Bloomberg is providing televised coverage of the hearings.
We are live blogging the event inside.
JPM - Complete Fraud List (Background reading)
The first question to any witness should be foundational: given JP Morgan's extensive track record of lying to regulators and the public about the London whale trade, why should we not presume that all of your testimony today is perjured?
In a nutshell, JP Morgan's London whale trade involved (1) gambling with money covered by FDIC insurance, (2) watching its bet blow up and then doubling down on the bet, (3) chaging its risk model internally so it could understate the risks to the public, and (4) a regulator (OCC) who was privy to all the action and who did nothing.
Carl Levin just swore in the witnesses. Query why no one in the Senate (or the House) made Jamie Dimon take an oath before testifying last summer? Oh, that's right. The JP Morgan witnesses are now free to perjure themselves blue in the face with Eric Holder's formal blessing.
10:05 am - Sen. McCain finishes reading from a prepared script.
10:10 am - Ina Drew is explaining how awesomely she has lived her life. Seriously, how did this woman get control of the London office.
Levin: Per JPM representations to regulators, OCC reported that book is decreasing in size when in fact SCP [synthetic credit porfolio] was inceasing in size, correct?
Levin: Do you think it's a coincidence that the [undisclosed internal] CRM analyst projection of a $6 billion loss turned out ot be correct?
Weiland: Not completely.
McCain has asked good questions, which is eliciting interesting evasions and partial truths. However, Johnny Boy is simply reading the questions and lacks the presence of mind to ask ANY follow-up answers. Pathetic.
It's telling that in the first 90 minutes of live testimony, no one on the Senate subcommittee, despite having established JPM's knowledge of its massive lies to regulators, has asked a single question about JP Morgan's knowing and intentional violations of Sarbannes Oxley--an indisputable crime. Why not?
Finally some action. Braustein confirms that it was Jamie Dimon who ordered data provided to regulators be cut off. He supposedly can't recall if Dimon was angry at him for restoring the data flow. Braustein says (to McCain) that Dimon concealed the data reports due to concerns over confidentiality. That's so fucking ridiculous that it seems to have penetrated even McCain's punch-drunk skull, if his grasping and pathetic efforts to phrase a follow-up question is any indication.
[Note: Chris Whalen has been saying for close to a year that Dimon knew everything.]
Levin: losses are piling up, so you change your accounting practice from reporting mid-points to reporting outer limits.
Cavanagh: We did that due to the market!
Levin: Was it coincidental that the change made losses took better?
Cavanagh: It's what happened.
Levin: Answer the question: was it a coincidence?
Levin: when did the reporting shift begin to occur?
Cavanagh: January 2012.
Levin: And it's your testimony that the shift was coincidental. You're under oath.
Cavanagh: The purpose of the change was to reduce the loss.
Levin: So you've changed your testimony.
Cavagnagh: Yes. I was misunderstood. My first answer was made from the perspective of someone else!!!!
Carefully orchestrated indignation is scheduled for yet another display in the Senate this morning at 9:30 a.m, in a sub-committee on Homeland Security, which is fitting given Jamie Dimon's role as a domestic global terrorist.
Let the Senate charades begin...
JPMorgan Whale Trades: A Case History of Derivatives Risks and Abuses - (Senate link)
Again, we are not calling JPM a terrorist bank, the government is.
INA DREWFormer Chief Investment OfficerJPMorgan Chase Bank NANew York, NY
ASHLEY BACONActing Chief Risk OfficerJPMorgan Chase Bank NANew York, NY
PETER WEILANDFormer Head of Market Risk - Chief Investment OfficeJPMorgan Chase Bank NANew York, NY
MICHAEL J. CAVANAGHCo-Chief Executive Officer - Corporate & Investment BankJPMorgan Chase Bank NANew York, NY
DOUGLAS L. BRAUNSTEINCurrent Vice ChairmanJPMorgan Chase Bank NANew York, NY
THE HONORABLE THOMAS J. CURRYComptroller of the CurrencyU. S. Department of the TreasuryWashington, DC
SCOTT WATERHOUSEExaminer-in-Charge - OCC National Bank Examiners - JPMorgan ChaseOffice of Comptroller of the CurrencyWashington, DC
MICHAEL SULLIVANDeputy Comptroller for Risk Analysis - Risk Analysis DepartmentOffice of the Comptroller of the CurrencyWashington, DC
Taken together, all previous displays of outrage by bought-and-paid-for government representatives have produced nothing of any substance whatsoever. In fact, the impotence of these carnivals has become so predictable, indeed so yawn-inducing, that it appears dis-information merchants in congress are working overtime trying to distract people from the barren wasteland of justice with wild promises of a brighter future.
Sadly, this wholly unbelievable puffery manages to turn up credulous writers and bloggers round after round after round after round after round--where was I? doing Jaeger bombs!!!--as reliably as Charlie Brown's appearance before Lucy's teed up football. In the current episode of "The Dupe" we see none other Dave Dayen in the starring role:
"People I’ve talked to expect the hearing to be explosive. As an excellent preview for the Friday fireworks..." Yeah, yeah, yeah.....zzzzzzzzzz THUDDdddd.
Let's consider the actors involved in the imminent charade. First is Carl Levin, whose Senate subcommittee has investigated financial crimes before only to come up empty-handed. If memory serves, Levin produced a criminal referral that went straight into Eric Holder's waste basket without so much as furrowing the senator's brow.
Next is John McCain, who co-authored the report at the heart of tomorrow's hearing. McCain has never seen a financial fraud that he couldn't either profit from (as the worst of the Keating 5 scum in the S&L crisis) or cover up with bailout monies taken from the taxpaying fraud victims against their will (as the man who fatally derailed his own presidential campaign to champion TARP).
There are also the JP Morgan hearing witnesses such as Ina Drew. They will function as the punching bags tomorrow. One or two of them might even appear to lose their jobs. I say appear because that will happen only if they have already been compensated for a couple lifetimes' worth of "work" in exchange for any Kabuki hara kiri you might think you've seen. Rest assured it is fake, which is why you won't hear anything about the Senate's subpoena power in re witness compensation memos and agreements.
Unseen players include the aforementioned Washington disinformation merchants. Since last night, for example, another blogosphere luminary, Matt Taibbi, has weighed in on the supposed severity of the hearing using exactly the same term as Dayen: "explosive"
Finally there is the Attorney General of the United States. He recently issued the formal coroner's report pronouncing the Rule of Law dead. That only underscores, does it not, the fact that the entire Senate proceeding tomorrow is fundamentally a sham? JP Morgan enjoys its status above the law as a matter of law now. How in the hell can the Senate at this point even purport to be relevant? I'll tell you how: by conducting the impeachment trial of Eric Holder. Place your bets on when that will happen. In the mean time, enjoy the latest iteration of the fraudulent conspiracy between Washington and Wall Street on display in a few hours.
Let's be clear about the so-called "explosion" that is apparently on tap: the goalposts of the financial crisis moved wtih Holder's declaration that systemic banks will not be prosecuted. With that, the U.S. jettisoned all pretense to the ideal formerly known as the Rule of Law and indeed democratic governance. Beware fake field goals on this Ides of March. Anything short of impending impeachment proceedings is a clear miss now.
TAG - The unknown banking subsidy - Chris Whalen
In the case of JPM, the hundreds of billions of dollars in new deposits helped to fuel the speculative mischief we now know as the “London Whale” trade. Faced with vast amounts of cash that the bank could not deploy in the loan market, JPM instead gave the TAG funds to the JPM office of the chief investment officer. The London-based trader Bruno Iksil and his colleagues gambled the excess funds generated by TAG in the derivatives market, causing a significant financial and reputational loss for the bank.
BIGGUS DICKUS - BEWARE THE IDES
Eric and Jamie are friends
We know how this love affair ends
Jamie's a whale
Who's Too Big Too Jail
So Eric subserviently bends
Check this out (scroll down the page):