JPMorgan Chase chief executive Jamie Dimon greeted with noisy protests as he prepared to testify before the Senate Banking Committee in 2012. "This man is a crook and needs to go to jail!" yelled one man.

A new Senate report shows that last year JPMorgan Chase, the country's biggest bank, manipulated documents and ignored internal controls as they built up trading losses. Jamie Dimon, the chief executive, also withheld information from regulators. The 300-page report was released the day before the Senate plans to question bank leaders and regulators at a hearing, and "it may also foreshadow a criminal case against employees at the heart of the troubled wager," according to the NYT. “While we have repeatedly acknowledged significant mistakes, our senior management acted in good faith and never had any intent to mislead anyone," a spokeswoman for the bank said.

NYT:

Mr. Dimon, whose reputation as an astute manager of risk has been undercut by the trading losses, comes under the harshest criticism yet from the Senate investigators. The chief executive signed off on changes to an internal alarm system that underestimated losses, seemingly contradicting his earlier statements to lawmakers, according to the report.

He is also accused of withholding from regulators details about the investment bank’s daily losses — and then raising “his voice in anger” at a deputy who later turned over the information.

While people close to the matter dispute whether the outburst actually happened, it illustrates a broader problem at JPMorgan: after emerging from the financial crisis in far better shape than rivals, the bank saw itself as being above its regulators. The bank was so filled with hubris, Senate investigators said, that an executive once screamed at examiners and called them “stupid.”

The bipartisan report, citing some of the same private documents that F.B.I. agents are now poring over, also highlighted how JPMorgan managers “pressured” traders to lowball losses by $660 million, a previously undisclosed figure, and then played down the problems to authorities.

With this line from the Times' report, you may start to think that the "too big to fail" could be falling..."After examining hundreds of e-mails and hours of taped phone calls, the people said, federal investigators also plan to interview top JPMorgan executives in the coming weeks, including Mr. Dimon."

But then the next line is a big let down, "While authorities do not suspect the chief executive of wrongdoing, the meetings signal that the case is at an advanced stage."

What a charade.

There is one highlight to come from this; Beginning at 9:30am Friday, Matt Taibbi will be live-blogging a hearing held by Senator Carl Levin's Permanent Subcommittee on Investigations who will be grilling J.P. Morgan Chase executives and high-ranking federal regulators in a get-together entitled, "J.P. Morgan Chase "Whale" Trades: A Case History Of Derivatives Risks And Abuses." Bring your popcorn and be there.

"A crucial change in the way financial derivatives are packaged and sold on Wall Street is enabling traders to bypass new regulations aimed at limiting reckless speculation, enhancing the prospect of another derivatives crisis, warn some market participants."

The Dodd-Frank financial reform law came into effect in 2010 in response to the financial crisis- it required safeguards for investors to cover losses on their derivatives trades. But what if investors found another, risky, way around that? That's what's happening now. Is it time to start the financial Armageddon clock? Cenk Uygur breaks it down.

Bank of America's top executives neglected to tell their shareholders about the losses at Merrill Lynch before completing the $50 billion purchase of the company in 2008. Shareholders were instead told of projections showing the deal would make money, when in fact it resulted in losses that prompted the $20 billion taxpayer bailout.

The information was revealed through documents filed on Sunday night for a Bank of America shareholder lawsuit, which includes testimony from then-Chief Executive Kenneth Lewis, admitting that the documents filed with regulators and shareholders before the acquisition vote didn't include the loss estimates he had previously received. At the bank board's next meeting just days after the decision, they were given news that there had been a $14 billion before tax loss in the fourth quarter. The lawsuit will be heard in Federal District Court in Manhattan.

NYT:

Two business days after Bank of America shareholders approved the deal, the bank’s board met and received details of the $14 billion pretax fourth-quarter loss. The board also learned that the deal would be far more damaging to the bank’s earnings than had been publicly disclosed.

One bank executive attending that meeting was Timothy Mayopoulos, then Bank of America’s general counsel. In testimony noted in the court filing, Mr. Mayopoulos expressed surprise at the size of the loss, which he said he had not been told about. He testified that he tried to speak with Mr. Price about possibly disclosing the losses but that Mr. Price was not available.

The next day, the filing noted, Mr. Mayopoulos was “fired without explanation and immediately escorted from
the premises, without being given the opportunity to collect his personal belongings.”

And just a reminder...

JPMorgan Chase CEO Jamie Dimon has been one of the most outspoken critics of the Volcker Rule, a section of the Dodd-Frank Act that aims to keep the banks in which you deposit your money from gambling it on their own sometimes-risky investments. Now Dimon has announced that risky trades have cost his company $2 billion in losses. In this April 22, 2012 Moyers Moment from Moyers & Company, Paul Volcker himself responds to Jamie Dimon’s complaints about the rule and its effects.

JPMorgan Chase has disclosed $2 billion in lossesfrom a trading group’s credit investments, causing the bank’s share price to plummet in after-hours trading.

Via:

Jamie Dimon, the chief executive of JPMorgan, blamed “errors, sloppiness and bad judgment” for the loss, which stemmed from a hedging strategy that backfired.

The trading in that hedge roiled markets a month ago, when rumors started circulating of a JPMorgan trader in London whose bets were so big that he was nicknamed “the London Whale” and “Voldemort,” after the Harry Potter villain.

The losses are expected to take a toll on the bank’s larger earnings, with the corporate group expected to lose $800 million in the second quarter, the company said today in its quarterly securities filings. JPMorgan had previously estimated that it would report a net income of roughly $200 million. The final report will depend on if the company can recover, though Dimon said things could “easily get worse.”

Via:

Given Dimon’s resistance to the ban and new regulations, “he’s got a lot of egg on his face right now,” said Craig Pirrong, a finance professor at the University of Houston. “Any chance they had of getting a relative loosening of Volcker rule, anything of that nature, that’s out the window.”
...
“It’s classic Wall Street hubris, which we’ve seen so many times before,” said Simon Johnson, a former chief economist at the International Monetary Fund who now teaches at the Massachusetts Institute of Technology. “What’s particularly ironic here is that Jamie presents himself, and is believed by others to be, the king of risk management.”

In an emailed correspondence, Senator Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations and co-author of the Merkley-Levin language establishing the Volcker Rule, issued the following statement Thursday in reaction to news that JP Morgan had suffered a $2 billion trading loss:

“The enormous loss JP Morgan announced today is just the latest evidence that what banks call ‘hedges’ are often risky bets that so-called ‘too big to fail’ banks have no business making. Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards to implement the Merkley-Levin language to protect taxpayers from having to cover such high-risk bets.”

If you've been hammered by our economy, perhaps this can put just a little grin on your face today...

JPMorgan on Friday reported a 23 percent decrease in profits for the last three months of 2011 as a result of big losses in its investment-banking and trading divisions. JPMorgan, the nation’s largest bank by assets, said it earned $3.7 billion, down from $4.8 billion in the same period in the previous year—a decrease of 23 percent. Net income from the bank dropped 52 percent to $726 million, which includes a $567 million drop that occurred from a debit-valuation adjustment. JPMorgan claimed that without those adjustments, there would be $1.1 billion earnings in its banking division. Net income from the bank dropped 40 percent to $302 million in the fourth quarter. JPMorgan CEO Jamie Dimon said in a statement that the bank is seeing signs of improvement in loan demand and credit quality.