Diabolically Simple
July 18, 2012 12:08 PM Subscribe
JP Morgan's manipulation of California energy market is a massive, illegitimate tax on the entire state. 'The Federal Energy Regulatory Commission, the regulator of the ISO and its trading markets, has started a formal investigation into Morgan's allegedly manipulative energy deals in California and with the Midwest ISO, which covers 11 states from Michigan to Montana.'
'Forget JPMorgan's well-publicized multibillion-dollar trading loss in derivatives; this trade turned a handsome profit, and it came directly out of electric customers' hides.' 'It shows that we haven't learned anything from Enron's bogus energy trading, the disclosure of which helped destroy that firm in 2001 and land several of its executives in jail. To the extent it was designed to exploit loopholes in energy trading rules, experts say, the scheme allegedly perpetrated by JPMorgan Ventures Energy Corp. is cut from the same cloth as Enron's infamous "fat boy" swindle, which cost the state's ratepayers an estimated $1.4 billion in 2000.'
'One issue raised by this affair is whether government regulators have adequate tools to enforce trading rules. FERC's investigation could take years, and its maximum penalty is $1 million per day of violation. If the agency hit JPMorgan for even six months of misbehavior, the $180-million bill would be a pittance compared with the $14 billion in revenue collected annually by JPMorgan's investment banking arm, which houses the energy trading.
The incentive remains for outfits like JPMorgan to stretch the rules to the breaking point — if they get caught, the cost is tolerable; if not, the returns are fabulous.'
'Indeed, there are signs that trading scams are rife: FERC in December accused Deutsche Bank of manipulating the California market and in March extracted a $245-million settlement from Baltimore-based Constellation Energy over charges it made manipulative trades in the New York market.'
'JPMorgan's alleged manipulation could have helped throw the entire energy market out of whack, imposing what could be incalculable costs on ratepayers.'
'These are trades that "don't create jobs or economic value," says Tyson Slocum, director of the energy program at the public advocacy organization Public Citizen.'
'What should scare the regulators — and ratepayers — is that there may be many more scams out there, all driving up costs to California consumers. According to ISO documents, JPMorgan's scheme got discovered only because the firm was collecting so much in excessive payments that it became hard to miss.
"JPMorgan got greedy," Slocum says. If their take was "25 cents on the dollar, instead of 200%, they never would have been caught."'
'Given the complexity of the energy market, this may be one of those cases in which the scandal lies not in what's illegal, but in what's legal.'
'Forget JPMorgan's well-publicized multibillion-dollar trading loss in derivatives; this trade turned a handsome profit, and it came directly out of electric customers' hides.' 'It shows that we haven't learned anything from Enron's bogus energy trading, the disclosure of which helped destroy that firm in 2001 and land several of its executives in jail. To the extent it was designed to exploit loopholes in energy trading rules, experts say, the scheme allegedly perpetrated by JPMorgan Ventures Energy Corp. is cut from the same cloth as Enron's infamous "fat boy" swindle, which cost the state's ratepayers an estimated $1.4 billion in 2000.'
'One issue raised by this affair is whether government regulators have adequate tools to enforce trading rules. FERC's investigation could take years, and its maximum penalty is $1 million per day of violation. If the agency hit JPMorgan for even six months of misbehavior, the $180-million bill would be a pittance compared with the $14 billion in revenue collected annually by JPMorgan's investment banking arm, which houses the energy trading.
The incentive remains for outfits like JPMorgan to stretch the rules to the breaking point — if they get caught, the cost is tolerable; if not, the returns are fabulous.'
'Indeed, there are signs that trading scams are rife: FERC in December accused Deutsche Bank of manipulating the California market and in March extracted a $245-million settlement from Baltimore-based Constellation Energy over charges it made manipulative trades in the New York market.'
'JPMorgan's alleged manipulation could have helped throw the entire energy market out of whack, imposing what could be incalculable costs on ratepayers.'
'These are trades that "don't create jobs or economic value," says Tyson Slocum, director of the energy program at the public advocacy organization Public Citizen.'
'What should scare the regulators — and ratepayers — is that there may be many more scams out there, all driving up costs to California consumers. According to ISO documents, JPMorgan's scheme got discovered only because the firm was collecting so much in excessive payments that it became hard to miss.
"JPMorgan got greedy," Slocum says. If their take was "25 cents on the dollar, instead of 200%, they never would have been caught."'
'Given the complexity of the energy market, this may be one of those cases in which the scandal lies not in what's illegal, but in what's legal.'
Didn't we already go through this same manipulation of CA energy markets?
posted by OmieWise at 12:17 PM on July 18, 2012 [4 favorites]
posted by OmieWise at 12:17 PM on July 18, 2012 [4 favorites]
When you put this latest together with the recent revelations about investment banks' fraudulent, systematic manipulation of the Libor rates, it certainly puts the current state of the financial industry in perspective.
And these are the responsible, deserving parties who got massive help to weather the financial crisis and ensuing Great Recession, while hard-hit working and middle class folks, if they're lucky, have gotten in their turn little more than shady offers to refinance their underwater mortgages for marginally better interest rates.
Sheesh. What an insult merely being alive to see all this feels like sometimes.
posted by saulgoodman at 12:17 PM on July 18, 2012 [21 favorites]
And these are the responsible, deserving parties who got massive help to weather the financial crisis and ensuing Great Recession, while hard-hit working and middle class folks, if they're lucky, have gotten in their turn little more than shady offers to refinance their underwater mortgages for marginally better interest rates.
Sheesh. What an insult merely being alive to see all this feels like sometimes.
posted by saulgoodman at 12:17 PM on July 18, 2012 [21 favorites]
I mean, I thought this was what Enron was doing before it went down the toilet. Am I remembering that wrong? Wasn't all that brownout stuff related to that? (God, I'm getting old.)
posted by OmieWise at 1:04 PM on July 18, 2012 [1 favorite]
posted by OmieWise at 1:04 PM on July 18, 2012 [1 favorite]
I'm kind of getting a callous where my outrage-at-financiers used to be. Are these exposes of conscienceless greed going to keep on coming?
posted by wenestvedt at 1:04 PM on July 18, 2012 [2 favorites]
posted by wenestvedt at 1:04 PM on July 18, 2012 [2 favorites]
You know.... you know that saying about lawyers and the first thing to do? I think we can safely replace lawyers with investment bankers as the root of a hell of a lot of the ills in the world today.
Christ almighty, revoke the charters and deport the players to Western Sahara already. Ser-iou-sly
posted by edgeways at 1:06 PM on July 18, 2012 [1 favorite]
Christ almighty, revoke the charters and deport the players to Western Sahara already. Ser-iou-sly
posted by edgeways at 1:06 PM on July 18, 2012 [1 favorite]
Fines like this should be a percentage of the corporate assets, or something like that, not something these guys can pay out of the office supply account.
posted by LastOfHisKind at 1:08 PM on July 18, 2012 [6 favorites]
posted by LastOfHisKind at 1:08 PM on July 18, 2012 [6 favorites]
I mean, I thought this was what Enron was doing before it went down the toilet. Am I remembering that wrong? Wasn't all that brownout stuff related to that?
The quote from the FPP touches on that. "It shows that we haven't learned anything from Enron's bogus energy trading, the disclosure of which helped destroy that firm in 2001 and land several of its executives in jail." Apparently, JP Morgan just took a lateral pass from Enron and kept running up the field toward the same goal line.
posted by saulgoodman at 1:09 PM on July 18, 2012 [1 favorite]
The quote from the FPP touches on that. "It shows that we haven't learned anything from Enron's bogus energy trading, the disclosure of which helped destroy that firm in 2001 and land several of its executives in jail." Apparently, JP Morgan just took a lateral pass from Enron and kept running up the field toward the same goal line.
posted by saulgoodman at 1:09 PM on July 18, 2012 [1 favorite]
Enron's manipulation was not as subtle as this, OmieWise.
Enron was more directly fiddling with supply by taking plants offline for maintenance at inopportune times; by "reserving" key parts of the transmission lines for its own power, then charging other wholesalers inflated fees to use that same line; by routing in state power out of state and back again to take advantage of higher rate ceilings in the CA law for out of state power; by God knows whatever other means they could think up.
posted by notyou at 1:14 PM on July 18, 2012 [1 favorite]
Enron was more directly fiddling with supply by taking plants offline for maintenance at inopportune times; by "reserving" key parts of the transmission lines for its own power, then charging other wholesalers inflated fees to use that same line; by routing in state power out of state and back again to take advantage of higher rate ceilings in the CA law for out of state power; by God knows whatever other means they could think up.
posted by notyou at 1:14 PM on July 18, 2012 [1 favorite]
Different laws must govern the operation of different types of federal auctions, 'cause this dude got two years in prison and a $10k fine for making a phony bid at a BLM mineral rights auction.
posted by notyou at 1:17 PM on July 18, 2012 [15 favorites]
posted by notyou at 1:17 PM on July 18, 2012 [15 favorites]
wenestvedt: "I'm kind of getting a callous where my outrage-at-financiers used to be. Are these exposes of conscienceless greed going to keep on coming?"
Until we have a right proper revolution, my friend. Ha. HA HAHAHAHAHA. *sigh*
posted by symbioid at 1:20 PM on July 18, 2012
Until we have a right proper revolution, my friend. Ha. HA HAHAHAHAHA. *sigh*
posted by symbioid at 1:20 PM on July 18, 2012
So when the fuck do we actually call this what it is - ORGANIZED CRIME? I mean, Jesus Christ on a pogo stick, these guys are no different than mobsters.
posted by Benny Andajetz at 1:26 PM on July 18, 2012 [29 favorites]
posted by Benny Andajetz at 1:26 PM on July 18, 2012 [29 favorites]
I'm glad my "surely this" outrage response was broken once-and-for-all the Iraq War, and by watching No End in Sight. I'd hate to have to be sickened when no one responsible for this is held accountable, either.
posted by ryanshepard at 1:28 PM on July 18, 2012 [1 favorite]
posted by ryanshepard at 1:28 PM on July 18, 2012 [1 favorite]
Lol, is this 2012 or 1912?
posted by facetious at 1:29 PM on July 18, 2012 [4 favorites]
posted by facetious at 1:29 PM on July 18, 2012 [4 favorites]
There is no limit to their venality. These individuals believe absolutely that they are entitled to rob us. Only the grave will correct this misunderstanding.
posted by Pudhoho at 1:38 PM on July 18, 2012 [5 favorites]
posted by Pudhoho at 1:38 PM on July 18, 2012 [5 favorites]
And then there's the marriage of Progress Energy & Duke Power. Goodie.
posted by yoga at 1:46 PM on July 18, 2012 [1 favorite]
posted by yoga at 1:46 PM on July 18, 2012 [1 favorite]
From the article: One issue raised by this affair is whether government regulators have adequate tools to enforce trading rules.
As a Californian I'm more concerned that state regulators lack the skills and incentives to enforce the rules. I have very little faith in our government oversight actually working on the citizen's behalf. Instead we get a lot of regulatory incompetence and the occasional outright crook.
Meanwhile, in San Francisco, the current plan is to raise our electricity rates to pay for years of criminal negligence of the gas pipeline network, deferred maintenance that eventually caused an explosion that killed eight people. PG&Es's shareholders have pocketed the profits from skipping maintenance already. But California regulators seem uninterested in making those same shareholders bear the expense.
Banks are self interested and crooked. If we're going to have an open energy market in this state, we have to regulate that market. But our own regulators are imcompetent, self-interested, and sometimes crooked. So California continues to get fleeced.
posted by Nelson at 1:47 PM on July 18, 2012 [1 favorite]
As a Californian I'm more concerned that state regulators lack the skills and incentives to enforce the rules. I have very little faith in our government oversight actually working on the citizen's behalf. Instead we get a lot of regulatory incompetence and the occasional outright crook.
Meanwhile, in San Francisco, the current plan is to raise our electricity rates to pay for years of criminal negligence of the gas pipeline network, deferred maintenance that eventually caused an explosion that killed eight people. PG&Es's shareholders have pocketed the profits from skipping maintenance already. But California regulators seem uninterested in making those same shareholders bear the expense.
Banks are self interested and crooked. If we're going to have an open energy market in this state, we have to regulate that market. But our own regulators are imcompetent, self-interested, and sometimes crooked. So California continues to get fleeced.
posted by Nelson at 1:47 PM on July 18, 2012 [1 favorite]
Now imagine a 20-year-old libertarian in a fedora and jorts telling you that this is not an abuse of capitalism, but actually somehow a result of government interference.
posted by Sticherbeast at 1:47 PM on July 18, 2012 [20 favorites]
posted by Sticherbeast at 1:47 PM on July 18, 2012 [20 favorites]
...uh that I find hard to believe JPMorgan doesn't have some kind of claw involved with, that is. (previous Duke Power/Progress Energy merger comment)
posted by yoga at 1:48 PM on July 18, 2012
posted by yoga at 1:48 PM on July 18, 2012
Fines like this should be a percentage of the corporate assets, or something like that, not something these guys can pay out of the office supply account.
I'd rather it be paid from their personal holdings. Divorce the corporate entity from this. It's the people who do these things. Take their homes, cars, planes, money. Then bar them from ever working in finance again. Make it so they can't so much as work the front-desk at a payday loan store.
posted by Thorzdad at 1:49 PM on July 18, 2012 [4 favorites]
I'd rather it be paid from their personal holdings. Divorce the corporate entity from this. It's the people who do these things. Take their homes, cars, planes, money. Then bar them from ever working in finance again. Make it so they can't so much as work the front-desk at a payday loan store.
posted by Thorzdad at 1:49 PM on July 18, 2012 [4 favorites]
Only the grave will correct this misunderstanding.
Whoa there now--I'm more inclined toward prison stripes and massive asset claw-backs myself. After all digging graves is hard work, and with the sorrowful state of our gravediggers' unions these days, your approach would inevitably put the nation's gravediggers in a pretty rough spot.
posted by saulgoodman at 1:50 PM on July 18, 2012 [2 favorites]
Whoa there now--I'm more inclined toward prison stripes and massive asset claw-backs myself. After all digging graves is hard work, and with the sorrowful state of our gravediggers' unions these days, your approach would inevitably put the nation's gravediggers in a pretty rough spot.
posted by saulgoodman at 1:50 PM on July 18, 2012 [2 favorites]
How about RICO charges?
posted by rtha at 1:51 PM on July 18, 2012 [6 favorites]
posted by rtha at 1:51 PM on July 18, 2012 [6 favorites]
PG&Es's shareholders have pocketed the profits
This is the root of the problem but not in the way you intend. I know the blowback I'm going to get on this, but by and large PG&E's investors are us. It's either pension funds for state/govt employees, teachers, and the like or 401ks or massive investment in mutual funds by the middle class who expect their money to grow so they can live large in retirement. Without access to this giant chunk of OUR money, none of this gambling would be possible for banks. People put their retirement dreams into this machine and they demand ever increasing growth - which is just not possible without major crap like this b.s. I'm not excusing the banks but to a degree we all have bought into this and feed it.
posted by spicynuts at 1:54 PM on July 18, 2012 [8 favorites]
This is the root of the problem but not in the way you intend. I know the blowback I'm going to get on this, but by and large PG&E's investors are us. It's either pension funds for state/govt employees, teachers, and the like or 401ks or massive investment in mutual funds by the middle class who expect their money to grow so they can live large in retirement. Without access to this giant chunk of OUR money, none of this gambling would be possible for banks. People put their retirement dreams into this machine and they demand ever increasing growth - which is just not possible without major crap like this b.s. I'm not excusing the banks but to a degree we all have bought into this and feed it.
posted by spicynuts at 1:54 PM on July 18, 2012 [8 favorites]
ISO rules allow bidders to claim payments of up to twice their real costs.
Yes: this is a situation in which the state government was willing to pay double a company's actual costs in order to encourage a company to offer to sell them something.
This program is so obviously ripe for abuse that it makes me wonder if someone was bribed to invent it.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 1:55 PM on July 18, 2012 [4 favorites]
Yes: this is a situation in which the state government was willing to pay double a company's actual costs in order to encourage a company to offer to sell them something.
This program is so obviously ripe for abuse that it makes me wonder if someone was bribed to invent it.
posted by East Manitoba Regional Junior Kabaddi Champion '94 at 1:55 PM on July 18, 2012 [4 favorites]
So, numbers from the article:
6 mos. income from JPM's energy arm: $14 billion
Penalty for 6 mos. malfeasance: $180 million
No jobs created. No value created. Customers looted.
Theft.
posted by Benny Andajetz at 2:00 PM on July 18, 2012 [13 favorites]
6 mos. income from JPM's energy arm: $14 billion
Penalty for 6 mos. malfeasance: $180 million
No jobs created. No value created. Customers looted.
Theft.
posted by Benny Andajetz at 2:00 PM on July 18, 2012 [13 favorites]
Sorry, 6 mos income is $7 billion, not $14 billion. Same sentiment, though.
posted by Benny Andajetz at 2:02 PM on July 18, 2012
posted by Benny Andajetz at 2:02 PM on July 18, 2012
This is the root of the problem but not in the way you intend. I know the blowback I'm going to get on this, but by and large PG&E's investors are us. It's either pension funds for state/govt employees, teachers, and the like or 401ks or massive investment in mutual funds by the middle class who expect their money to grow so they can live large in retirement.
So, they steal $2 from us, but it's cool because we get $1 back?
I, respectfully, disagree.
posted by Bathtub Bobsled at 2:08 PM on July 18, 2012
So, they steal $2 from us, but it's cool because we get $1 back?
I, respectfully, disagree.
posted by Bathtub Bobsled at 2:08 PM on July 18, 2012
I think if you read the rest of the comment you will see that it addresses your $2 for $1 point. The vampire squid feeds on everyone.
posted by feloniousmonk at 2:15 PM on July 18, 2012 [1 favorite]
posted by feloniousmonk at 2:15 PM on July 18, 2012 [1 favorite]
Maybe the solution is to lower taxes of the job creators?
Maybe I'm just cynical, but doesn't this thing have a hallowed history? Californians (or more generally: citizens) have been robbed for generations. When those who do the robbing get away with it, they grow very respectable and admired by society. Go big. Don't just rob, rob big, and you'll go from robber to robber baron.
There is a long, long tradition of this here in California. Coincidentally I just re-watched Chinatown.
"'Course I'm respectable. I'm old. Politicians, ugly buildings, and whores all get respectable if they last long enough.'"
He missed: bankers.
posted by VikingSword at 2:16 PM on July 18, 2012 [1 favorite]
Maybe I'm just cynical, but doesn't this thing have a hallowed history? Californians (or more generally: citizens) have been robbed for generations. When those who do the robbing get away with it, they grow very respectable and admired by society. Go big. Don't just rob, rob big, and you'll go from robber to robber baron.
There is a long, long tradition of this here in California. Coincidentally I just re-watched Chinatown.
"'Course I'm respectable. I'm old. Politicians, ugly buildings, and whores all get respectable if they last long enough.'"
He missed: bankers.
posted by VikingSword at 2:16 PM on July 18, 2012 [1 favorite]
Oops, posted too soon. Was going to add: there is the old argument that robber barons did bring in some benefits and were able to do things on a scale and with an alacrity mere democratic government would not be able to pull off. So we got railways, dams, cities, steel industry and so forth.
But my question with regard to these new robbers is: what value do they bring?
'These are trades that "don't create jobs or economic value," says Tyson Slocum, director of the energy program at the public advocacy organization Public Citizen.'
And that ties in to my point: the solution, apparently, is to lower taxes for these job creators - because having wealth, no matter how ill-begotten, automatically qualifies you as a job creator who deserves a helping hand from the government, funded by the little people taxpayers - the same taxpayers who were just robbed by the job creators in a simple transfer of stolen money.
posted by VikingSword at 2:21 PM on July 18, 2012 [2 favorites]
But my question with regard to these new robbers is: what value do they bring?
'These are trades that "don't create jobs or economic value," says Tyson Slocum, director of the energy program at the public advocacy organization Public Citizen.'
And that ties in to my point: the solution, apparently, is to lower taxes for these job creators - because having wealth, no matter how ill-begotten, automatically qualifies you as a job creator who deserves a helping hand from the government, funded by the little people taxpayers - the same taxpayers who were just robbed by the job creators in a simple transfer of stolen money.
posted by VikingSword at 2:21 PM on July 18, 2012 [2 favorites]
And this is why I've given up on the Democrats. Because really, if they can't make the case that the Republicans are simply not a sane political choice, then I wonder if they're even trying. Why aren't the Demos screaming from the rooftops: "here is what is happening with financial abuse - look at JP Morgan! What is the Republican response other than cutting taxes for the rich and having less money available for regulatory enforcement? Why is the Republican response to try to cut food stamps? Why do the Republicans think that the solution is to have even LESS regulation?"
And it looks more and more like the answer is not because the Democrats are terminally incompetent campaigners, but that the Democrats are in bed with the same financial industry that's like a growing cancer on this country - and the world.
If the major parties can not provide solutions, what recourse do citizens have in our democracy?
posted by VikingSword at 2:39 PM on July 18, 2012 [19 favorites]
And it looks more and more like the answer is not because the Democrats are terminally incompetent campaigners, but that the Democrats are in bed with the same financial industry that's like a growing cancer on this country - and the world.
If the major parties can not provide solutions, what recourse do citizens have in our democracy?
posted by VikingSword at 2:39 PM on July 18, 2012 [19 favorites]
what recourse do citizens have in our democracy?
You can shut the hell up and buy a new automobile to show everyone how successful you are, that's what.
...or.... or pretty much nothing. Yep, nothing.
Enjoy!
posted by aramaic at 2:49 PM on July 18, 2012 [1 favorite]
You can shut the hell up and buy a new automobile to show everyone how successful you are, that's what.
...or.... or pretty much nothing. Yep, nothing.
Enjoy!
posted by aramaic at 2:49 PM on July 18, 2012 [1 favorite]
And it looks more and more like the answer is not because the Democrats are terminally incompetent campaigners, but that the Democrats are in bed with the same financial industry that's like a growing cancer on this country - and the world.
Whoa now, let's not jump to conclusions. We should all tune in on September 6th to hear President Obama tell us his bold vision for our republic from the floor of Bank of American Stadium
posted by crayz at 3:06 PM on July 18, 2012 [1 favorite]
Whoa now, let's not jump to conclusions. We should all tune in on September 6th to hear President Obama tell us his bold vision for our republic from the floor of Bank of American Stadium
posted by crayz at 3:06 PM on July 18, 2012 [1 favorite]
Natural monopolies should either be tightly regulated or state owned. This circle will never be squared.
posted by aerotive at 3:10 PM on July 18, 2012 [4 favorites]
posted by aerotive at 3:10 PM on July 18, 2012 [4 favorites]
>If the major parties can not provide solutions, what recourse do citizens have in our democracy?
Stop relying on the "major parties" or expecting them to provide solutions. They walked out on you a long time ago. Contrary to popular belief, voting doesn't happen just once a year during business hours in November. Voting happens with every action you take and every dollar you spend. Your vote is whatever loot, trade, or sacrifice you make to live comfortably or survive in this society.
The major parties aren't running the country, but the major businesses are. And businesses run on supply and demand, for profit. It might not be the clear-cut answer you're looking for, but until someone with the appropriate means, motive, and opportunity decides to show everyone that no one is above the law, my best suggestion is not to associate with these criminals and their racket.
posted by Johann Georg Faust at 3:21 PM on July 18, 2012
Stop relying on the "major parties" or expecting them to provide solutions. They walked out on you a long time ago. Contrary to popular belief, voting doesn't happen just once a year during business hours in November. Voting happens with every action you take and every dollar you spend. Your vote is whatever loot, trade, or sacrifice you make to live comfortably or survive in this society.
The major parties aren't running the country, but the major businesses are. And businesses run on supply and demand, for profit. It might not be the clear-cut answer you're looking for, but until someone with the appropriate means, motive, and opportunity decides to show everyone that no one is above the law, my best suggestion is not to associate with these criminals and their racket.
posted by Johann Georg Faust at 3:21 PM on July 18, 2012
FYI: The JP Morgan Chase Board of Directors:
James A. Bell (Boeing)
Crandall C. Bowles (Springs Industries)
Stephen B. Burke (NBC Universal -- don't look for much coverage from NBC)
David M. Cole (Honeywell)
James S. Crown (Henry Crown & Co.)
Jamie Dimon (he's having quite a year!)
Timothy P. Flynn (KPMG)
Ellen V. Futter (JP Morgan)
Laban P. Jackson, Jr. (JP Morgan)
Lee R. Raymond (Exxon Mobil)
William C. Weldon (Johnson and Johnson)
posted by mrhappy at 3:33 PM on July 18, 2012 [3 favorites]
James A. Bell (Boeing)
Crandall C. Bowles (Springs Industries)
Stephen B. Burke (NBC Universal -- don't look for much coverage from NBC)
David M. Cole (Honeywell)
James S. Crown (Henry Crown & Co.)
Jamie Dimon (he's having quite a year!)
Timothy P. Flynn (KPMG)
Ellen V. Futter (JP Morgan)
Laban P. Jackson, Jr. (JP Morgan)
Lee R. Raymond (Exxon Mobil)
William C. Weldon (Johnson and Johnson)
posted by mrhappy at 3:33 PM on July 18, 2012 [3 favorites]
I have given up on hoping that any of these banksters will ever go to jail?
I would just like to see criminal charges filed against one person for one case of financial fraud.
Will somebody please bring some charges against just one bankster for any one of their many crimes?
posted by Flood at 4:04 PM on July 18, 2012
I would just like to see criminal charges filed against one person for one case of financial fraud.
Will somebody please bring some charges against just one bankster for any one of their many crimes?
posted by Flood at 4:04 PM on July 18, 2012
People put their retirement dreams into this machine and they demand ever increasing growth - which is just not possible without major crap like this b.s.
This assertion is false. Growth without fraud is possible.
posted by incessant at 4:18 PM on July 18, 2012
This assertion is false. Growth without fraud is possible.
posted by incessant at 4:18 PM on July 18, 2012
because we get $1 back?
I neither said anything about it being cool nor about us getting a dollar back
posted by spicynuts at 4:22 PM on July 18, 2012
I neither said anything about it being cool nor about us getting a dollar back
posted by spicynuts at 4:22 PM on July 18, 2012
Take their homes, cars, planes, money. Then bar them from ever working in finance again. Make it so they can't so much as work the front-desk at a payday loan store.
No, no, no. Make it so they may work only at the front desk of a payday loan store.
posted by one more dead town's last parade at 4:30 PM on July 18, 2012 [2 favorites]
No, no, no. Make it so they may work only at the front desk of a payday loan store.
posted by one more dead town's last parade at 4:30 PM on July 18, 2012 [2 favorites]
This assertion is false. Growth without fraud is possible.
yes... Reasonable growth. But people were conned to believe they deserved the never ending double digit returns that would turn them into barons like they saw in the late 90s
posted by spicynuts at 4:36 PM on July 18, 2012
yes... Reasonable growth. But people were conned to believe they deserved the never ending double digit returns that would turn them into barons like they saw in the late 90s
posted by spicynuts at 4:36 PM on July 18, 2012
How do the people coming home from Afghanistan after years of putting their lives on the line to keep terrorist camps shut feel about what's been going on at the home front?
posted by Anything at 4:42 PM on July 18, 2012
posted by Anything at 4:42 PM on July 18, 2012
Banking Is a Criminal Industry Because Its Crimes Go Unpunished
posted by homunculus at 5:26 PM on July 18, 2012 [4 favorites]
posted by homunculus at 5:26 PM on July 18, 2012 [4 favorites]
So, numbers from the article:
6 mos. income from JPM's energy arm: $7 billion
Penalty for 6 mos. malfeasance: $180 million
When we arrest and punish people for stealing, don't we normally not let them keep the stolen stuff? The fine should be $180 million (or whatever) on top of relinquishing the $7 billion. So what's the official explanation for that not happening?
posted by Evilspork at 5:35 PM on July 18, 2012 [3 favorites]
6 mos. income from JPM's energy arm: $7 billion
Penalty for 6 mos. malfeasance: $180 million
When we arrest and punish people for stealing, don't we normally not let them keep the stolen stuff? The fine should be $180 million (or whatever) on top of relinquishing the $7 billion. So what's the official explanation for that not happening?
posted by Evilspork at 5:35 PM on July 18, 2012 [3 favorites]
Did everyone actually read what JPM is accused of doing? It reads like those losers who find and exploit bugs in MMORPGs and then defend it by saying they were just taking advantage of the system as implemented. JPM energy traders must have gotten their start as those 13 year old asshole dupers in WoW.
posted by Justinian at 5:47 PM on July 18, 2012 [5 favorites]
posted by Justinian at 5:47 PM on July 18, 2012 [5 favorites]
Advocating for El Diablo here -- presumably not all of their $7bn income was fraudulent?
posted by Anything at 5:55 PM on July 18, 2012
posted by Anything at 5:55 PM on July 18, 2012
Yeah, I read the article. As far as I can tell they were gaming a stupidly designed system, not doing anything illegal. Basically, they put in bids at prices which were so high that no-one would ever buy the energy, but in doing so were able to recoup up to 2x the baseline operating costs of the power generating facilities. It looks like they were well within the letter of the (very poorly written) law.
posted by unSane at 6:09 PM on July 18, 2012
posted by unSane at 6:09 PM on July 18, 2012
Yeah, I read the article. As far as I can tell they were gaming a stupidly designed system, not doing anything illegal. Basically, they put in bids at prices which were so high that no-one would ever buy the energy, but in doing so were able to recoup up to 2x the baseline operating costs of the power generating facilities. It looks like they were well within the letter of the (very poorly written) law.
Yeah, but if someone is able to connect the dots and prove that JPM never intended to win a contract, that's fraud, ain't it?
posted by Benny Andajetz at 6:13 PM on July 18, 2012
Yeah, but if someone is able to connect the dots and prove that JPM never intended to win a contract, that's fraud, ain't it?
posted by Benny Andajetz at 6:13 PM on July 18, 2012
I don't think intent comes into it. I presume that there are some clauses in the contracts that try to prevent this kind of thing that the State thinks they fell foul of.
posted by unSane at 6:22 PM on July 18, 2012
posted by unSane at 6:22 PM on July 18, 2012
"Who hit you in the face?"
"J.P. Morgan."
"And who hit you in the face last time?"
"J.P. Morgan."
"And the time before that?"
"J.P. Morgan."
"Damn. If we could just figure out who keeps hitting you in the face, maybe we could do something about it."
posted by Benny Andajetz at 6:34 PM on July 18, 2012 [3 favorites]
"J.P. Morgan."
"And who hit you in the face last time?"
"J.P. Morgan."
"And the time before that?"
"J.P. Morgan."
"Damn. If we could just figure out who keeps hitting you in the face, maybe we could do something about it."
posted by Benny Andajetz at 6:34 PM on July 18, 2012 [3 favorites]
FERC keeps a record of its "Notices of Alleged Violations".
Some fun reading there. Look what Barclays got itself up to [PDF]:
As for whether or not "intention" enters into FERC's enforcement actions, this copy on FERC's Enforcement page suggests it does:
Some fun reading there. Look what Barclays got itself up to [PDF]:
Staff alleges that Barclays Bank PLC and the individual traders (collectively Barclays) each violated 18 CFR 1c.2 (2011) by engaging in a coordinated scheme during certain months in the period November 2006 to December 2008 by trading day-ahead fixed-price physical electricity at the locations of MidColumbia, Palo Verde, South Path 15 and North Path 15 to benefit Barclays’ Intercontinental Exchange (ICE) fixed-for-floating financial swap positions in those markets. Specifically, staff alleges that Barclays assembled substantial physical positions in the opposite direction of Barclays’ fixed-for-floating financial swap positions and that Barclays flattened those physical positions in the next-day fixed-price physical markets to move the ICE daily index settlement up if buying and down if selling.Now that's diabolical.
As for whether or not "intention" enters into FERC's enforcement actions, this copy on FERC's Enforcement page suggests it does:
Under 18 C.F.R. § 1c it is unlawful for any entity, directly or indirectly, in connection with the purchase or sale of electric energy or natural gas or the purchase or sale of transmission or transportation services subject to Commission jurisdiction:posted by notyou at 6:38 PM on July 18, 2012 [1 favorite]
- To defraud using any device, scheme or artifice (i.e. intentional or reckless conduct);
- To make any untrue statement of material fact or omit a material fact; or
- To engage in any act, practice or course of business that operates or would operate as a fraud or deceit.
It's amazing to me there are still people out there who can rationalize away all these betrayals of the public trust.
The article mentions that California retains the authority to take over its energy markets and revert them to public utilities. The state should do that immediately and take as big a financial chunk out of all these assholes as it can along the way.
posted by saulgoodman at 7:07 PM on July 18, 2012 [3 favorites]
The article mentions that California retains the authority to take over its energy markets and revert them to public utilities. The state should do that immediately and take as big a financial chunk out of all these assholes as it can along the way.
posted by saulgoodman at 7:07 PM on July 18, 2012 [3 favorites]
Of course JP Morgan was greedy and venal. That's just what you would expect. But if this had been a MMORPG their exploit would have been nerfed long ago. Why were the regulators asleep at the switch?
posted by Joe in Australia at 7:34 PM on July 18, 2012 [1 favorite]
posted by Joe in Australia at 7:34 PM on July 18, 2012 [1 favorite]
There is a profound lack of will to punish these criminals in government officials, elected and otherwise. What options do we have? As moral people, bullets are off the table, but short of divine intervention, what can stop this?
posted by Joey Michaels at 7:48 PM on July 18, 2012
posted by Joey Michaels at 7:48 PM on July 18, 2012
It reads like those losers who find and exploit bugs in MMORPGs and then defend it by saying they were just taking advantage of the system as implemented. JPM energy traders must have gotten their start as those 13 year old asshole dupers in WoW.
Except it wasn't really a bug. It's more like after careful consideration of how to improve the market, they decided to pay everyone $1 in real money for every item they listed for sale at the auction house, and then acted all shocked and dismayed when 30 seconds later some 13-year-oldasshole investment banker puts up a million leather tunics for sale with a reserve price of 1800 gold each.
posted by sfenders at 7:59 PM on July 18, 2012 [1 favorite]
Except it wasn't really a bug. It's more like after careful consideration of how to improve the market, they decided to pay everyone $1 in real money for every item they listed for sale at the auction house, and then acted all shocked and dismayed when 30 seconds later some 13-year-old
posted by sfenders at 7:59 PM on July 18, 2012 [1 favorite]
It's more like after careful consideration of how to improve the market,
No, it's more like they deregulated the market after listening to a bunch of pro-corporate private industry types complain endlessly that they could do it better if not for all the onerous regulations imposed on them, only to turn around and unrepentantly pull the plug on all the power in the state to convince everyone to pass even more deregulation of the energy industry at the Federal level. Only to act all shocked when financial industry assholes turned around and exploited the weakened regulatory environment to screw people even more blatantly a few years later.
Am I the only one around here who remembers when Cheney and his secret energy taskforce practically brought the entire state of California to a halt a few years back just to push their radically deregulatory energy policies through Congress on the grounds that we obviously needed to do whatever it would take to bring new capacity online immediately on the basis of those (we now know manufactured) energy shortages?
Are we really just cool with that level of public fraud now?
posted by saulgoodman at 8:37 PM on July 18, 2012 [2 favorites]
No, it's more like they deregulated the market after listening to a bunch of pro-corporate private industry types complain endlessly that they could do it better if not for all the onerous regulations imposed on them, only to turn around and unrepentantly pull the plug on all the power in the state to convince everyone to pass even more deregulation of the energy industry at the Federal level. Only to act all shocked when financial industry assholes turned around and exploited the weakened regulatory environment to screw people even more blatantly a few years later.
Am I the only one around here who remembers when Cheney and his secret energy taskforce practically brought the entire state of California to a halt a few years back just to push their radically deregulatory energy policies through Congress on the grounds that we obviously needed to do whatever it would take to bring new capacity online immediately on the basis of those (we now know manufactured) energy shortages?
Are we really just cool with that level of public fraud now?
posted by saulgoodman at 8:37 PM on July 18, 2012 [2 favorites]
tl;dr version: The market was only set up so stupidly thanks to the deregulatory lobbying efforts of the same industries who later profited from those weaknesses.
posted by saulgoodman at 8:42 PM on July 18, 2012
posted by saulgoodman at 8:42 PM on July 18, 2012
...Where in this case "lobbying"="holding all the electrical power in the US's largest, most economically productive state hostage for a few months."
posted by saulgoodman at 8:46 PM on July 18, 2012
posted by saulgoodman at 8:46 PM on July 18, 2012
So banks are manipulating LIBOR, manipulating the energy market, and getting bailed out for being too big to fail when the try and game the mortgage market. Is there any reason not to break up the banks into pieces that don't have so much power?
posted by CheeseDigestsAll at 9:32 PM on July 18, 2012 [3 favorites]
posted by CheeseDigestsAll at 9:32 PM on July 18, 2012 [3 favorites]
Is there any reason not to break up the banks into pieces that don't have so much power?
Because then they'll re-merge and do they same shit a few years later. They should be regulated as a public utility.
posted by eurypteris at 10:57 PM on July 18, 2012 [1 favorite]
Because then they'll re-merge and do they same shit a few years later. They should be regulated as a public utility.
posted by eurypteris at 10:57 PM on July 18, 2012 [1 favorite]
There is a profound lack of will to punish these criminals in government officials, elected and otherwise. What options do we have? As moral people, bullets are off the table, but short of divine intervention, what can stop this?
Honestly, maybe it's not so moral to keep the bullets of the table.
posted by IAmUnaware at 12:55 AM on July 19, 2012
Honestly, maybe it's not so moral to keep the bullets of the table.
posted by IAmUnaware at 12:55 AM on July 19, 2012
"off the table", obviously.
posted by IAmUnaware at 12:56 AM on July 19, 2012
posted by IAmUnaware at 12:56 AM on July 19, 2012
I'm torn. Banks as a public utility seems sensible to me. The individual incentive to profit personally from banking operations needs to be removed somehow. We can't trust such money-hungry people with our money; that much is clear.
posted by saulgoodman at 7:50 AM on July 19, 2012
posted by saulgoodman at 7:50 AM on July 19, 2012
And it looks more and more like the answer is not because the Democrats are terminally incompetent campaigners, but that the Democrats are in bed with the same financial industry that's like a growing cancer on this country - and the world.
If the major parties can not provide solutions, what recourse do citizens have in our democracy?
Political power comes from two places - Votes or Money.
So - why should Democrats care about your wants if it provides neither of those ?
posted by Pogo_Fuzzybutt at 8:23 AM on July 19, 2012
If the major parties can not provide solutions, what recourse do citizens have in our democracy?
Political power comes from two places - Votes or Money.
So - why should Democrats care about your wants if it provides neither of those ?
posted by Pogo_Fuzzybutt at 8:23 AM on July 19, 2012
Because then they'll re-merge and do they same shit a few years later. They should be regulated as a public utility.
See: AT&T
posted by entropicamericana at 9:06 AM on July 19, 2012
See: AT&T
posted by entropicamericana at 9:06 AM on July 19, 2012
6 mos. income from JPM's energy arm: $14 billion ...Sorry, 6 mos income is $7 billion, not $14 billion. Same sentiment, though.
posted by Benny Andajetz at 2:02 PM on July 18 [+] [!]
Does it bother anyone that these figures are just totally wrong? One can discuss the issue, the banks etc, but if you want to invoke rage-instilling facts can we at least check them?
For the last 6 months, JPM Investment bank (the ENTIRE IB, not "the energy arm") did $14billion in revenue. Revenue is not at all the same thing as income - you have to pay for computers and vendors and real estate and people etc.
During that period JPM Investment bank (the ENTIRE IB, not just "the energy arm") did ~$3.5billion in income. So Benny you are only off by a factor of 2 if the energy arm was the entire IB, which its not. You are probably off by at least a factor of 10, which in my neck of the woods is just called 'wrong'.
The data is all right there at the sec websites on edgar, or a bloomberg terminal, or any financial data website with its act together.
posted by H. Roark at 10:37 AM on July 19, 2012
posted by Benny Andajetz at 2:02 PM on July 18 [+] [!]
Does it bother anyone that these figures are just totally wrong? One can discuss the issue, the banks etc, but if you want to invoke rage-instilling facts can we at least check them?
For the last 6 months, JPM Investment bank (the ENTIRE IB, not "the energy arm") did $14billion in revenue. Revenue is not at all the same thing as income - you have to pay for computers and vendors and real estate and people etc.
During that period JPM Investment bank (the ENTIRE IB, not just "the energy arm") did ~$3.5billion in income. So Benny you are only off by a factor of 2 if the energy arm was the entire IB, which its not. You are probably off by at least a factor of 10, which in my neck of the woods is just called 'wrong'.
The data is all right there at the sec websites on edgar, or a bloomberg terminal, or any financial data website with its act together.
posted by H. Roark at 10:37 AM on July 19, 2012
H. Roark:
Point taken. I misread the sentence.
Do the financial data have a breakdown on what JPM made in that sector alone?
(My guess, correctly or incorrectly, is that the potential fines are still a slap on the wrist. Just basing that on recent history.)
posted by Benny Andajetz at 1:25 PM on July 19, 2012
Point taken. I misread the sentence.
Do the financial data have a breakdown on what JPM made in that sector alone?
(My guess, correctly or incorrectly, is that the potential fines are still a slap on the wrist. Just basing that on recent history.)
posted by Benny Andajetz at 1:25 PM on July 19, 2012
Whoa. Even some big bankers are now calling for the big banks to be broken up. Maybe we're finally starting to see a thaw in the political climate...
posted by saulgoodman at 7:05 AM on July 25, 2012
posted by saulgoodman at 7:05 AM on July 25, 2012
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posted by HuronBob at 12:17 PM on July 18, 2012 [8 favorites]