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The Fed’s Glue-Sniffing Announcement Yesterday Involving JPMorgan Chase

Courtesy of Pam Martens

Jamie Dimon, Chairman and CEO, JPMorgan Chase

Jamie Dimon, Chairman and CEO, JPMorgan Chase

Federal Reserve inspectors appear to be on some kind of mind-altering drug or their superiors are simply taking their marching orders from Wall Street cronies in the Trump Administration.

Yesterday the Fed released a terse 104-word statement indicating that the largest and serially charged bank in the U.S., JPMorgan Chase, had shown “evidence of substantial improvements” in its “risk-management program and internal audit functions” and the Fed was therefore removing the dog collar it had put on the bank in January 2013. (JPMorgan Chase had been required to provide written progress reports to the New York Fed in 2013 until further notice – which became six years.) The Fed’s actions in 2013 stemmed from JPMorgan Chase secretly gambling with depositors’ money in exotic derivatives in London and losing at least $6.2 billion of those funds. The incident became infamously known as the London Whale saga after reporters at Bloomberg News and the Wall Street Journal broke the story about the massive, market-distorting derivative trades.

The regulator of national banks, the Office of the Comptroller of the Currency, charged JPMorgan Chase in the London Whale episode with engaging “in unsafe or unsound banking practices.” That charge is a very big deal for a bank holding $1.58 trillion in deposits, much of which is owned by mom and pop savers and backstopped by the U.S. taxpayer.

Yesterday’s statement from the Fed is bizarre on multiple fronts. First, JPMorgan Chase had apparently decided on its own that it was free of any Fed restrictions on March 13 of this year when it announced that it “planned to open up to 90 branches in new markets” over 2019.

In October of last year, Michelle Davis reported for Bloomberg News that “In actions never before made public, Obama administration regulators prevented the bank from opening branches in new states as punishment for violating banking rules, according to people familiar with the matter. JPMorgan’s ambitious plan to expand nationally, announced earlier this year, was made possible by the Trump administration’s rollback of those restraints…”

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