Charles Gasparino: Jamie Dimon's "Tempest in a Tea Pot"Reported by Huffington Post on Tuesday, 15 May 2012 (on May 15, 2012)
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Some not-so-big news: the Justice Department is now investigating the JP Morgan trading loss fiasco.
Of course, the all those Eliot Ness types who came up with a 100 reasons why no one should be charged criminally for misleading investors about the 2008 financial collapse and another 200 reasons why no one should be charged for the $1.6 billion in missing MF Global customers' money won't tell you that.
In fact, they've been telling reporters all day that something that barely registers on JP Morgan's balance sheet --a $2 billion trading loss at a bank with more than $2.2 trillion in assets -- is so important to investors that they need to unleash an army of FBI agents to investigate if any wrong doing took place.
What a joke.
OK, a lot people hate Wall Street these days, and the average guy thinks anyone who wears a suit and works at a bank is a crook, but there is a masturbatory element to all these inquiries and investigations that the Justice Department, the FBI and Securities and Exchange Commission keep telling us that they're conducting about Wall Street these days.
First, most end up going nowhere and real crimes go undetected. Recall all the criminal investigations into the activities of Goldman Sachs that have vanished from the front pages, while real life criminals like the $50 billion Ponzi schemer Bernie Madoff don't get caught until the damage is done.
And we're all supposed to take comfort knowing that the FBI is investigating JP Morgan and its CEO Jamie Dimon for what everyone agrees is a bad trade.
The funny thing is the people in federal law enforcement who conduct these "probes" know that much of their work is pure BS, designed to appease public anger at Wall Street following the 2008 financial collapse. "I wouldn't even use the word investigation," one Justice Department official told the Fox Business Network regarding what they're doing (or not doing) about the JP Morgan trading loss. "I would use something like preliminary inquiry to describe our action because we just can't afford sit around and wait for something to happen."
Indeed, what the Feds know and won't tell you is how they manipulate the press with these fake investigations that are designed to generate fake stories. The easiest headline for any newspaper to print is that some Wall Street firm or company exec "is under under investigation" even if those investigations are perfunctory at best where the crime at hand is pretty remote.
Such is likely the case with the JP Morgan London Whale trading loss. 'News' of the investigation made huge headlines today, with gullible reporters failing to alert readers that the feds are basically on autopolot to investigate any big news story even if they're (a) probably going to do nothing about the matter, and (b) should have been doing something before the alleged bad stuff went down, not after.
In many ways, you expect this behavior from some publicity hungry congressman, but it's really sad when our white collar gatekeepers who are supposed to protect us from really bad stuff have been reduced to flacks engaged in a desperate attempt to show the public that they are cracking down on the bad guys of Wall Street, when they really aren't.
Of course, I can't tell you whether Jamie Dimon, the London Whale or anyone else at the firm might have committed a crime as more facts about the trading loss come to light. Before the loss was disclosed, Dimon described concerns over the high-risk trading strategy as a "tempest in a teapot," which he says he now regrets.
But a little perspective is in order: JP Morgan will still likely earn record profits for the year, and $4 billion this quarter -- and that's after taking into account the losses from the trading fiasco. From that standpoint at least the loss appears pretty negligible.
Unlike what happened at MF Global, not a single customer lost money, unless those customers who hold JP Morgan stock, which has gotten creamed amid the media feeding frenzy. Meanwhile, Dimon has been pretty open about the whole thing; he has opened the company's books to investigators, and has given media interviews explaining the mess in a fairly candid manner.
In other words, he isn't acting like a guilty man, nor is he pulling a Jon Corzine, the former CEO of MF Global, who infamously appeared before Congress evading just about every question put to him as he tried to suggest he knew nothing about how $1.6 billion in his customers' money vanished into thin air.
Of course, Dimon's openness might be a big act. He may be trying to give the appearance of honesty when in fact he's hiding something big. Low probability in my view; I know Dimon for a long time and I don't think that it's in his DNA to spin at least to this degree.
But if he is, so what? There's got to be bigger scandals out there that cost bank customers real money, and actually lead to real losses that could put a company's survival in jeopardy. The JP Morgan trading loss is neither and not by a long shot.
Our crack investigators at the Justice Department the FBI and the SEC don't seem to care, and while they're not caring they're wasting their time and taxpayers' money investigating a trading loss that when you think about it, really isn't.
Maybe Dimon shouldn't take back that "Tempest in a Tea Pot" statement after all.
Links:  Full news story
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