Do they really deserve all these obscene bonuses?

Bully Bonus: $11.7 Billion JPM

Posted on January 16, 2010 by

“Each year they will launder more money back into the system and back onto
the books so it becomes “on balance sheet” but the explanation of where
the profits came from will be double-talk. But as long as we let them
do it, they will be using the proceeds of purse snatching from the
little people and wholesale robbery from the the taxpayers to pretend
that they have higher and higher earnings, make their stock more and
more valuable.


“This is the start of the REST of the scheme.
Gradually repatriating income that was previously undeclared. $23.7
trillion was skimmed largely by the four horsemen of the Apocalypse.
All that taxpayer money, in cash, obligations and guarantees went out
because these banks were “too big to fail” and we accepted the
proposition that they were failing when in fact they were sitting on
more money than the government had. The “loss” was an accounting loss
allowable by changes to generally accepted accounting principles
(GAAP), deregulation and failure of the SEC to enforce the most basic
elements of disclosure. They called it “off-balance sheet” transactions.

Now they they are laundering the money back in and giving themselves
bonuses out of the taxpayer money they obtained through
misrepresentation of their REAL financial status.

Each year they will launder more money back into the system
and back on the books so it becomes “on balance sheet” but the
explanation of where the profits came from will be double-talk. But as
long as we let them do it, they will be using the proceeds of purse
snatching from the little people and wholesale robbery from the the
taxpayers to pretend that they have higher and higher earnings, make
their stock more and more valuable.

They have no trouble taking their bonuses in stock. They know the
stock will be ever higher and higher and the price earnings ratios will
go up, multiplying the effect of the higher earnings. They know it just
as surely as they knew the loans would fail, that their influence in
Washington was strong enough with the Bush administration to get free
money for fake losses, and that their tacit agreement to let
non-creditors sue on defective loans as hush money would keep the cycle

President Obama told the big four that the only thing between them
and pitchforks from the populace was him and he was doing his best to
maintain order. But they don’t get it and they won’t get it because
they think, perhaps correctly, that they will get away with the
multiple phase scheme to drain America dry. Get out the pitchforks or
watch your country dry up into a memory.

What does this mean for litigation and discovery. Plenty. The
offshore SIV’s are the vehicle through which this money was sequestered
and they are the vehicles through which the money is being laundered
back in. That is why you must emphasize that you want the WHOLE
accounting and not just the part about the records of the servicer,
master servicer or some other intermediary in the securitization chain.
They will try to keep the court’s attention on the non-payment of the
borrower while you are trying to get a full accounting of the money
from the start of the transaction all the way from debtor through

To use a simple analogy, suppose you had a five year loan and you
prepaid the principal at the rate of $1,000 per month for the first
three years.

Now they come in and want the court only to look at the total
obligation and the fact that you missed the last three payments but
they refuse to allow you access to an accounting that would prove the
total principal has been reduced by your previous prepayments of $36,00
in addition to the regular amortization contained in your regular
monthly payments.

Now add the fact that after the closing they realized that they had
overcharged you on points for the loan and other charges, and they sent
you a letter to that effect but the credit doesn’t show up in the
demand, their notice of default of their foreclosure.

You have a right to demand discovery based upon your
allegation that there were was money paid and that there are
adjustments due in the accounting and that they have only offered a
partial accounting, their demand letter was incorrect and so was their
notice of default. What I am suggesting is that all of the
above may be true PLUS there may have been debits and credits arising
from third aprty trnsactions with aprticipants in the securitization
chain that you are only just leanring about and you have a right to
discovery about that too.

At this stage you are RAISING the question of fact, not proving it. You
don’t have to be right to be entitled to discovery. You only have to
make an allegation and it helps to have an expert declaration to go
with it. Your goal is not to get the Judge to agree that these people
can’t foreclose. Your goal is to get to the truth about your loan, the
parties and all the money that exchanged hands. At the conclusion of
discovery, properly conducted, and with the help of an expert, the case
could very be over.

New York Times

January 16, 2010

JPMorgan Chase Earns $11.7 Billion

JPMorgan Chase
kicked off what is expected to be a robust — and controversial —
reporting season for the nation’s banks on Friday with news that its
profit and pay for 2009 soared.

In a remarkable rebound from the depths of the financial crisis,
JPMorgan earned $11.7 billion last year, more than double its profit in
2008, and generated record revenue. The bank earned $3.3 billion in the
fourth quarter alone.

Those cheery figures were accompanied by news that JPMorgan had
earmarked $26.9 billion to compensate its workers, much of which will
be paid out as bonuses. That is up about 18 percent, with employees, on
average, earning about $129,000.

Workers in JPMorgan’s investment bank, on average, earned roughly
$380,000 each. Top producers, however, expect to collect
multimillion-dollar paychecks.

The strong results — coming a day after the Obama administration, to
howls from Wall Street, announced plans to tax big banks to recoup some
of the money the government expects to lose from bailing out the
financial system — underscored the gaping divide between the financial
industry and the many ordinary Americans who are still waiting for an
economic recovery.

Over the next week or so, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are expected to report similar surges in pay when they release their year-end numbers.

But not all the news from JPMorgan Chase was good. Signs of
lingering weakness in its consumer banking business unnerved Wall
Street and drove down its share price along with those of other banks.

Chase’s consumer businesses are still hemorrhaging money. Chase Card
Services, its big credit card unit, lost $2.23 billion in 2009 and is
unlikely to turn a profit this year. Chase retail services eked out a
$97 million profit for 2009, though it posted a $399 million loss in
the fourth quarter. To try to stop the bleeding, the bank agreed to
temporarily modify about 600,000 mortgages. Only about 89,000 of those
adjustments have been made permanent. In a statementon Friday, Jamie Dimon,
the chairman and chief executive of JPMorgan, said that bank “fell
short” of its earnings potential and remained cautious about 2010
considering that the job and housing markets continued to be weak.

“We don’t have visibility much beyond the middle of this year and
much will depend on how the economy behaves,” Michael J. Cavanagh, the
bank’s finance chief, said in a conference call with journalists.
Across the industry, analysts expect investment banking revenue to
moderate this year and tighter regulations to dampen profit. As
consumers and businesses continue to hunker down, lending has also

Just as it did throughout 2009, JPMorgan Chase pulled off a
quarterly profit after the strong performance of its investment bank
helped offset large losses on mortgages and credit cards. The bank set
aside another $1.9 billion for its consumer loan loss reserves — a
hefty sum, but less than in previous periods.

That could be a sign that bank executives are more comfortable that
the economy may be turning a corner. The bank has now stockpiled more
than $32.5 billion to cover future losses. Still, Mr. Dimon warned that
the economy was still too fragile to declare that the worst was over,
though he hinted that things might stabilize toward the middle of the
year. “We want to see a real recovery, just in case you have another
dip down,” he said in a conference call with investors. Earlier, Mr.
Cavanagh said that the bank hoped to restore the dividend to 75 cents
or $1 by the middle of 2010, from 20 cents at present.

Over all, JPMorgan said 2009 net income rose to $11.7 billion, or
$2.26 a share. That compares with a profit of $5.6 billion, or $1.35 a
share, during 2008, when panic gripped the industry. Revenue grew to a
record $108.6 billion, up 49 percent.

JPMorgan has emerged from the financial crisis with renewed swagger.
Unlike several other banking chiefs, Mr. Dimon has entered 2010 with
his reputation relatively unscathed. Indeed, he is regarded on Wall
Street and in Washington as a pillar of the industry. On Wednesday on
Capitol Hill, during a hearing of the government panel charged with
examining the causes of the financial crisis, Mr. Dimon avoided the
grilling given to Lloyd C. Blankfein,
the head of Goldman Sachs. Mr. Dimon was also the only banker to
publicly oppose the administration’s proposed tax on the largest
financial companies.

Moreover, JPMorgan appears have taken advantage of the financial
crisis to expand its consumer lending business and vault to the top of
the investment banking charts, including a top-flight ranking as a
fee-earner. Over all, the investment bank posted a $6.9 billion profit
for 2009 after a $1.2 billion loss in 2008 when the bank took huge
charges on soured mortgage investments and buyout loans.

The division posted strong trading revenue, though well short of the
blow-out profits during the first half of the year when the markets
were in constant flux. The business of arranging financing for
corporations and advising on deals fell off in the last part of the
year, though Mr. Cavanagh said there were signs of a rebound in the
first two weeks of January.

As the investment bank’s income surged, the amount of money set
aside for compensation in that division rose by almost one-third, to
about $9.3 billion for 2009. But JPMorgan officials cut the portion of
revenue they put in the bonus pool by almost half from last year.

The division, which employs about 25,000 people, reduced the share
of revenue going to the compensation pool, to 37 percent by midyear,
from 40 percent in the first quarter. The share fell to 11 percent in
the fourth quarter because of the impact of the British bonus tax and
the greater use of stock awards.

Bank officials have said that they needed to reward the firm’s
standout performance, but to show restraint before a public outraged
over banker pay. Other Wall Street firms may make similarly large

Chase’s corporate bank, meanwhile, booked a $1.3 billion profit this
year, even as it recorded losses on commercial real estate loans.
Still, that represents a smaller portion of the bank’s overall balance
sheet compared with many regional and community lenders. JPMorgan’s
asset management business and treasury services units each booked
similar profits for 2009.

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: , , , , , , , , , , , , , , , , |

Taking Aim at Bonuses based on $23.7 Trillion in Taxpayer Gifts

Posted on January 15, 2010 by

If they earned it, what business is it of ours or the government? On the other hand, if they stole it, why are they not in jail?

If there is money for bonuses it is because of illusory
(fake) profits from an illegal scheme that I would call fraudulent. If
that is profit then so are the proceeds of purse snatching. So the
bonuses, the “profits” and the “capital of the perpetrators belongs to
the taxpayers, the homeowners and the investors — the only real victims
in this mess.

The REAL tally of taxpayer aid is coming out from members of the
media and oversight committees and it isn’t $700 billion the way they
have said, and it isn’t $7 trillion the way some pundits have
calculated it. It is $23.7 trillion, which is roughly TWICE the U.S. gross domestic product. That’s right folks, so far, as the tally is rising, Wall
Street sucked out of our economy the amount we measure as all goods and
services traded in the entire United States for two years.

Just think about it. If it were really about $600 billion in
defaults or even $2 trillion in defaults, why would the entire economy
have taken a nose dive? Why would the world have have been paralyzed?
We’ve taken hits before and it didn’t bring us to the brink of ruin.
This one did, because the percentage was more than 3% or even 15% of
GDP, it was around 200%, so far and it is growing.

It isn’t the bailout or the stimulus that is putting us behind the
8-ball. It’s the money siphoned off by Wall Street who have
successfully disseminated two myths through the lazy media: (1) the
banks had losses caused by excessive risk taking and (2) government
bailout is TARP. The truth is they never had any losses from mortgage
defaults or defaults on SWAPS  (how could they with $23.7 trillion
covering them?) and TARP is barely 2% of the taxpayer aid through
entities created, preserved or promoted with the blessing of the U.S.
Treasury and the Federal Reserve.

It shouldn’t surprise me, but it always does — somehow the people
with the most money get closest to the microphone and the lazy press
lets them take over the narrative. My personal choice is that if they
committed fraud knowing of the huge catastrophic consequences and if
that fraud and associated acts constitute a crime, then they belong in

If you are serious about getting the past corrected as much as it is
possible to do so, and serious about sending referees back onto the
playing field so this really doesn’t happen again then start writing to
your congressmen, legislators, governors, the White House and DON’T
STOP. Make it a weekly ritual.

Those people in the tea parties might seem extreme and some of them
might be racist, but their underlying theme is getting traction simply
because the people are way out in front of their government this time
and the political consequences will be very painful for those who think
their jobs are secure. Their theme is that government has been stolen
from the people and they are right. The only people to take it back are
citizens who vote and people who are willing to serve in public office.

This should not be taken as an endorsement of the tea party — just
their message. Wall Street stole our gross domestic product for two
years and we want it back. If we get it back or any significant portion
of it, state budget deficits will disappear or at least become
manageable. Foreclosures will stop or be reduced to a  lower rate than
before this mess started. Wealth will be returned at least in part to
the middle class so the the economy can function without government
stimulus and without that ridiculous cycle of debt.

We have to get over the myth that the banks took the losses
from mortgage defaults. They didn’t. They always had the securities
sold before committing the funds and used investor money to fund the
mortgages. That is why it is incorrect to say that they took excessive
risks. They took no risk at all. They schemed like the movie “The
Producers”: to open a show that was sure to fail and bet on that. Where
is the risk. None to Wall Street.

Of course that’s just my opinion. Maybe the ideologues are right.
Maybe we should focus on personal responsibility, selectively enforce
it against the middle  and lower class, and let the country go to hell.

So about those bonuses. In the law we have a doctrine called a
constructive trust where a thief or other person who is not authorized
takes title to property or money that is clearly the property or money
of another. Under the doctrine of a constructive trust the current
holder of the property, despite his pleas to the contrary is actually
holding the property “constructively” for the real owner(s).

If there is money for bonuses it is because of illusory
(fake) profits from an illegal scheme that I would call fraudulent. So
the bonuses, the “profits” and the “capital of the perpetrators belongs
to the taxpayers, the homeowners and the investors — the only real
victims in this mess.

Filed under: CDO, CORRUPTION, Eviction, GTC | Honor, Investor, Mortgage, bubble, currency, foreclosure, securities fraud | Tagged: , , , , , , , ,

2 thoughts on “Do they really deserve all these obscene bonuses?

  1. *thanks to Steve on for posting this;A Short Sale Story You Wont Believe!Does our Government really want to clean up this mess?This just inBasically, IndyMac Bank (now OneWest Bank), is holding clients hostage, demanding a promissory notes, or they will proceed to foreclosure. For the life of me, I couldn’t figure out why they were doing this. What advantage could there possibly be for them to proceed to foreclosure?You see, IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).Now, listen to the deal they got from the FDIC..Basically, they purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts). They purchased all current HELOCS at 58% of Par Value!!!Next, in order to "sweeten the pot", the FDIC stepped in and guaranteed the following: For any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the ORIGINAL LOAN BALANCE, not the amount that OneWest paid for the loan. Let’s use my clients situation as an example:If the Loan Amount is $478,000, plus 6 months of missed payments, for a grand total of $485,200. OneWest pays $334,600 for the loan. We have an all cash offer of $241,000, net to OneWest. So, let’s do the math, shall we?The net loss, according to the FDIC formula is the ORIGINAL LOAN AMOUNT minus the amount of the offer. In this case, $485,200-$241,000, or $244,200. Next, the FDIC, according to their Loss Share Agreement, writes a check to OneWest for 80% of the so-called "net loss". So, in this case, OneWest gets a check from Uncle Sam for $195,360 (.80 X $244,200).Add the $195,360 to the sales price of $241,000, and you get a grand total of $436,360. Remember, OneWest paid $334,600 for the loan. So, OneWest puts $101,760 in their pocket, thanks to the FDIC. Folks, that is over $100k of our hard-earned tax dollars!So, you ask.Why does this program hurt short sales? Because, our brilliant government offers this SAME PROGRAM FOR FORECLOSURES! The only difference is, the government picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO’s, upkeep, utilities/maintenance, legal fees, etc.)So, If I’m OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure? And we wonder why nobody can get a Loan Modification? Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k? And, to add injury to insult, they have held this loan for 6 months! Not a bad ROI, huh?

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