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« Letter From Satan: Dear Brother Corzine | Main | Jamie Dimon Goes Ballistic: "This Is Not The Soviet Union. This Is The USA. It’s A Free. Fucking. Country." »
Thursday
Aug162012

'JPM's $150 Billion FDIC Reality Adjustment' - Jamie Dimon Just Admitted To The World That JPM's Assets Are Overvalued By $150 Billion

JPM's $150 Billion FDIC Reality Adjustment

Reuters published an exclusive story this morning:

Buried in the final paragraph:

In a presentation in March, JPMorgan Chase said it had a recovery plan in place and said it was ordered by regulators. The presentation was organized by Harvard Law School and was closed to the media at the time, but is now available online.

Here's the BEST part of the JPM document.

It's easy to see on the PDF:

http://www.law.harvard.edu/programs/about/pifs/symposia/europe/baer.pdf

Go to page 9.  Under the wipeout scenario JPM describes a $50 billion trading loss turning into a $200 billion loss as soon as the FDIC takes over.  Why... ? Because JPM says they would expect the FDIC to immediately writedown JPM's assets by an additional $150 billion.

Holy mark to bullshit.  Jamie Dimon just admitted to the world that JPM is mis-marking assets to the tune of $150 billion.

It gets better. Go to page 10.  The chart shows that they only have $184 billion in equity, minus the $50 billion loss, minus 'the $150 billion fdic reality adjustment', which leaves them in a negative equity position of (-$16 billion).

So, we can extrapolate that without this phantom loss of $50 billion, JPM's real equity position is just $34 billion currently, not the $184 billion on their books.

 

See STEP 2 in the figure below:

 

Look at the far right column EQUITY in the figure below:

 

 

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Reader Comments (24)

This FDIC markdown might be standard whenever the FDIC takes over. $150 billion looks to be about 8% of total assets. So is an 8% markdown standard? The reason I'm curious is that I would assume JPM's assets would be marked down much more than 8% once someone got in there and took an objective look at things. Hell, HELOC mis-marking alone should be worth more than $150 billion.
Aug 10, 2012 at 12:14 PM | Registered CommenterDailyBail
Unbelievable.

This morning I was SHOCKED to see that the lead CNBC headline was that our biggest U.S. banks just released their "living wills". Living wills??????? What an optimistic way to describe what is coming.

Loved your post. I am definitely signing up for follow-ups.
Aug 10, 2012 at 12:15 PM | Unregistered CommenterHattieBelle
Gee obama's favorite banker surprise, surprise (sarc)

http://www.economicpolicyjournal.com/2009/07/president-obamas-favorite-banker.html

I don't know if you caught this DB

Trillion dollar bank insurance program may sneak into legislation

http://dailycaller.com/2012/08/07/trillion-dollar-bank-insurance-program-may-sneak-into-legislation/

If the banks are solvent why do they need that?

Failure of bank in Illinois brings '12 total to 40

http://www.pjstar.com/free/x2095088843/Failure-of-bank-in-Illinois-brings-12-total-to-40

Banks Are A Financial Disaster For Both Shareholders And Depositors

http://problembanklist.com/banks-are-a-financial-disaster-for-both-shareholders-and-depositors-0553/

The Truth about TARP
The free money for crooked bankers program

http://www.realecontv.com/videos/us/the-truth-about-tarp.html

Treasury's Secretive $2.4 Trillion Fund Guarantee

http://finance.yahoo.com/news/treasurys-secretive-2-4-trillion-120213692.html

TO BE CLEAR HERE BY PUNISHED THEY MEAN FINED NO ONE GOES TO JAIL UNDER OBAMA (see DB article financial prosecution scoreboard) I ONLY POST THIS TO SHOW THE REPEATED WRONG DOINGS

Banks Are Being Punished, Again and Again, to No Avail

http://www.americanbanker.com/bankthink/banks-are-being-punished-again-and-again-to-no-avail-1051594-1.html?zkPrintable=true

Old but worth the read

How Safe is My FDIC-Insured Bank Account?

http://www.financialsensearchive.com/fsu/editorials/martenson/2008/0414.html

Now this is very interesting

A Gold Bug as Secretary of State in a Romney Administration?

http://www.economicpolicyjournal.com/2012/08/a-gold-bug-as-secretary-of-state-in.html

FDIC and Fed issue "Notice of Proposed Rulemaking"
to adopt Basel III

http://americankabuki.blogspot.com.es/2012/08/fdic-and-fed-issue-notice-of-proposed.html
Aug 10, 2012 at 12:23 PM | Unregistered CommenterLiberatedCitizen
IF I had any JPM stock, I'd be getting rid of it as fast as I could, right now.
Aug 10, 2012 at 2:01 PM | Unregistered CommenterAnon
LC

Great links. I may have mistakenly deleted 1 of your comments here with several links. I thought they were all duplicated (4 comments), but maybe not. If I did, feel free to repost.
Aug 10, 2012 at 2:08 PM | Registered CommenterDailyBail
Reuters is carrying a story on JP MORGUE in regards yet another 100 million dollar settlement that according to the Judge to be fair and just. Wonder when someone is going to be the one who drives a wooden stake into the blood sucking creature that this organization is. Geez us key riced.
Aug 10, 2012 at 2:46 PM | Unregistered CommenterSKINFLINT
Skinflint

Reuters Runs Interference for Elite Corruption, Scrubs Article That Shows How Banks Get Out of Jail Free

http://www.nakedcapitalism.com/2012/08/reuters-runs-interference-for-elite-corruption-scrubs-article-that-shows-how-banks-get-out-of-jail-free.html
Aug 10, 2012 at 6:15 PM | Unregistered CommenterLiberatedCitizen
Thanks L.C. Know Reuters is MSM, but an interesting piece anyway. The Morgue seems to be getting slammed on all sides and taking a lot of water. Perhaps they are the next Lehman. We will see.
Aug 10, 2012 at 7:10 PM | Unregistered CommenterSKINFLINT
Umm...I think the key word is "hypothetical". In other words it was just an example. Some of you are reading too many conspiracy web sites.
Aug 12, 2012 at 3:22 PM | Unregistered CommenterTom
I read a conspiracy web site & it said housing prices only appreciate.LOL
Aug 12, 2012 at 5:20 PM | Unregistered CommenterHEY YOU
Isn't that because they had to come up with a wipeout scenario ??
Aug 13, 2012 at 2:06 PM | Unregistered Commenterjjjooon
jjjooon,

You're missing the point. JPM is already in a "wipeout" scenario if their assets are marked to reality instead of "marked to my ass," as one wit put it. That's the implication of what they've written in their living will -- intentional or not, and of course JPM would reject this interpretation of what they've written.

Bottom line, they appear to be lying about asset values to the extent that they are already effectively in a negative equity position.
Aug 13, 2012 at 2:40 PM | Unregistered CommenterPitchfork
I still think a $150 billion FDIC write-down is optimistic. I believe that a true accounting of assets would lead to a writedown maybe 2X larger. According to an email I just received from Chris Whalen, he agrees on the higher number.
Aug 13, 2012 at 3:33 PM | Registered CommenterDailyBail
Living will=oxymoron...

And JPM is a "healthy" bank? What do the other banks' death plans look like?
Aug 15, 2012 at 10:19 AM | Unregistered CommenterJosie
The 99% VS the 1% - A battle to be fought and won with truth and unity!
Now is the time to join forces with those you would not normally consider. This is all starting to leak out to the main stream media... finally. We just need to KEEP THE HEAT on them. We will soon be posting new petition and email campaign info as well as protest ideas. We just need more people following this group and we can use resources from the Tea Party, Occupy and other groups. THEY win as long as they can keep us arguing with each other.
WE need to come together with people we wouldn't normally work with to bring these criminals DOWN! Spread the word, others have carried the load of exposing this activity. Now we the people NEED to come out and make it a major issue in the news and in this political cycle.
JOIN US, this is YOUR cause too (Click the “LIKE” button and spread the word): www.facebook.com/BankAndPoliticianFinancialCorruption
Aug 15, 2012 at 12:07 PM | Unregistered CommenterCoreyG/Texas
Situation is hypothetical--NOT actual. It is if JPM had to do a fire sale of its assets. The will always market always pay a lower valuation for assets that need to be liquidated. Nobody in their right mind would want to purchase them for full price. Look at the housing market, people are trying to unload their properties for less than their actual value. You can go join the rest of the people who don't care about actual issues if you want to believe this conspiracy theory and continue to be blind to all this class warfare over silly issues.
Aug 17, 2012 at 11:37 PM | Unregistered CommenterAnonymous
JPM isn't saying their valuation is negative $150 billion. They are saying that the FDIC will write that number down. If you look at what he actually said, he said it as one would say, "it figures". It was a prediction of what the government might do, not a statement of their worth.

Are people so desperate to knock the bankers they have to make stuff up? There's plenty without doing so!
Aug 20, 2012 at 10:02 AM | Unregistered CommenterOwlich
What about the CDF's and all the rest of the weasel-worded and schemed, 'bonds' and ' treasuries ' ? ........They've been selling smoke, ever since fiat currency got a free-rein from Nixon and the gold standard. Remember when this first started? The little zionist weasel said ......''Two billion isn't all that much'' and he was thinking, ''If they only knew, .'' Trillions of bernwanky's FUNNY MONEY for everyone...... Zimbabwe will have company pretty soon at this rate. Smoke tends to dissipate. It was good while it lasted, though. Welcome to world of barter! ''Give me that gold ring and you will get milk delivered for some months''
Bad analogy......... Amerika doesn't allow fresh milk.....they 'reconstitute' it with even more hormones and god knows what else they are using to fuck up the herd....., or should that be flock?
Aug 20, 2012 at 10:41 AM | Unregistered Commenterhank
It’s getting very unusual and very disturbing in the America these days, it’s disappointing as WE folks in Paraguay see the last beacon of freedom (America) having it’s constitution being systematically destroyed. Many Americans are very worried about their safety and their families, money and investments etc.. I am an immigration lawyer in Paraguay that have been helping Americans acquire legal residency and a legal passports for about 5 years now. We have had a spike in requests over the last 3 years for various reasons. Some Americans just want the peace of mind having a second citizenship in case US Passports become more regulated and or more difficult to get. Some are concerned about talk of martial law. Some just want to invest in a country that does not have capital gains taxes or income taxes. A reason that the Bush family recently purchased 150,000 acres in our beautiful country.

***DHS, IRS, TSA, ICE, FBI, CIA (THE LIST’S GO ON) YOUR FREEDOM IS BEING SYSTEMATICALLY STOLEN FROM YOU***

You owe it to yourselves and your families to obtain second LEGAL passports. The DHS, IRS and TSA have already confirmed that they are making it more and more difficult to travel for Americans holding US passports. Why? To control the tax base from leaving at will.

At any rate we are an inexpensive boutique type firm that take great care of our clients. You can read more about us and our testimonials at passportoption dot com
Aug 21, 2012 at 3:17 AM | Unregistered CommenterJeronimo Finestra
What? They list something like 200 Trillion as assets and you think 150 billion off is a story??? Please get real!!
Why does anyone think Jamie had to testify about a trading loss of a couple of billions.. It's ludicrous!!
A couple of billion, just because he had a row with Blankfein!! They have trading losses in the billions every day, it's complete garbage what the media is reporting. Why do people get upset?? Complete rubbish story, go do some real reporting!
Aug 23, 2012 at 4:54 PM | Unregistered CommenterJonas
You're an idiot Jonas.

This is from JPMorgan's own presentation.

A $50 billion loss would wipe them out according to the company.

Wake the fuck up and learn to read before you go on the attack.

Seriously.
Aug 23, 2012 at 5:15 PM | Registered CommenterDailyBail
This is interesting. Fraud, fraud and more fraud.

http://foreclosuredefensenationwide.com/?p=469
Aug 23, 2012 at 5:42 PM | Unregistered CommenterSagebrush
Aug 27, 2012 at 4:33 PM | Unregistered CommenterSKINFLINT

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