Another Huge JP Morgan Fine
Even as JP Morgan announced 30%+ profits this past week, it now faces yet another fine by a regulatory agency, this one a whopper - as much as $1 billion.
The agency, FERC (Federal Energy Regulatory Commission), claims JPM's energy trading operations manipulated energy prices in order to enhance its profits and to the detriment of consumers of power. Of course, JPM won't comment except to deny the charge, but they are apparently pressing for a settlement, as the initial figure of $ 1billion has declined a bit. A couple of points about this.
One knee-jerk reaction might be to conclude JPM is guilty and deserves the fine. But neither you nor I have any first-hand evidence that would allow us to conclude this. On the other hand, is it unreasonable to think that there might be culpability if they're willing to fork over almost a billion here?
Another point, how is it possible that anyone has a "spare" billion to settle something like this unless there's a good chance they feel they are limiting their liability. They could be limiting either an even greater cash settlement, or they could be limiting or eliminating prosecutions of individuals at the company.
While JPM denies the allegations, it turns out they were thrown out of the California energy market a while back for the activities that have resulted in this gargantuan fine. Interestingly, the headline of the article in the Wall Street Journal didn't say they were thrown out, merely that they were "exiting" the California power market. The body of the article, however, does provide some detail:
Well, such shenanigans ought not surprise us. And these "settlements" are designed to prevent the facts from coming to light, of course. So my suspicion is that FERC will continue to levy big fines, showing how they're "protecting" consumers by punishing the JPMs of the world, even as the JPMs of the world and their batteries of lawyers settle, go to court, and continue to pursue profits wherever the almighty buck leads them.
So now we're moving from hundreds of millions in fines to the billion dollar league. Oh, and we continue to wonder what consequence there might be for the actual individuals that initiate and execute the actions in question. It's always some bank or company that's being sued, as if no person or persons bear any responsibility for what are alleged to be illegal activities. The money gets sloshed around and the activities never stop. No one really pays a price, so why should they?
The agency, FERC (Federal Energy Regulatory Commission), claims JPM's energy trading operations manipulated energy prices in order to enhance its profits and to the detriment of consumers of power. Of course, JPM won't comment except to deny the charge, but they are apparently pressing for a settlement, as the initial figure of $ 1billion has declined a bit. A couple of points about this.
One knee-jerk reaction might be to conclude JPM is guilty and deserves the fine. But neither you nor I have any first-hand evidence that would allow us to conclude this. On the other hand, is it unreasonable to think that there might be culpability if they're willing to fork over almost a billion here?
Another point, how is it possible that anyone has a "spare" billion to settle something like this unless there's a good chance they feel they are limiting their liability. They could be limiting either an even greater cash settlement, or they could be limiting or eliminating prosecutions of individuals at the company.
While JPM denies the allegations, it turns out they were thrown out of the California energy market a while back for the activities that have resulted in this gargantuan fine. Interestingly, the headline of the article in the Wall Street Journal didn't say they were thrown out, merely that they were "exiting" the California power market. The body of the article, however, does provide some detail:
...the state's market monitor saw bidding strategies that it believed allowed the bank to extract $73 million in unearned profits from the California market. California referred the case to FERC for further investigation and possible penalties.According to the article, it turns out that those "unearned" profits were gained while putting California energy consumers at risk of not having enough electricity earlier this summer, since JPM blocked efforts to upgrade electricity infrastructure. Looks like they preferred the comfort of their $73 million to the customers' receiving adequate electric power.
Well, such shenanigans ought not surprise us. And these "settlements" are designed to prevent the facts from coming to light, of course. So my suspicion is that FERC will continue to levy big fines, showing how they're "protecting" consumers by punishing the JPMs of the world, even as the JPMs of the world and their batteries of lawyers settle, go to court, and continue to pursue profits wherever the almighty buck leads them.
So now we're moving from hundreds of millions in fines to the billion dollar league. Oh, and we continue to wonder what consequence there might be for the actual individuals that initiate and execute the actions in question. It's always some bank or company that's being sued, as if no person or persons bear any responsibility for what are alleged to be illegal activities. The money gets sloshed around and the activities never stop. No one really pays a price, so why should they?
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