Share on Google Plus Share on Twitter
  2
Share on Facebook
  1
Share on LinkedIn Share on PInterest Share on StumbleUpon Tell A Friend
  1
4 Shares     
Printer Friendly Page Save As Favorite View Favorites View Article Stats
1 comment

OpEdNews Op Eds

Did JPMorgan Chase Really Take a 'Ten Billion Dollar Hit' For Uncle Sam?

By (about the author)     Permalink       (Page 1 of 3 pages)
Related Topic(s): ; ; ; ; ; ; , Add Tags Add to My Group(s)

View Ratings | Rate It

Headlined to H3 10/30/12

opednews.com


Even in these tempestuous times, some things are still predictable. Bank CEOs still plead poverty after receiving billion-dollar favors from the government. And there are apparently still reporters who take their word for it.

Recently a lawsuit was filed against JPMorgan Chase which details massive investor fraud at Bear Stearns, the firm it acquired at the government's request -- and at considerable public expense -- during the 2008 crisis. And right on time, JPM CEO Jamie Dimon ran to reporters to claim that his bank really lost money on that extraordinarily cushy deal.

Such is the credulousness of our journalistic class that this well-timed disclaimer didn't raise any red flags at the Washington Post. And when the bank claimed that it lost $10 billion in the Bear Stearns acquisition. This extraordinary assertion is simply repeated, without challenge or investigation.

The figure wasn't even put in quotes.

The paper's editors punched up the bank-friendly spin by headlining the piece, "JPMorgan remorse on Bear Stearns prompts question: Were crisis mergers worth it?" Let's help readers out with that question.

Yes.

The Ten Billion Dollar Hit

In fact, as we noted yesterday, this was one hell of a deal for JPMorgan Chase. And nevertheless the Post unquestioningly asserts today that "JPMorgan took a $10 billion hit on the Bear Stearns portfolio."

Readers are entitled to an explanation for a statement that bold, but none is forthcoming. Instead, the Post wants us to believe -- as do a number of other Washington power players -- that Dimon and JPMorgan Chase took one for the team, jeopardizing their profits because ... well, because they love their country. It's already cost 'em ten billion, so let's give them a break, right?

And yet the Post, like most other major news outlets, reported in 2008 that the Federal Reserve agreed to absorb $29 billion in losses to the mortgage securities portfolio after JPM absorbed the first $1 billion. So where did this $10 billion figure come from? Given the deal which the government set up for the bank, a lot of money would have to disappear before a "hit" like this could talke place.

The Math

It was reported in 2008 that JPMorgan Chase paid a $1.2 billion to acquire Bear Stearns, whose Manhattan headquarters alone were valued at somewhere between $1.1 and 1.4 billion at the time. Then there were other properties, corporate jets, automobiles, various holdings, cash on hand ... since the Post didn't do the math, let's do it ourselves:

Published reports stated that Bear Stearns had a total of $370 billion in assets when JPM purchased it. Danielle Douglas, Post reporter whose byline appears in today's article, reports that the sale price as $1.5 billion, which is higher than earlier reports. The difference is not explained. But even if that higher figure is correct, JPMorgan Chase acquired $370 billion in assets for $1.5 billion.

That's a damned good deal.

For $1.5 billion (or less) JPM also bought itself another huge chunk of market share, a whole book of business filled with customers, a new team of employees, and an increase in the priceless leverage you get from being even more "too big to fail." That means you have an even bigger implied guarantee that the government will rescue you from future management mistakes.

Next Page  1  |  2  |  3

 

http://www.huffingtonpost.com/rj-eskow/the-dumbest-bipartisa

Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future
Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Submit to Stumble Upon

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

How to Fix the Fed: Dismiss Dimon, Boot the Bankers, and Can the Corporations

The Top 12 Political Fallacies of 2012

Pawn: The Real George Zimmerman Story

What America Would Look Like If Libertarians Got Their Way

"F" The Bureaucracy! The White House Can Help Homeowners Right Now

The Price of Evil at JPMorgan Chase

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
1 people are discussing this page, with 1 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

They're not supposed to be pleasuring the people-o... by Don Caldarazzo on Tuesday, Oct 30, 2012 at 4:14:28 PM