Fed Issues JP Morgan Cease & Desist Over CIO Risk Management, Money Laundering

Ben Bernanke Jamie DimonThe Federal Reserve Monday issued it’s owners (JP Morgan Chase) a two separate Cease and Desist orders.  The first orders JPM to take corrective action regarding its prop-trade hedge fund known as the Chief Investment Office (CIO), and the second orders The Morgue to take corrective action regarding compliance with anti-money laundering requirements
The Office of the Comptroller reportedly also issued two similar orders against JPM Monday.

We’re sure Jamie’s conversation with Ben went something like this,  ‘You want us to do WHAT with our hedge fund?  Oh, yeah, sure Benny, we’ll get right on that.

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The Federal Reserve Board on Monday issued two consent Cease and Desist Orders against JPMorgan Chase & Co., New York, New York (JPMC), a registered bank holding company. The first order requires JPMC to take corrective action to continue ongoing enhancements to its risk-management program and its finance and internal audit functions, particularly in regard to JPMC’s Chief Investment Office (CIO). The Board’s order follows the disclosure of significant losses in a large synthetic credit portfolio that was managed by the CIO. The second order requires JPMC to take corrective action to enhance its program for compliance with the Bank Secrecy Act and other anti-money laundering requirements at JPMC’s various subsidiaries.

The Office of the Comptroller of the Currency on Monday issued two similar Consent Orders against JPMorgan Chase Bank, N.A., Columbus, Ohio.

 

http://www.federalreserve.gov/newsevents/press/enforcement/20130114a.htm

 

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Comments

  1. somebody want to clarify what this means?

  2. Yes, pleeeeeze somebody, maybe AG, enlighten us.  My first reaction was: Hey, this is just a “circle jerk”!

  3. I believe the cliffnotes are, the regulators and bankers are all pieces of shit with eyes. Any proceedings against them, warnings or fines are merely kabuki theater to convince people that regulators are regulating.
     
    We know the true nature of sociopathic morsels of feces. They do what they do until they cannot do it anymore.

  4. I believe there may be a breakdown in the incestuous relationship.

  5. The morgue will live to steal many more days. Their Copper EFT will be kicking off soon for example ( after a company was fined in the 90s – japanese – for manipulating the copper market).

  6. Ben and Jamie

  7. Two Cease and Desist orders are serious. They are the banking equivalent of shouting  STOP WHAT YOU ARE DOING IMMEDIATELY.  These have force of law.  Since it was from the NY Fed, this is not something to be taken lightly.  C&Ds for something such as the $8 billion IR Swap losses from the London Whale and maybe even more important, the anti money laundering charge, makes these matters ones that must be dealt with. 
    If two C&D’s were filed against a bank of less stature and political connection as JPM, this could easily spell the kiss of death   When a bank suffers multi billion dollars losses coupled with criminal actions, they would usually be slated for the boneyard as the capital base would have become so eroded as to make the bank insolvent. JPM is profitable and perhaps with sufficient reserves to weather the whale loss. 
    Dimon will lose his status as the most highly compensated bank executive in the US but there’s been nothing to indicate his job is in jeopardy.  As far as the existence of JPM is concerned, the charges may be allowed to go away once Dimon and his top people mitigate the IS Loss by not taking bonuses, a small price to pay.  Corrective action is usual involves  sacrificing the lambs like the people closest to the problem and telling the NY Fed No Mas. we are clean now. This will never happen against. There is a rumor according to Jim Willie, that to climb the corporate ladder you have to have at least on fraud charge levied against you and won the battle too boot.
      As we all know, once the C&D goes away the same people will pop up elsewhere.  The top people will survive.  New people will be brought in and since this is a too big to bail/jail/fail bank, the damage is mended and the people responsible for the train wreck will go back to doing the same thing only with the knowledge of how to paper over the leaks and blunders that got them in trouble in the first place.
    When a bank is charged with larceny and survives, they quickly adapt to the new  means to run the show.  Fed discovery of  the larceny  means the bank now knows the leaks  and how to avoid the scrutiny of the next investigation.  They shift the operations off shore or under cover of a shadow bank  hedge fund like GS and its business as usual. 
    This is a generic version of what happens with a C&D given what most of the large banks do when caught with the hands in the cookie jar.  No one’s received a perp walk even after multi trillions in fraud, scams, losses and bad behaviour.  the tax payers can always be counted on to clean up and pay for the damages.

  8. not even … just said to give the impression of impartiality … this will be challanged in court and all will agree that the fed was being to interfering in free market policy and every one will agree that mr dimon is the closest thing to mahatma ghandi and nelson mandela in the 21 century

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