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JP Morgan Gets Sued by Lehman

May 26, 2010 By Chuck

Oh boy, this could get interesting!

Today Lehman Brothers Holdings Inc.’s estate (the entity that makes up what’s left of the Lehman company) has filed suit against J.P. Morgan (JPM) alleging that J.P. Morgan illegally siphoned billions of dollars from Lehman prior to Lehman’s failure.

The lawsuit alleges that J.P. Morgan Chief Executive James Dimon and other top executives used inside knowledge to take advantage of Lehman as its financial state worsened. J.P. Morgan, the suit alleged, coerced Lehman to turn over $8.6 billion in collateral in September 2008, triggering a liquidity squeeze that contributed to Lehman’s collapse. The estate is hoping to recoup billions in collateral the bank demanded, and billions in other damages. […]

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Filed Under: Market Updates Tagged With: ,

JP Morgan Makes Money by Employing Scare Tactic?

April 22, 2010 By Chuck

JP Morgan Chase (Chase Bank) sent a letter to all of their cardholders telling them to not use it as a debit card with a PIN, but instead choose credit and sign for your purchase.

Chase goes on to tell their customers that it is safer to choose credit vs.debit when using the card. Perhaps the real reason behind this letter is that a credit transaction would earn the bank more money in fees as opposed to a debit transaction.

A Chase letter to cardholders strongly suggests they "always select ‘credit’" when making a debit purchase, according to the American Banker. "It’s not a credit card, so the money still comes out of your checking account," the letter says. "But by choosing ‘credit,’ you won’t have to enter your PIN in public." […]

[…] It’s an appeal to safety. Problem is, security experts and consumer advocates are unanimous that debit card purchases are safer with a PIN than with a signature. […]

[…] An analyst told American Banker that with a signature debit transaction, the bank stands to make $1 from merchant interchange fees on a $100 purchase, versus a dime or a nickel with a PIN transaction. "PIN is actually more secure, but PIN does not generate as much revenue to the bank," the analyst said. "If they get you to use signature debit, then they are going to make much more money." […] (HuffPo)

Banks never stop at trying to get every last penny from their customers. Now they even resort to scare tactics.

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Read more on J P Morgan Chase, Banking at Wikinvest
Filed Under: Credit Cards, Market Updates Tagged With: , , ,

December Master Trust Data and Charge Offs

January 16, 2010 By Chuck

Some of the major banks issued their monthly ‘master trust’ data yesterday. This data reveals the the amount of money that is delinquent, and the amount being charged off. It is still a mind boggling amount of money that is delinquent. Consumers are fine? I don’t think so.

Citigroup Inc Reports Dec Master Trust; Net Charge offs 9.56% v 10.29% m/m

- 5-34 days $2.5B v $2.49B m/m
- 35-64 days $1.17B v $1.22B m/m
- 65-94 days $972M v $979.8M m/m
- 95-124 days $869M v $872.7M m/m

American Express Co Reports Dec Master Trust; Net write offs on managed basis 7.1% v 7.6% m/m

- Annualized default rate net of recoveries 6.9% v 7.5% m/m
- 30 days past due loans on owned basis 3.7% v 3.9% m/m
- 30 days past due loans on managed basis 3.7% v 3.9% m/m

JPMorgan Chase and Co Reports Dec Master Trust; Net charge offs 7.11% v 8.81% m/m

- Delinquencies 4.94% v 4.90% m/m
- 30-59 days 1.13% v 1.23% m/m
- 60-89 days 0.99% v 1.12% m/m
- 90+ days 2.82% v 2.55% m/m

Bank of America Corp Reports Dec Master Trust; Net Charge offs 13.53% v 13.00% m/m

- Delinquencies 7.44% v 7.69% m/m
- 30-59 days $1.62B v $1.78B m/m
- 60-89 days $1.44B v $1.48B m/m
- 90-119 days $1.25B v $1.33B m/m
- Total delinquencies $6.72B v $6.93B m/m

Discover Financial Services Reports Dec Master Trust: Net charge offs 8.68% v 8.98% m/m

- Delinquencies 5.49% v 5.68% m/m
- 30-59 days $529.7M v $545.6M m/m
- 60-89 days $432.6M v $456.8M m/m
- 90-119 days $401.3M v $402.9M m/m
- Total delinquency amount ending balance $2.08B v $2.09B m/m
- Gross charge offs 9.64% v 9.91% m/m

Capital One Financial Corp Reports Dec Master Trust; Net Charge Offs 10.14% v 9.6% in Nov m/m – filing

- US Card 30 day+ delinquency rate: 5.78% v 5.87% m/m
- International Net charge off rate: 9.58% v 9.50% m/m
- Auto finance metrics annualized net charge off rate: 5.68% v 3.67% m/m
- US Card managed receivables $60.3B v $60B m/m

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Read more on Trust at Wikinvest
Filed Under: Market Updates Tagged With: , , , , , , , ,

JP Morgan (JPM) Q4 Earnings

January 15, 2010 By Chuck

JP Morgan has released Q4 earnings data. Good on the EPS, but bad on the revenues. The comments by the company is what really hit the futures in a negative way pre market..

JPMorgan Chase and Co Reports Q4 $0.74 v $0.60e, R $23.2B v $27Be

- Q4 ROE 8.00% v 9.00% q/q
- Q4 ROA 0.65% v 0.70% q/q
- Q4 Investment banking net Rev $4.9B v $7.5B q/q
- Q4 Tier-1 capital ratio 11.1% v 10.2% q/q
- Q4 Retail Card Services provision for credit losses $5.15B v $4.9B q/q
- Q4 Provision for credit losses $8.9B v $9.8B q/q
- Q4 AUM $1.7T v $1.7T q/q

CEO Dimon: "Though these results showed improvement, we acknowledge that they fell short of both an adequate return on capital and the firms earnings potential. While we are seeing some stability in delinquencies, consumer credit costs remain high, and weak employment and home prices persist. Accordingly, we remain cautious."

Prime mortgage quarterly losses could reach $600M in a few quarters, subprime losses may go to $500M

- Could see home equity quarterly loss of $1.4B over next few quarters.
- Not certain that stable delinquency trends will continue.

Expects losses at Chase card unit to approach 11% in Q1 of 2010, due in part to 60 bps impact from adverse timing of payment holiday.

- Card services outlook:
- WaMu losses could approach around 24% over the next several quarters.
- Anticipate net income reduction from legislative changes of $500-$750M.
- Estimated full year average outstanding expected to decline $15B +/- to $155B +/- in 2010 due to WaMu portfolio run-off of approx $7B and lower balance transfer levels.
- Expect $1B +/- net loss per quarter in 1H10, before potential reserve actions; 2H10 dependent on the environment and reserve actions.

- Retail financial services:
- Overdraft policy changes currently estimated to reduce annualized after-tax income by approx $500M.
- At current production and estimated run-off levels, the Home Lending portfolio of $263B at the end of 4Q 2009 could decline by 10-15%, possibly to averages of $240B +/- in 2010 and $200B +/- in 2011.
- Credit environment remains uncertain. Signs of stability do not equal improvement.
- Continued pressure on profits due to elevated servicing, default and foreclosed asset expense and mortgage repurchase activity.
- At investment banking unit, expects Fixed Income and Equity Markets revenue to normalize over time as conditions stabilize.
- Commercial banking unit has strong reserves, but credit expected to weaken further.

Overall, if the economy weakens further, additional reserving actions may be required.

Filed Under: Market Updates Tagged With: ,

Can Corporations Earn Money And Have Morals At The Same Time?

December 9, 2009 By Chuck

Can a ‘for profit’ corporation enjoy healthy revenues year after year and exhibit good morals at the same time? The largest companies in the nation have evolved over the years to find more ways to streamline operations, reduce waste, increase the productivity of their employees, preached corporate ethics to their employees, try to be involved with local communities by giving to the local youth clubs or donations to a regional cancer research center. But is this to be a good citizen of the community, or is it a show?

Corporations have moved further and further away from encouraging independent thought of their employees to one of ‘corporate thought’. Six Sigma programs have swept across corporate America like wildfire. Employees are being driven to compete against one another, strive to be their absolute best, and to achieve the Six Sigma black belt. Corporations scour the college campuses looking for future managers and leaders. They hire graduates right as they hang up their cap and gown and indoctrinate them into ‘their’ corporate mentality. To begin the brain washing as early as possible before they can discover the concept of free thought.

Ethics, as defined in the dictionary:

1. the body of moral principles or values governing or distinctive of a particular culture or group: the Christian ethic; the tribal ethic of the Zuni.

2. a complex of moral precepts held or rules of conduct followed by an individual: a personal ethic.

Corporations preach loudly that they embrace a corporate ethics policy. Employees in some companies are required to attend mandatory ethics training. And some companies even require the employees to sign a statement that they understand and will follow the corporate ethics policy. The purpose of an ethics policy is to tell the employees what is right and wrong. Don’t cheat, be honest with the customers, don’t commit fraud, treat all people equally, don’t exchange money from the Government and/or subcontractors in return for preferred treatment. The list goes on and on.

But what really is all of this ethics stuff? As defined in the Websters definition shown above, it is a “body of moral principles“. My question however is whose moral principals? A corporate defined morality, or a standard of morals that is generally accepted by everyday people who work hard and raise a family?

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The Economy Has Been Saved…

October 14, 2009 By Chuck

… and Bernie Madoff was a caring and honest man.

The Dow Industrial average reached 10,000 with CNBC staff wearing caps that read ‘DOW 10,000‘ and will run a “special” DOW 10,000 TV show this evening.

STOP THE INSANITY

The economy has not been saved, only disguised… akin to putting lipstick on ENRON years ago and calling it a great investment.

Banks and other financial institutions have only been able to report revenues because they no longer have to record ‘actual‘ losses, as long as they don’t sell it they can put whatever value on it they want. We have Congress and the FASB for that brilliant move.

Is Jamie Dimon (JP Morgan CEO) on ‘your‘ side?

Wednesday, October 14, 2009 9:38:07 AM
JPMorgan Chase and Co CEO Dimon: Consumer Protection Agency will be “damaging”; will cost customers.

Uhhh, what he is really trying to say is that regulations will be damaging to JP Morgan. I am sure all of the Wall Street firms will scream how bad regulations will be for the consumer if they are forced to be controlled or regulated in any way.

Unfortunately our Government caves in to the demands of Wall Street faster than a 5 dollar hooker will drop her panties, so any meaningful regulation or safe guards will be nothing but ‘show’ and no meat.

Whatever happened to Obama’s pledge that lobbyists will not be an outside force that can influence Washington? Stupid me, I forgot that many lobbyists ‘are’ part of the Government. So in a way he kept his promise by putting them on staff.

Will regulation ever see the light of day, as opposed to the Government just talking it up? Yes, but it will be so one sided that the regulations will most likely provide ‘additional‘ loop holes in which the Wall Street firms will be able to capitalize from. 

There is only one regulation that will work, yet no one in Washington will dare say the word… Glass-Steagall Act. There was one individual that discussed putting Glass-Steagall back and that was Sen. Ted Kennedy.

With the placement of pen to paper the President can issue an executive order to reinstate this regulation which was abolished in 1998. If you want to know why no one in Washington speaks about this you only have to look at the President’s key financial advisers… such as Larry Summers who praised the abolishment of Glass-Steagall back in 1998. The very same people who contributed to the mess the nation is in now are right back at it again.

The middle class are the new ATM machine, but this time it is Wall Street firms like JP Morgan, Goldman Sachs, Bank of America, and Citigroup et. al. who have the card and ‘you‘ are the machine giving cash to them. They ‘got ya’ when things were good by taking advantage of every loop hole they could capitalize on, and now they are out to ‘get ya’ once again by standing in the way of  ‘any’ meaningful financial reform from being passed.

And why was the media claiming that JP Morgans quarterly results were a sign of strong economic recovery? From what I read this morning I see things as still bad.
Wednesday, October 14, 2009 7:58:55 AM
JPMorgan Chase and Co Card services unit see losses of approx 10.5% through H1 2010 – Investor slides
- Card service unit losses seen at 9.0% in Q4 2009 and 11% in Q1 2010
- WaMu losses could approach 24% through next ‘several quarters’
- Overall: If economy weakens further, additional reserving actions may be required
Wednesday, October 14, 2009 9:38:07 AM
JPMorgan Chase and Co CEO Dimon:   Corporate lending continues to trend around all time lows, extended credit lines continue to be drawn at very light levels.
I guess CNBC ‘forgot’ to mention the bad parts ;)

To Mr. Dimon… If you are wondering what is happening in the “real world” and if your losses will grow then just take a look at the growing ‘tent cities’ all around the country. Oh, maybe you already know about them because you have your people out their trying to milk a few more bucks from their “tent mortgage“.

Don’t worry, President Obama has everything under control and will quickly move to solve this problem:

Wednesday, October 14, 2009 3:49:13 PM
White House: Pres Obama supports a $250 payment to seniors, veterans, and the disabled; program could cost up to $13B
- payment may include approx 57M individuals

Wow! $250 bucks, that will go a long way in helping people hurt by the financial disaster. The Government estimates that 57 million individuals may qualify for the 250 buck payment. That is if they can find addresses for those who are now living in tents.

Video wrap up will be late this evening…
Filed Under: Market Updates Tagged With: , , , , , , ,

JP Morgan Gets Hit With $6 Billion of RMBS Downgrades

June 24, 2009 By Chuck

Late this afternoon JP Morgan (JPM) had $6 billion worth of their RMBS (residential mortgage backed securities) downgraded by Moody’s due to the deteriorating mortgage situation.

Moody”s Downgrades $6B Of RMBS Issued By J.P. Morgan Mortgage Trust And Chl Mortgage Pass-Through Trust

Moody”s Investors Service has downgraded 217 tranches and confirmed 3 tranches from 9 deals issued by J.P. Morgan Mortgage Trust and CHL Mortgage Pass-Through Trust in 2006 and 2008.

The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, Jumbo mortgage loans.  The actions are triggered by the quickly deteriorating performance — marked by rising delinquencies and loss severity, along with concerns about the continuing drop in housing prices nationwide and the rising unemployment levels. The actions listed below reflect Moody”s updated expected losses on the jumbo sector announced in a press release on March 19th, 2009, and are part of Moody”s on-going review process. (emphasis added)

Among the tranches downgraded include:
- CHL Mortgage Pass-Through Trust 2008-1
- Cl. A-1, Downgraded to Ba3; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade
- Cl. A-2, Downgraded to Baa1; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade
- Cl. A-3, Downgraded to A3; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade
- Cl. A-4, Downgraded to A3; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade
- Cl. A-5, Downgraded to Baa2; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade
- Cl. PO, Downgraded to Ba3; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade
- Cl. X, Downgraded to A2; previously on 4/9/2009 Aaa Placed Under Review for Possible Downgrade

Filed Under: Market Updates Tagged With: ,

JP Morgan (JPM) Gets Hit With Downgrade

March 4, 2009 By Chuck

jp morgan logo 02 JP Morgan (JPM) Gets Hit With DowngradeJP Morgan (JPM) got hit today with a downgrade to their ratings outlook. Moody’s changed the ‘ratings outlook’ from stable to negative.

Moody’s said the negative outlook reflects its expectations that JPMorgan’s results will continue to be hurt by sustained high provisions and credit costs for the next year to year and a half, because of increasing financial strains for U.S. consumers and the global recession.

JPMorgan’s current ratings: Senior debt is rated Aa3 and the ratings on its lead bank, JPMorgan Chase Bank N.A., are B for bank financial strength and Aa1 for long-term deposits.

Shares of JP Morgan traded down 8.14% today with a closing price of $19.30.

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