elmer which they are running this morning—

    “What I am objecting to is not one particular bank, but a system of structures,” he told the Observer. “I have worked for major banks other than Julius Baer, and the one thing on which I am absolutely clear is that the banks know, and the big boys know, that money is being secreted away for tax-evasion purposes, and other things such as money-laundering – although these cases involve tax evasion.”

    Elmer was held in custody for 30 days in 2005, and is charged with breaking Swiss bank secrecy laws, forging documents and sending threatening messages to two officials at Julius Baer.

    Elmer says: “I agree with privacy in banking for the person in the street, and legitimate activity, but in these instances privacy is being abused so that big people can get big banking organisations to service them. The normal, hard-working taxpayer is being abused also.

    “Once you become part of senior management,” he says, “and gain international experience, as I did, then you are part of the inner circle – and things become much clearer. You are part of the plot. You know what the real products and service are, and why they are so expensive. It should be no surprise that the main product is secrecy … Crimes are committed and lies spread in order to protect this secrecy.

    This civic high-mindedness is bullshit, of course: It looks clear that Elmer and Julius Baer had a falling out, and Elmer absconded with a list of clients. Legal machinations to and fro, and now the endgame—and the revelations.
    Now, Elmer has handed over the list of clients and their data to Wikileaks—but the list will not be released by Julian Assange’s group just yet. Clearly, this is the sword of Damocles over Swiss authorities and Julius Baer, clearly a last (and desperate) attempt for Elmer to weasel his way out of jail time.

    But if this all has come to light this morning—in so spectacularly public a fashion—then it’s all over: Swiss authorities can’t let Elmer slide, so Elmer will be forced to put-up-or-shut-up.

    So get ready! The next Wikileaks revelations are coming! This time, from finance.


    Julius Baer Whistleblower To Expose 2,000 High Net Worth Tax Evaders To The World
    Tyler Durden’s picture
    Submitted by Tyler Durden on 01/15/2011 23:09 -0500

    * Germany
    * national security
    * Newspaper
    * Reality
    * Swiss Banks
    * Switzerland
    * Tax Fraud

    Two years ago when the US bailed out UBS and Switzerland from a brief but potentially terminal liquidity crisis, it succeeded in extracting a historic pound of flesh: it forced UBS to declassify thousands of bank accounts of US tax evaders which was the first nail in the centuries-old concept of Swiss bank secrecy. Today, Rudolf Elmer, a former COO of one of the biggest Swiss banks, Julius Baer, may have just nailed the last, and with that set off a chain reaction that will force a huge outcry against pervasive global tax fraud (but likely achieve nothing ultimatel). According to the Guardian, tomorrow Elmer will hand over details of 2,000 “high net worth individuals and corporations” to WikiLeaks which will make him “the most important and boldest whistleblower in Swiss banking history.” And since among those exposed will be “approximately 40 politicians” expect all hell to break loose as photos of Assange having a underage orgy with Al Qaeda members are suddenly made public to diffuse what is bound to be another huge (if brief – after all human kind cannot bear very much reality).

    From the Guardian:

    British and American individuals and companies are among the offshore clients whose details will be contained on CDs presented to WikiLeaks at the Frontline Club in London. Those involved include, Elmer tells the Observer, “approximately 40 politicians”.

    Elmer, who after his press conference will return to Switzerland from exile in Mauritius to face trial, is a former chief operating officer in the Cayman Islands and employee of the powerful Julius Baer bank, which accuses him of stealing the information.

    He is also – at a time when the activities of banks are a matter of public concern – one of a small band of employees and executives seeking to blow the whistle on what they see as unprofessional, immoral and even potentially criminal activity by powerful international financial institutions.

    This is interesting: after all it was Zero Hedge that about 18 months ago suggested that all financial professionals should be very concerned: after all, all it takes is one sloppy firing, or one departure without the appropriate non-disparagement and non-truth telling clause, and all hell could break loose as those who were part of the inner sanctum suddenly find themselves on the outside… and wanting revenge. Elmer is just first of many. In the meantime, we hope that every single hedge fund, starting with that particular one in Stamford and going all the way down, has made plans regarding termination of its employees. All it takes is one person who believes they may have been wrongfully terminated to approach the SEC themselves, or, even worse, some blog or alleged terrorist organization with a penchant for disclosing the truth…

    More on what will soon be the biggest case of exposed international tax fraud:

    Elmer says he is releasing the information “in order to educate society”. The list includes “high net worth individuals”, multinational conglomerates and financial institutions – hedge funds”. They are said to be “using secrecy as a screen to hide behind in order to avoid paying tax”. They come from the US, Britain, Germany, Austria and Asia – “from all over”.

    Clients include “business people, politicians, people who have made their living in the arts and multinational conglomerates – from both sides of the Atlantic”. Elmer says: “Well-known pillars of society will hold investment portfolios and may include houses, trading companies, artwork, yachts, jewellery, horses, and so on.”

    “What I am objecting to is not one particular bank, but a system of structures,” he told the Observer. “I have worked for major banks other than Julius Baer, and the one thing on which I am absolutely clear is that the banks know, and the big boys know, that money is being secreted away for tax-evasion purposes, and other things such as money-laundering – although these cases involve tax evasion.”

    Below is Elmer’s more verbose explanation of why the game of mutual assured secrecy works…until it doesn’t.

    “Once you become part of senior management,” he says, “and gain international experience, as I did, then you are part of the inner circle – and things become much clearer. You are part of the plot. You know what the real products and service are, and why they are so expensive. It should be no surprise that the main product is secrecy … Crimes are committed and lies spread in order to protect this secrecy.”

    What is interesting is that Elmer has penetrated not only onshore Swiss accounts, but offshore ones, anmely those located in the Caymans, which as everyone knows is the primary base of operations for tax evading “offshore” hedge fund LPs:

    That first crop of documents was scrutinised by the Guardian newspaper in 2009, which found “details of numerous trusts in which wealthy people have placed capital. This allows them lawfully to avoid paying tax on profits, because legally it belongs to the trust … The trust itself pays no tax, as a Cayman resident”, although “the trustees can distribute money to the trust’s beneficiaries”.

    Now, Blum says, “Elmer is being tried for violating Swiss banking secrecy law even though the data is from the Cayman Islands. This is bold extraterritorial nonsense. Swiss secrecy law should apply to Swiss banks in Switzerland, not a Swiss subsidiary in the Cayman Islands.”

    Yet just like with cablegate, the end result of all this imminent disclosure will be merely the confirmation of what everyone has already long suspected: that nobody rich pays taxes, and all US, and world, politicians are massively corrupt. And therefore, no criminal charges will be filed against anyone. Expect of course Assange, who will soon be branded a threat to US national security.

    Unfortunately, US society, having lost all forms of checks and balances. has gotten to a point where no incremental information will do anything to even dent the ponzi lie. After all, the simplest observations is that Madoff is in jail for life, while sacrifices are made on Ben Bernanke’s altar each and every day. And they say gold is a religion…

  8. Neil,
    You get an ‘A’ for your EDITOR’S COMMENT.
    Great job.

  9. What you now have is a complex mish mash of remote controlled layers, on auto-pilot, self-replicating, as the top level bank pimp, bringing us up in this, from the maternity ward onward, the moment we opened that elementary school bank account. But in the end, the brains that built it, also have the wherewithal to see what it’s purpose is, hiding machinations of unjust gain, behind legal smokescreen and protection, built by bought and controlled puppets, at high levels of this construction contracting, in an immensity far to large to cover in any thing but a generalized pattern of observation, by illustration. The strings of these puppets, are power, prestige and money, the prod is what corruptions they may be hiding and want to keep that way, their own conscience, their own addiction though, to material power, acceptance and social- and self-worship, is what propels them.
    Now you try to crack that pot, and it will crack (kill) you because you are poking at the balls and eyes of it’s chief deity, gold. Gold re-symbolized as the money concept, distributable as currency, controlled by banks, channelized by politicians, protected and extended by the chief consumer of it, the military system. In that design, is why lawyers, bankers and politicians are probably held in about the worst light a group can be held in. Something smells funny, and when you finally peel away the layers, hidden in that corrupted darkness, and see where it leads, you understand why it is hidden, it’s stinky, ugly, and of human construction, a project that required a huge magnitude of help, and a huge amount of capital to get it rolling. Don’t worry, it was the capital of the masses to begin with. Basically, in a percentage existing in this “class”, we have the sneakiest hypocrites of global, 4,000 year history, a pinnacle of human construed, legalized, liars, who won’t give a bum a dollar, they are demented by obsessive greed, dopamine propelled, and irreversible. They build laws for public protection and behavioral decency, but behind the scenes they built a mechanism that was so abused with corruptive, obsessive, legally justified greed gone wild, it brought down a nation, and catalyzed also global financial collapse. At least you will see the writing on the wall begin to happen in more shocking detail as the months pass this threshhold of obvious tremors, thunders, winds and warnings. Now picture the already fanatical military element, and banking element, and political elements locus of power, actually be sacrificed by it’s own system, and your going to see a lot of severely troubled and unhappy campers, whose prideful dementia, is now faced with a devastatingly brutal natural system payback – the destitution of their entire system of materialistic orgasm stimulus – one nasty withdrawal symptom for these lap of luxury hedonists. To make a long story, shorter, LOL, This then leads to global military instability, delusion and futility, which leads to the button. The big red button. Which conveniently, is now as easy as clicking a mouse, and a decent way to end this article as well, LOL.

    That’s why you’d be better off trusting a Hell’s Angel, than the average banker. At least the HA has a code to live by!

    Bankers and the eilte code? $troking their cash wad, and kissing every cent, LOL.

  10. The simple math is, that in a financial/legal ecology, the protection to yourself from financial predators, is a lawyer. The fuel of the system is money. The ratio of prey which has not the resources to invest in it’s own protection, and those whose legal protection can be beaten by those who have heavily invested in this vanguard of predation, agendized legal counsel, leans towards the house of money, the bank, winning more than it loses; Like Vegas, and like Vegas, not accidental, it’s formulaic and mathematically sound, the underlying principle illustrating that it can and will work – from years ago. That’s the simple math, which makes it profitable, to invest in legal architecture, fabrication and construction, by lawyers and politicians bent to that end for a percentage, by no means, the whole pot of gold. Then bury it in so many layers of legal convolution, interpretation and complexity, even lawyers can get baffled by it. And if they are not baffled, and they are going to penetrate a weakness in the “legality” of the predator, then the predator may have other tricks (assassination is NOT beyond that bag-o-tricks, btw). But here is an easier way: Hire the magical gatekeeper to whisk such trouble away with a wave of his wand, the bought judge (The pinnacle of the picture of the one who should clearly see the corruption within his own realm). This is why, people always feel a little nauseous watching these guys bask in public glory, what hypocrisy, eyes wide open hypocrisy. Obviously, it’s self doomed, and in the end, self-destructive. A principle so foreign, to the man who worships worldly power. But, none the less existing, and none the less an unchangeable consequence, justice from the cosmic dimension; septillion year old God.

    But in the meantime, let Bill Maher, Rush Limbaugh, Obama, and all the other characters in this play do what the do best. Squabble over a couple drops of blood that they comprehend and see, and try to fix what happened with a philosophical band-aid, anecdote and a joke or two; National decapitation of the middle class, and the average Americans financial future, worked on for decades, whisked away in 3 years.

    Banks? and other thieves? They are in a cosmic trap that will make them wish, they did not exist, when the next decade plows the globe. LOL

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