When
JPM announced its first 1Q2012 results in April 2012, the investors were happy.
It made good profits for the first quarter! The CEO Jamie Dimon brushed off the questions
about the potential CDS linked losses of its London office - he stated the
trade is just a 'tempest in a teapot'!
However,
during the conference call yesterday, JPM put the CDS trade losses at $5.8
billion, with the potential to grow another $1.6 billion (totaling $7.4
billion) in a worst-case scenario.
It
definitely questions either the (i) integrity of top management at JPM or (ii)
managerial capacity. In other words, when the CEO misled the investors in April
2012, either he knew it and had hidden the information from shareholders or he
was kept in dark by his staff!
The
beauty of the entire episode is that despite the loss, the second quarter
results are better and profitable! Where have the losses gone? Well, the
company simply restated its first-quarter results to reflect $1.4 billion in
related CDS losses. What an accounting!! Let us see who signs the audited
accounts of JPM!
But
for the state protection, both JPM and Goldman Sachs would have licked the dust
in 2008 crisis. Well after all, there is not much difference in Communism and
Capitalism at times. (Karl Marx had predicted in mid 1800s that the capitalist
banks will have to be salvaged by the state after narrating incidents more or
less in line with the 2008 crisis)
And
the stock rallied because the 1Q2012 earnings were marked down to losses so that
2Q2012 can show some profits. If this continues, during the next conference
call in Sept 2012, they may re-state 2Q2012 figures downwards to show profits
in 3Q2012! and the stock may rally! Just wondering who is fooling who? Does it suggest
a massive cover-up & isn’t it obvious that a critical examination required?
Across the Atlantic,
another Anglo-Saxon banking model also shows loopholes. Barclays Chairman
Marcus Agius and CEO Robert Diamond had resigned in the wake of that firm's
LIBOR-rigging scandal. But is amazing that Dimon continues to be the CEO
despite scandals after scandals – the power brokers are keeping him up there as
he is an expert in mis-leading investors and public? I like the British way of handling the situation
- as they know how to treat erring CEOs or the CEOs that either lacks integrity
or capability.
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