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JPMorgan's Sheer Gall On Full Display In Whale Report: Seven And A Half Things To Know

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JPMORGAN LONDON WHALE REPORT
JPMorgan Chase & Co Chairman and CEO Jamie Dimon wears U.S. presidential cuff links while testifying before the House Financial Services Committee on Capitol Hill June 19, 2012 in Washington, DC. After testifying before the Senate last week, Dimon answered questions from the committee about his company's $2 billion trading loss earlier this year. (Photo by Chip Somodevilla/Getty Images) | Getty Images

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Thing One: Throwing The Book At JPMorgan: Hubris led Ahab and the Pequod to be sunk by the Great White Whale, and hubris is sucking Jamie Dimon and his bank, JPMorgan Chase, into the depths, tied still to the carcass of their own Whale.

The sheer gall of Dimon and other top managers at the biggest U.S. bank is maybe the most striking thing about the eviscerating, 300-page report by the Senate Permanent Subcommittee on Investigations on JPMorgan's London Whale debacle, in which a credit-derivatives trader in London built a large, dangerous position in credit default swaps, ultimately costing the bank more than $6 billion. Again and again the report alleges the bank's disdain for those who would dare question it. According to the report, managers shouted down and belittled regulators and hid the size of the bank's losses, and Dimon himself breezily told investors the story was a "complete tempest in a teapot" even as the losses mounted.

The bank denies these allegations. But we can perhaps be forgiven for not fully trusting a bank that called the London Whale story a "complete tempest in a teapot" even as it was losing, again, $6 billion on it.

And there was gall piled upon gall: The entire time the London Whale's position was being built and then destroyed, Dimon broke out his soapbox at every possible opportunity to rail against the evils of regulation and whine about how much banks were vilified. It is costing him now. As The Huffington Post's Ben Hallman points out, the report is only going to increase the likelihood of tighter restrictions on trading -- the sort of regulation Dimon hates.

Is that not enough gall for you? How about this: Just before the London Whale report was released on Thursday, the Federal Reserve released its report card on bank capital plans for the year. Most banks passed, meaning they could give money back to shareholders in the form of dividends and stock buybacks. But JPMorgan and Goldman Sachs were told they had "weaknesses" in their plans that had to be corrected by September, or they wouldn't be able to give money away. JPMorgan's response to this was to announce that it was sure it could satisfy the Fed's demands, and it raised its dividend by 8 cents to 38 cents a share. It also said it expected to buy back $6 billion in its own stock over the next year. That's right, $6 billion -- nearly matching the $6 billion it lost to the London Whale.

We don't need no stinking money, the bank seems to be saying. More hubris. To be fair, the entire banking sector is of the same mind, hurrying cash out the door when they are likely undercapitalized, as Bloomberg View points out this morning.

Independent bank analyst Josh Rosner has a long report that he is releasing one chapter at a time at Barry Ritholtz's blog, in which he compares JPMorgan to Fannie Mae before the crisis. Some of the more convincing parallels include JPMorgan's ability to sway politicians to its side. And the hubris. Eventually Fannie Mae's luck ran out, and Rosner suggests JPMorgan's will too -- though he never suggests the bank will need a bailout, as Fannie Mae did. Rather, he says the bank's "long list of regulatory run-ins" raise doubts about how well the firm is managed.

So far none of this is sticking to Dimon much. The permanent subcommittee has a hearing this morning about the London Whale, but Dimon will not be testifying -- only the underlings that JPMorgan has already blamed for the debacle.

One thing is for sure. From this day forward, whenever Dimon and other bankers make their standard complaints about too much interference from regulators, they will have their answer in the 300-page book -- about half the size of Moby Dick -- that just got thrown at JPMorgan.

Thing Two: That Darn Europe: Despite the pain of Europe's lingering recession, European Union policy makers meeting in Brussels this week are sticking to their austerity guns, The New York Times writes. They may be loosening the fetters just a smidgen, Bloomberg points out, giving troubled countries a little more time to meet budget goals. But budget cutting is the order of the day, month and year. That goes even for Greece, trapped for years now in Austerity Hell, and now under orders from its lenders to tighten its belt even more, the NYT writes.

Thing Three: Congress To Agree To Disagree Some More: Speaking of austerity, while President Obama tries to hammer out a Grand Bargain on the budget deficit that will thankfully never happen, both Republicans and Democrats can at least agree on a need to reform the tax code, according to the Washington Post. But they will never, ever, ever agree on how to reform it.

Thing Four: Another Day, Another Record: The Dow Jones Industrial Average rose for a tenth straight day yesterday, the longest winning streak since an 11-day run in 1992, hitting yet another record high. For those into tracking meaningless numbers (like me), the record winning streak for the Dow is 14 days, set back in 1897, according to the WSJ. More meaningfully, the S&P 500 stock index, a more useful stock-market indicator than the Dow, is now just a couple of points away from its record high.

Thing Five: We Interrupt This Natural-Gas Boom: President Obama plans to harsh the nation's natural-gas fracking high today by proposing that $2 billion in money from federal oil and gas leases be diverted to clean-energy research. Of course, even if this were ever to get past Congress, the money would be stretched out across the next decade, by which time we will be using water taxis to get up and down Broadway.

Thing Six: Samsung's Latest Shot Across Apple's Bow: Samsung unveiled a new phone, the Galaxy S4, yesterday, accompanied by nearly Apple-like levels of hype, which is appropriate, as Samsung hopes the phone will chip away at Apple's market share in the U.S. The phone has lots of cool features, but they may not work all the time, writes Spencer Ante in the WSJ.

Thing Seven: Let's Not Get Small: A government agency charged with advocating on behalf of the nation's small businesses may have let the definition of "small" drift a little bit, the Washington Post writes. At a congressional hearing yesterday the Small Business Administration’s Office of Advocacy was accused of fighting regulations on behalf of large companies, WaPo writes.

Thing Seven And One Half: The Ides Of March: On this day in 44 BC, Julius Caesar was stabbed to death by a crowd of senators, putting President Obama's current relationship with Congress maybe in better perspective. Oh, and apparently Caesar did not really say "Et tu, Brute?" Shakespeare made that up because it sounded nice.

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Calendar Du Jour:

Economic Data:

8:30 a.m. ET: Consumer Price Index for February

8:30 a.m. ET: Empire State Manufacturing Survey for March

9:15 a.m. ET: Industrial Production for February

9:55 a.m. ET: University of Michigan Consumer Sentiment Index for March

Corporate Earnings:

Nada.

Heard On The Tweets:

-- Calendar and Tweets rounded up by Alexis Kleinman

And you can follow us on Twitter, too, if you want, no pressure: @AlexisKleinman and @MarkGongloff

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