Courtesy of Pam Martens
Jamie Dimon, Chairman and CEO, JPMorgan Chase
How many second chances should a criminal recidivist get? JPMorgan Chase has logged in guilty pleas to three criminal felony counts in the past five years; it has a criminally-charged precious metals trader singing to the Feds currently as JPMorgan admits in regulatory filings that it’s under a new criminal investigation in that matter; the bank has paid $36 billion in fines for wrongdoing since the financial crash, including $1 billion for trading exotic derivatives in London with bank depositors’ money and losing at least $6.2 billion of those depositor funds (the London Whale scandal). And in just the past year it has proven that it’s “game on” for more regulatory fines and illicit profits. (See Could JPMorgan Chase Be Hit with a Fourth Felony Count for Rigging Precious Metals Markets?)
Despite all of this, yesterday the Federal Reserve announced that it had given JPMorgan Chase a second chance at passing the regulator’s stress test.
According to the announcement from the Fed, all 18 mega banks it submits to stress testing had passed the second leg of its stress tests known as the Comprehensive Capital Analysis and Review (CCAR). It did require one bank, Credit Suisse, “to address certain limited weaknesses in its capital planning processes.”
But JPMorgan Chase, along with the much smaller and zero-felony-count Capital One, were only able to pass the stress test because the Fed allowed them to resubmit their plan a second time. (That’s like failing your licensing exam on Wall Street that you have months to prepare for and then being allowed to take an open text exam.) The Fed said this about the matter:
“In the supervisory severely adverse scenario, Capital One Financial Corporation (Capital One) and JPMorgan Chase & Co. (JPMorgan) were projected to have at least one minimum post-stress capital ratio lower than minimum required regulatory capital ratios based on its original planned capital actions. Capital One fell below the minimum required common equity tier 1 ratio, tier 1 capital ratio, and total capital ratio on a post-stress basis. JPMorgan fell below the minimum required common equity tier 1 ratio, tier 1 leverage ratio, and the supplementary leverage ratio on a post-stress basis…However, both Capital One and JPMorgan were able to maintain their post-stress regulatory capital ratios above minimum requirements in the severely adverse scenario after submitting adjusted capital actions.”
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