the finance industry / wall street

http://www.salon.com/2013/11/20/jpmorgan%E2%80%99s_bait_and_switch_the_ballyhooed_settlement_is_just_a_scam/

Meanwhile, almost all of the deal, save a $2 billion penalty to the U.S. Attorney’s Office in Sacramento to settle a civil lawsuit, is tax deductible as a business expense. Assuming a 38 percent rate for deductions (as JPMorgan does) on $7 billion in business expenses, this knocks another $2.66 billion off the real cost to JPMorgan Chase. A ballyhooed $13 billion settlement winds up being closer to $2.74 billion. That’s less than what BP or GlaxoSmithKline paid in their Justice Department settlements.

I don't follow where he's getting $2.74 billion. It says the $2 billion penalty to the US Atty's office is non-tax-deductible, so that would leave only $0.74 billion coming out of the rest of the settlement.

Math's not my thing, sorry.

Moving on:

http://www.washingtonpost.com/blogs/plum-line/wp/2013/11/21/another-reason-for-filibuster-reform-it-will-help-dems-crack-down-on-wall-street/

A D.C. Circuit with Dem appointed judges is more likely to uphold Dodd-Frank regs

Fingers in dikes, water rolling downhill, etc

You've got a point. But yep a finger in the dike, watered down moderate Dem judge upholding watered down regs, is still better than "hey lets let 'free' market work, as long as its helping ceos we want helped"

Something is always better than nothing, right?

I think so, but Morbs and others do not.

http://dealbreaker.com/2013/11/jpmorgans-top-lawyer-thinks-government-couldve-been-just-as-happy-with-100-million-as-it-was-with-13-billion/

Blah blah blah, JPMorgan lawyer, quoted above, has a typical background:
WilmerHale Partner Stephen M. Cutler was named Executive Vice President, General Counsel of JPMorgan Chase, effective February 2007.

Stephen M. Cutler is a lawyer and was the Director of the Division of Enforcement for the U.S. Securities and Exchange Commission from 2001 until 2005 (in the Bush administration).

http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/

Written by a judge in NY who is overseeing some of the related cases

Written by *the* judge who famously admonished the SEC for always taking these settlements that don't require an admission of fault.

You have any idea/insight what those negotiations are like? Like, why the SEC wouldn't demand them?

(demand admission of fault)

An admission of fault in the legal record would allow private plaintiffs (i.e. non-government) to sue the hell out of them

:D

Yes, I assumed that but wondered if there was some other workaround. thanks kids!

Rakoff points out that the SEC is understaffed/funded. If they had more manpower and resources, it might be easier to extract admissions of fault. His comments on the process are worth reading.

http://qz.com/159004/jamie-dimon-jpm-holiday-card-looks-like-a-ralph-lauren-advertisement/

I'm dying @ these pictures

Thought that was a Bill-Clinton-with-a-tennis-racket cameo there for a minute.

He's got a lotta balls alright. EY!

http://www.nytimes.com/2014/01/19/opinion/sunday/for-the-love-of-money.html

Not sure what to think about that, honestly. Seems like a guy who's self-reflective about being a general destructive shitheel on Wall Street, and is trying to go the opposite way. But the damage is already done, isn't it? I suppose it's better than being totally unrepentant. That line about him making more in a year than his mother made her entire life being inconcievably unfair rings true, as the sentiment usually does. I'm not saying he needs to burn all his assets and live in a monastery, but of course you can do what you want now when you have millions in the bank and your future grandchildren are pretty much taken care of for their lives. Still, at least seems like an honest piece.

I always sense a little bit of "everyone look at what a good boy I am" in these repentant op-ed pieces, like the same impulse that drove him to seek the "feedback" of money now drives him to seek the feedback of approval. Still, better the latter I guess.

i think lots of ppl probably get "enough" money, which is a big chunk, and eventually have that realization one way or another -- "I can do whatever I want, I'm set" and go do something else, typically with less fanfare.

Its typically known as a "fuck you number".

otoh there's the famous wall street folktale wherein one trader says to the other "You know man, if I ever made ten million, I'd just fucking quit right there," and the other says "that's why you'll never make ten million

so you'll never make the big bucks without an infinite sense of greed?

Read Michael Lewis's first book, now reading Barbarians at the Gate. Disappointed in the first, I was expecting more depth into what life was like as a trader/salesman in that era; BatG hasn't gotten to the real drama yet.

man if you didn't love liar's poker i dunno. apparently lewis' next one is about high-frequency trading, supposed to be out sometime this year.

Yeah Liar's Poker is a stone cold classic

I've read BatG, it's more tame

If you're expecting WoWS type level excess, Liar's Poker is as close as you're probably gonna get

xp, right, I think that's the idea, that it takes bottomless hunger for money to make large amounts of money, at least as a trader. My mom went to high school with a guy who made fuck you level money as I guess sort of a quant/hf guy and isn't like that -- quit to take care of his kids, doesn't believe in tax avoidance strategies, etc. But that's probably not all that common.

funny thing--we started a jacobin reading group here in DC, and a bunch of CFPB ppl were there.

a bunch of CFPB ppl

Capitalists For Police Brutality?

https://www.youtube.com/watch?v=AuqemytQ5QA

Capitalists For Police Brutality?

― Aimless, Wednesday, January 22, 2014 6:39 PM (7 minutes ago) Bookmark Flag Post Permalink

http://surefiredata.com/wp-content/uploads/2012/12/CFPB-image1-e1354816067595.png

This is a really fucking interesting article
https://www.jacobinmag.com/2014/02/the-rent-is-too-damn-high-2/

I need to give it some more thought/chew on it a bit.

for a pleb like me, it just reads broadly as "soooo much corruption in real estate markets but what are ya gonna do? nobody listens to Elizabeth Warren"

ok i bet those charts are sorta dumb. like here you have a ratio of "rent" to gross investment then well if the number goes up, then either "rent" went up or gross investment went down.

Now we just had an economic crisis. the big thing that happened is ppl stopped investing because everything was tumbling in value, and also the value of investments decreased.

Here's a chart thru the end of 2010 which i think basically matches the chart they have, showing just that: http://research.stlouisfed.org/fred2/graph/?g=shr

so that accounts for the big upward spike at the end of the chart. I bet if they had a few more years we'd see some changes a investment picked back up again.

So there's a general upward trend and there's arguments to be made about that, but the situation the chart displays can be accounted for by other means.

But you might want to know why "rent" doesn't decrease proportionately to gross investment. There could be good reasons but I'd want to know what they are.

like this points to the growth of the finance sector thu the 80s, and that makes sense. but the recent portion bears some interpretation (the huge blip in the 'net' investment line makes this double clear).

the main reason rent doesn't decrease proportional to gross investment is inertia. like these are huge sectors of the economy. just because we had a huge economic contraction for a span of years doesn't mean that these companies just shut down.

cash moves in and out of markets quickly, companies don't grow and shrink at the same pace usually. in any case, a better comparison if one is made at all would probably be something about rent vs. capital flows not absolute investment

the more I think about it, I'm also not sure the way they're doing "gross" and "net" investment makes sense either, and I'm also not sure if looking at a "per dollar DIRECTED (invested)" figure makes sense.

clover otm re: inertia, it's rocket vs feather

also i think the fact that finance as a sector gets a certain chunk of money is a bit point-missing because that accounts not just for fees paid to brokers, or money managers taking 2-5% off the top, but also the amount actually held by these firms. So say like GM makes a profit building cars or whatever. Now of that profit, a chunk gets paid out in dividends. And of the gross profit, a chunk gets paid out in returns on bonds GM has floated in the past. So some of those dividends and coupon payments go to financial firms that hold stocks and bonds, and they get marked as profit.

But this isn't different than that going to Johnathan D. Rich Person III, who bought that stuff himself.

Its not like finance "took" that profit from somewhere else. Its just that these firms are sitting on cash and invested it.

Consider also that maybe GM does well and the stock goes up in value (and the bonds go up too because the rating improves or whatever). Now again the holder accrues value they can book as profit. But nothing actually happened! Value was just "created". Until they sell out of those positions, nobody actually took profit there.

You don't have like "good industries that make things" on the one hand and "evil banks that don't make things" on the other and like if money flows to the latter then that means that that's taken from the former in some sense. finance has a very specific relationship with other sectors of the economy.

finance has a very specific relationship with other sectors of the economy.

a vital relationship, and at scale perhaps the most important relationship with other sectors of the economy

vital is pushing it. i realize my above was imprecise too. i should have said "good capital that invests in productive industry vs. evil capital that operates via finance" because the point is finance capital is just another route to the same place.

You don't have like "good industries that make things" on the one hand and "evil banks that don't make things" on the other and like if money flows to the latter then that means that that's taken from the former in some sense. finance has a very specific relationship with other sectors of the economy.

― eric banana (s.clover), Wednesday, February 19, 2014 5:36 PM Bookmark Flag Post Permalink

I think you're right to an extent. The article was more trying to make the argument that Wall Street is somehow extracting much more payment from everyone for the same arguable services than it used to. I'm not sure the methodology it used really makes sense though.

But what wall street "does" is actually a lot of different things of what I would say are widely varying degrees of usefulness (or harmfulness) to a capitalist economy. It's certainly important to the efficient allocation of capital and all that, and at the same time it's laughable to suggest that that's all they do, and I wonder if it's even a majority of what they do. Would be fascinating to see very detailed research showing a breakdown of the activities of the banking sector.

finance capital is just another route to the same place.

Could you explain this a bit?

Yes, please explain