JP Morgan; Why did no one sue them for 'Winning Billions During the Financial Crisis?!
JP Morgan Chase are the biggest investment bank in the world (At time of this post).
In the lead up to the banking Crisis, Goldman Sachs were the biggest investment bank. But losses during the financial crisis meant the bank was to reduce its assets substantially.
However, JP Morgan made bets during the aproach to the financial crisis which were successful enough to cover any losses due to the financial crisis. This success has also bolstered the banks success since as investors have favoured the bank due to its apparent imunity to financial crisis. The confidence of its new customers may however be misplaced.
JP Morgan investment bank, recently hit the the headlines for losing $2 billion in 'bets that went wrong'.
Share holders of the bank are suing the Chief executive and the board.
Reasons for the law suit are,"Defendants mis represented the losses and risk of loss to the company arising from massive bets on derivative contracts related to credit indexes refecting interest rates on corporate bonds." as explained by Saratoga Advantage Trust-Financial Services Portfolio, one of the share holders.
What is interesting about this is that lots of this kind of thing was going on in the lead up to the crisis. Only during this time, JP Morgan was one of the more successful banks. JP Morgans success today has been partly due to how it was able to ride the economic crisis. The reason for this was that lots of these 'bets' that JP Morgan were involved in during the crisis were a whole lot more successful. JP Morgan were in fact profiting by adding to the economic crisis. Other banks were losing money which was ending up in the hands of those same executives which are now being sued. Banks that ordinary people of the world helped to bail out with their taxes was in part due to banks like JP Morgan and the hedge funds run by JP Morgan who were protecting themselves, but at the same time adding to the losses of other banks and financial institutions, and to the bail outs which the public have had to pay for.
Some will say, how can this be right? While they are gaining phenomenal amounts of money, no one seems to care how they earn it. The press and media never seem to question it, and much of the press and media seems to actively encourage them by shouting about their profits figures when the accounts become available.
The other matter concerns all of us and the way that these banks should operate in the future. We all invest in shares, bonds, derivatives, credit default swaps, etc one way or an other. I mean all of us.
All of us who have savings.
Once these are placed in investment account they can be used for various types of bets that JP Morgan have been involved in. This is because for example a hedge fund owned by JP Morgan will have access to the money in your account by your bank lending money to the hedge fund. Your money could then be used to invest in a whole range of investment products such as the derivatives which have been blamed for the current JP Morgan loss.
All of us who have insurance.
Similarly, insurance money gets paid into funds which will be used by the investment banks and the hedge funds they run in a more direct way. (This is used as the deposit, the money you have in a deposit account could be used for a loan, up to around five times the amount which would be put behind the main investment). These insurance funds will earn more money than the money in your investment account, but obviously you will not see any of it as this will go to the managers of the insurance companies. (This should make your insurance costs lower but it in reality, it is more likely to have the opposite effect. This is what happens when a finance industy is allowed to run it's self).
All of us who have National Insurance (Employed or unemployed!)
If you thought you had escaped with the two above routes to investments controlled by investment banks then you are less likely to escape through this route. Even the un-employed have investments which are being handed to investment banks to do with as they wish. National Insurance is invested in much the same way as any other type of insurance. The majority of these investments will be making money for the few, but as for the rest of us and the world economy in general, we will all suffer for these investments.
I really don't see how Saratoga are going to get compensated for the loss in value of their shares. This is what the investment banks do every day. Most of the money that has been paid to share holders in the past will have come from profits generated from the same type of business, but when JP Morgan had been more fortunate with their 'bets'. The share holders weren't complaining then. I totally agree that the bank was taking risks it should not have been taking. The problem is that bankers beleive all their hype. That they are creating some kind of good from their gambling. All they are doing is creating problems, and these will become ever bigger as the bankers themselves become more demanding as far as their own salaries and bonuses. This gambling they are taking part in is at the expense of real investments which provide products like housing which we all need. Real business for these investment banks is becoming a bit of chore for them because the costs related to employment and other genuine costs of a business reduce the commission and interest possibilties that the investment banks can get from any deal. They therefore too often choose to use our money to gamble with.
The bottom line is this-
The share holders are right about the risks being taken but what they should be complaining about is the fact that they are merely gambling with investors money, whether it be money that JP Morgan are using whilst carrying out their business which could be contributed by any member of the public (through an investment account), or the share holders investment in the company. The share holders should be telling JP Morgan that they want the money invested in real business with real products and services instead of the type of 'investments' that the investment banks call business which in real terms is nothing more than touting, gambling and damaging the economy with our money. The problem with this is that the gambling, and the needless shovelling of money into business which don't need it is a major part of investment banking.
If the investment banks are unable to react to the changing economic conditions and also the new expectations of both their customers ( by this I mean the originators of all the fund s that end up with the investment banks) and their share holders, they could find themselves having to down size some time in the near future. If things carry on as they are today, with the governments allowing the big banks to dominate the economy, the people are likely to start to influence the situation by investing money elsewhere, where the investment banks can't get access to it. Also the insurance companies which invest the money we pay to them may have to invest money where it will create more sustainable investments in order to keep their customers in the future.
JP Morgan Chase are the biggest investment bank in the world (At time of this post).
In the lead up to the banking Crisis, Goldman Sachs were the biggest investment bank. But losses during the financial crisis meant the bank was to reduce its assets substantially.
However, JP Morgan made bets during the aproach to the financial crisis which were successful enough to cover any losses due to the financial crisis. This success has also bolstered the banks success since as investors have favoured the bank due to its apparent imunity to financial crisis. The confidence of its new customers may however be misplaced.
JP Morgan investment bank, recently hit the the headlines for losing $2 billion in 'bets that went wrong'.
Share holders of the bank are suing the Chief executive and the board.
Reasons for the law suit are,"Defendants mis represented the losses and risk of loss to the company arising from massive bets on derivative contracts related to credit indexes refecting interest rates on corporate bonds." as explained by Saratoga Advantage Trust-Financial Services Portfolio, one of the share holders.
What is interesting about this is that lots of this kind of thing was going on in the lead up to the crisis. Only during this time, JP Morgan was one of the more successful banks. JP Morgans success today has been partly due to how it was able to ride the economic crisis. The reason for this was that lots of these 'bets' that JP Morgan were involved in during the crisis were a whole lot more successful. JP Morgan were in fact profiting by adding to the economic crisis. Other banks were losing money which was ending up in the hands of those same executives which are now being sued. Banks that ordinary people of the world helped to bail out with their taxes was in part due to banks like JP Morgan and the hedge funds run by JP Morgan who were protecting themselves, but at the same time adding to the losses of other banks and financial institutions, and to the bail outs which the public have had to pay for.
Some will say, how can this be right? While they are gaining phenomenal amounts of money, no one seems to care how they earn it. The press and media never seem to question it, and much of the press and media seems to actively encourage them by shouting about their profits figures when the accounts become available.
The other matter concerns all of us and the way that these banks should operate in the future. We all invest in shares, bonds, derivatives, credit default swaps, etc one way or an other. I mean all of us.
All of us who have savings.
Once these are placed in investment account they can be used for various types of bets that JP Morgan have been involved in. This is because for example a hedge fund owned by JP Morgan will have access to the money in your account by your bank lending money to the hedge fund. Your money could then be used to invest in a whole range of investment products such as the derivatives which have been blamed for the current JP Morgan loss.
All of us who have insurance.
Similarly, insurance money gets paid into funds which will be used by the investment banks and the hedge funds they run in a more direct way. (This is used as the deposit, the money you have in a deposit account could be used for a loan, up to around five times the amount which would be put behind the main investment). These insurance funds will earn more money than the money in your investment account, but obviously you will not see any of it as this will go to the managers of the insurance companies. (This should make your insurance costs lower but it in reality, it is more likely to have the opposite effect. This is what happens when a finance industy is allowed to run it's self).
All of us who have National Insurance (Employed or unemployed!)
If you thought you had escaped with the two above routes to investments controlled by investment banks then you are less likely to escape through this route. Even the un-employed have investments which are being handed to investment banks to do with as they wish. National Insurance is invested in much the same way as any other type of insurance. The majority of these investments will be making money for the few, but as for the rest of us and the world economy in general, we will all suffer for these investments.
I really don't see how Saratoga are going to get compensated for the loss in value of their shares. This is what the investment banks do every day. Most of the money that has been paid to share holders in the past will have come from profits generated from the same type of business, but when JP Morgan had been more fortunate with their 'bets'. The share holders weren't complaining then. I totally agree that the bank was taking risks it should not have been taking. The problem is that bankers beleive all their hype. That they are creating some kind of good from their gambling. All they are doing is creating problems, and these will become ever bigger as the bankers themselves become more demanding as far as their own salaries and bonuses. This gambling they are taking part in is at the expense of real investments which provide products like housing which we all need. Real business for these investment banks is becoming a bit of chore for them because the costs related to employment and other genuine costs of a business reduce the commission and interest possibilties that the investment banks can get from any deal. They therefore too often choose to use our money to gamble with.
The bottom line is this-
The share holders are right about the risks being taken but what they should be complaining about is the fact that they are merely gambling with investors money, whether it be money that JP Morgan are using whilst carrying out their business which could be contributed by any member of the public (through an investment account), or the share holders investment in the company. The share holders should be telling JP Morgan that they want the money invested in real business with real products and services instead of the type of 'investments' that the investment banks call business which in real terms is nothing more than touting, gambling and damaging the economy with our money. The problem with this is that the gambling, and the needless shovelling of money into business which don't need it is a major part of investment banking.
If the investment banks are unable to react to the changing economic conditions and also the new expectations of both their customers ( by this I mean the originators of all the fund s that end up with the investment banks) and their share holders, they could find themselves having to down size some time in the near future. If things carry on as they are today, with the governments allowing the big banks to dominate the economy, the people are likely to start to influence the situation by investing money elsewhere, where the investment banks can't get access to it. Also the insurance companies which invest the money we pay to them may have to invest money where it will create more sustainable investments in order to keep their customers in the future.
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