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Did JPM Cause Bernie Madoff’s Ponzi To Collapse?

By Ilene
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Here’s the second part of the intriguing JPMorgan-Madoff connection. – Ilene JamieDimon.jpg

Did JPM Cause Bernie Madoff’s Ponzi To Collapse?

By John Carney at ClusterStock

Let’s talk about the JP Morgan Chase and Bernie Madoff story we mentioned yesterday. If we’re following this correctly, it seems that starting in 2006 JP Morgan allowed investors to make bets on the performance of hedge funds that invested with Bernie Madoff. This basically means that JP Morgan was institutionally short Madoff, which is interesting in itself. What made JP Morgan think it could beat the guy who had over forty-years of steady results?

Even more interesting is the fact that JP Morgan initially hedged this bet against Madoff by investing $250 million of its own money with Madoff. And then, as late as last fall, it decided to take off this hedge…

Perhaps the most tantalizing idea is that JP Morgan’s withdrawal might have triggered the collapse of Madoff’s fund…

Grim ReaperWe know that JP Morgan began to become very conservative with its assets last fall. It made collateral calls on Lehman Brothers and Merrill Lynch, requiring the investment banks to hand over billions. Those collateral calls more or less consigned those firms to death. So did JP Morgan also doom Madoff? It does look like Jamie Dimon’s shop has played the role of the Grim Reaper all through this credit crisis.

Full article here.

More Bernie Madoff at ClusterStock

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