There they go again. First there was Enron rigging energy markets. Now the sights are set on JP Morgan Chase, where the Wall Street Journal reported on Wednesday, "JP Morgan, Energy Regulator Near Record Settlement." Record settlement, really? The number bandied about is $1 billion, or one sixth of the London Whale's $6 billion blowout, termed by that casino master par excellence, JP Morgan Chairman and CEO Jamie Dimon as "a tempest in a teapot." So there goes JP Morgan allegedly fleecing millions from unsuspecting utility consumers and forking up a fine out of their petty cash cup. This while a kid on the street caught with a pouch of marijuana does jail time -- no cozy deal there.
At some point this theater of our regulatory agencies 'feather dusting' these powerful and connected banks as punishment has got to stop. The banks and its operatives get off purloining hundreds of millions and then some, only to be assessed fines paid out of their shareholders assets, that is funds from the corporation's treasury. Then carrying on as before, with little more than a career bump (probably for being so stupid in having been caught).
The agency handling this procedure is the Federal Energy Regulatory Commission (FERC) and according to the Wall Street Journal the deal could still fall apart. Yet according to the WSJ there is an urgency within JP Morgan to get a deal done quickly amid heightened regulatory scrutiny. This "urgency" from JP Morgan, a major player in all facets of the energy market, not only electricity, but also oil, oil storage, petroleum derivatives such as gasoline and heating oil, diesel and on. They are players of particular significance, with virtual limitless funding available to them as 'banks' at the Fed window. How they proceed to play casino in the field of oil and gas, etc., has an important bearing on the formation of prices of these commodities. If their actions in the electricity markets are an example of how they play the game, then one could well surmise that it is not only utility customers that are paying manipulated prices for their energy needs.
In a way this is an ongoing saga. According to Bloomberg, Blythe Masters, the head of JP Morgan's commodities unit resisted an earlier offer from FERC that would have banned three of her traders from the commodity markets taking the position that the bank 'did nothing wrong.'
This is the same Blythe Master about whom this corner wrote in 2010: "JP Morgan" Shows Us the "Volcker Rule" is All Hat and No Cattle While The Administration and Congress Fiddle Away.
Let me quote from that blog post referring to JP Morgan's purchase of the Royal Bank of Scotland's commodities trading division, RBS Sempra:
"The purchase, led by JP Morgan global commodities chief Blythe Masters, expands the bank's commodities division just as U.S. President Barack Obama tries to curb banks' trading of securities for their own account. JP Morgan held talks to buy RBS Sempra's North American gas and power trading units as well."
What, pray tell, is a bank doing in the oil, gas, power and electricity business? Is that why we have a Federal Reserve -- to fund their gambling addiction? And when all is said and done, should the bank fail because of its gambling excess, we would be left holding the bill and mopping up the mess of Too Big to Fail. The banks cash in billions playing with Fed's largesse and backed with their depositor's money. When there is actual fraud or other illegal and duplicitous trading policies in place, it is the banks' shareholders who pay the tab, as well they should. Yet the players who act, and the officers who hear, see, and speak no evil dance away. It's time for that to change. A society that slams kids for carrying about a pouch of weed but lets those responsible for millions and billions of malfeasance pass with a feather duster's slap on the wrist and without meaningful jail time is a society deeply troubled, and in dire straits.
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