Dancing With Derivatives ‘Pas De Deux’
The newly coined phrase, from Maureen Dowd of the New York Times comes from the latest two-step by Jamie Dimon, CEO at JPMorgan, where he managed to orchestrate Wall Street’s latest big bank debacle. He’ll soon be ”Dancing with the Stars“ in front of congress explaining his mis-adventure that created a $2 Billion trading loss, which could exceed $3 Billion when the dust settles, from a credit-default swap deal gone wrong. Keep in mind that these are the same derivatives that helped trigger the financial crisis – sans mortgages. Even though Ina Drew, JPM‘s Chief Investment Officer immediately got the ax, there will surely be more hell to pay before this is over.
Scheduled to appear in front of Congress in the spring, Dimon this week apologized to the bank’s shareholders for the loss. “This should never have happened. I can’t justify it. Unfortunately, these mistakes are self-inflicted,” Dimon said at JPMorgan’s annual meeting. And he later told reporters, “The buck always stops with me.”
News of JPMorgan’s trading loss has reinvigorated the Democrats’ push to strengthen a key rule (known as the the Volcker Rule) mandated under the 2010 regulatory overhaul that would restrict banks from trading for their own profit.
Dimon has been among the most outspoken critics of the rule. He says “their recent loss came from a hedging strategy that backfired, and not a bet with the bank’s own money. Whose money was it then I wonder?
He and other bank executives successfully pushed for an exemption, which would allow banks to make trades for their own profit if they are hedging against risk.
“They simply got caught short” said one anonymous trader. While J.P. Morgan shareholders continued to back Dimon, Washington isn’t quite as forgiving given the huge bank bailouts recently granted.
The good news is this latest loss only wiped out about 1% of the firm’s capital. Even with a $2 billion write-off the bank reported $190 billion as equity in its just-released first quarter 10Q. Dimon also said that the bank would still earn around $4 billion for the quarter, versus $5.4 billion last quarter.
Too big to fail, you bet! But what would you do?
Related articles
- JP Morgan boss dodges job bullet (news.com.au)
- JPM’s Dimon: We are not against new regulations (marketwatch.com)
Backward Banking
I don’t know if it’s Dodd-Frank. Or if it’s Barney Frank and Christopher Dodd themselves. Or if it’s just the big bankers.
But the reality is, our banking system is completely screwed up when it comes to getting a home loan.
The problem used to be that the banks, in collusion with a federal government, made bad loans to bad people. That’s what helped bring us the housing bubble and the inevitable bust that followed.
Today the problem is reversed. The banking system is so nuts it won’t even allow banks to make good loans to good people. An example of our new backward banking system in action is what’s happened to the daughter of a friend of mine.
She’s a 29-year-old schoolteacher. When she was 24 she went out and bought herself a townhome that a bank had ended up owning after a foreclosure.
The bank was buried in the townhome for $560,000. The schoolteacher got the house for $360,000 and put $110,000 down. Her interest rate five years ago was 6¾ percent.
Today the townhome is worth more than what the teacher paid for it and now she wants to refinance and get a low-interest loan. But she’s just been told by Big Bank that she doesn’t qualify for a 3 or 4 percent loan. They’ve even told her she shouldn’t have been able to qualify for her original loan.
Think about this: Here is a teacher who has never missed a house payment. She has her monthly mortgage payment taken out of her bank account automatically. She’s never missed paying her taxes. She’s never missed paying her homeowner’s dues.
Yet she is treated as though somehow she’d suddenly stop making her mortgage payments if the bank gave her a new loan at 3 or 4 percent. The schoolteacher is looked at by the bank as if she was a future criminal.
I come from a generation where people were allowed to have a personal relationship with their bank. I used to be able to go down and talk to my local banker about a loan.
I’d tell him what I wanted to do and how much money I needed. The banker would say, “Mike, I’ve known you for 30 years. I know you’re good for it.”
Now there’s no such thing as a personal relationship with your banker. The “local” bank is owned by a bunch of international mega-corporations and the management changes every 3 minutes.
Dodd-Frank has created a situation where only the large banks will survive. Small banks are essentially being outlawed. That means our ability to ever have a personal relationship with a banker is also being outlawed. And one bad result of that will be to create more people who become upside-down on their mortgages.
If we want to bring the U.S. economy back to life we have to do it through the housing industry. But there’s no way in hell housing is going to recover if banks are no longer even giving good loans to good and rightful people.
The big bankers and politicians co-produced the meltdown of the economy. They’re the criminals, not the honest schoolteacher looking for a better interest rate on her mortgage.
If we’re going to bring this country back, the Dodds and Franks of Washington are going to have to rewrite the laws so we can have personal relationships with local banks again.
Michael Reagan is the son of President Ronald Reagan, a political consultant, and the author of “The New Reagan Revolution” (St. Martin’s Press, 2011). He is the founder and chairman of The Reagan Group and president of The Reagan Legacy Foundation. Visit his website at www.reagan.com, or e-mail comments to Reagan@caglecartoons.com. ©2012 Mike Reagan. Mike’s column is distributed exclusively by: Cagle Cartoons, Inc., newspaper syndicate. For info contact Cari Dawson Bartley. E-mail Cari@cagle.com, (800) 696-7561.
Related articles
- Getting Banks Back Into Banking (donny-wise.com)
- Frank-Dodd In A Box (zerohedge.com)
Information on Worldwide Adventure Tours Guide
Anyone looking for some adventure on their next holiday is going to have trouble choosing where to go. The world is truly your oyster and as the boundaries become fewer there’s more and more to see and do. From trekking in the Himalayas to Polar expeditions, caving in New Zealand to classic African safaris, here’s a quick guide to the plethora of worldwide adventure experiences.
Active Adventure
How active you want to be is up to you. Active holidays range from trekking or walking trips to caving, mountaineering, kayaking or paragliding. If you fancy a trekking holiday then the options are endless, but particularly great places for trekking include South America, North America and Europe. North America has a long reputation as a great trekking location with the Rockies, the Big Country, the Wild West and so much more. The best thing about trekking holidays is that you can reach those special places which are only accessible by foot such as the Inca Trail in Peru or even a trek through the Himalayas.
If you are looking for a little more adrenalin on your adventure tours then there are many more options. Mountaineering or rock climbing are great as long as you have a head for heights. Top rock climbing sites include California where Yosemite National Park offers some of the world’s most famous climbing spots. Perhaps you want to try a bit of white-water rafting; popular spots include Zimbabwe and Chile. Skiing has long been the choice for adventure holidays and opportunities are endless though Europe and North America are the obvious destinations.
The Road Less Travelled
For some people the true adventure is finding a place where others haven’t been and although the whole world has been mapped there are still plenty of opportunities to go wild. The Polar regions are now able to be explored via expedition boats where you can see ice formed in ways you never thought possible. Some adventure holidays even offer an opportunity to ‘ice dive’ in Antarctica.
Safari and Wildlife adventures
Safari trips in Africa or India offer a great adventure for wildlife enthusiasts. Imagine seeing a lion or gorilla up close in their own habitat! Other opportunities for wildlife include shark diving in South Africa or Australia or whale watching in Argentina.
Volunteering
The biggest adventure many people have in their life is during a spot of volunteering abroad. Perfect for gap year students or those wanting to gain a fresh perspective on life, volunteering options may cost you money rather than pay you, but the life experience is invaluable. These opportunities are available across the developing world including India, Africa and South America. Volunteering doesn’t always involve working with people and there are many opportunities to get involved with animal or marine conservation projects also.
With a whole host of places to see and things to do, deciding on an adventure holiday is not going to be easy. One thing is for certain though, the experience will be unforgettable. Whether you end up sailing to the North Pole or diving with sharks, the world is just waiting to be enjoyed.
AUTHOR BIO:
Sarah Jarvis is an adventure tours expert who frequently blogs and writes on the subject. She contributes regularly to a number of travel blogging sites.
While we don’t have exact figures, it’s estimated that 85+% of all real estate web sites are ineffective at actually bringing in active buyer and seller client leads to your business. It’s really unfortunate considering the time, effort and money many agents and brokers put into web site design and maintenance. What’s really sad is that the corrective action necessary to make your web site a commission generator can be quite inexpensive and generate income in a fairly short amount of time.
Here are seven reasons that are preventing your site from generating commissions for you.
1. Most agents don’t expect much.
There are a great many real estate agents out there that set up a web site because they perceive it to be required by their listing clients and a necessary evil of being a listing agent. It is true that seller prospects expect a web presence from the brokerage and/or the agent. If your only goal for your site is to appease these listing prospects, then it’s not a problem. However, if you decide that your time and efforts in site design and maintenance should do more for your business, it’s quite possible to make that happen.
2. The site doesn’t provide what the visitor wants.
Real estate agents want to apply their print and personal marketing tactics to the Internet and that just doesn’t work. The first-time visitor to a real estate web site is generally interested in only a couple of things. Both buyers and sellers want to search all the local listings, though for different reasons. Then buyers want area info and sellers want to know about the listing process. Note that we haven’t mentioned that they want a sales pitch for your great sales abilities, nor do they care about how well you care for your clients. Get them what they want fast and first.
3. Agent websites pester the visitor for contact info.
You’ll get arguments on both sides, (we have strong opinions on this one and a compromise) but you can bet that the Internet buyer or seller wants certain information from a web site and they don’t want or expect to have to give up personal information to get it. IDX search registration works for some, but it can drive away site visitors. You can provide other types of reports and information via email delivery and still get good leads. In fact, they’ll appreciate the fact that they can come to your site to do research without a login and feel free to sign up for more information later when they are ready.
4. Agent’s typically don’t understand the longer time line involved.
The Internet has stretched the time line from first research to a transaction. Buyers and sellers expect to be able to research markets and information anonymously without sales pressure. So, they start their searches earlier and research the results longer. Rushing a web client (or any client) doesn’t work, nor does ignoring them until they’re closer to making a decision. We hear stories every day from buyers who said they emailed an agent that they were thinking of buying in six months to a year and they didn’t even get a response. Work with your leads and stay in touch or lose them to the agent who will.
5. No lead capture mechanism in place on the website.
If you’ll buy into not forcing sign-up for searching listings, then you need to have something of value to offer the site visitor in exchange for their contact information. Develop some custom reports about special facets of real estate and transactions in your market. This could be information about stringent local codes, septic regulations, property sales statistics, etc. These need only be a page or less, and can be set up for automated email delivery. Allow them to sign-up and save their searches and other research information. Site visitors will give your their information for information of value returned by you.
6. Visitors who sign-up are inundated with drip emails.
Even if you’ve done everything right and grabbed that important contact name and email from your site visitor, you’ll lose a lead in the first couple of weeks if you’re not careful. Too many agents think that an aggressive drip email campaign, with an email every week or so is what works. Worse yet, they use a canned approach with emails developed by a third party on subjects like “How to make get your home ready for better for showings.” After receiving the third one of these emails from you I guarantee that you’ll get an “Unsubscribe” email from your valuable prospect.
7. Prospective Buyers and Sellers don’t know your website is out there.
Most folks new to the world wide web don’t realize that just purchasing a domain name (URL) and launching a website will absolutely guarantee that no one will find it. That’s right, it will be floating around in cyberspace with literally billions of other documents and no way to find it. Unless you strive to drive prospects to your site with aggressive marketing of your site, it is sure to attract no one; or worse, attention you don’t want or need. Web site marketing, Search Engine Registration and Search Engine Optimization (SEO) are crucial to placing your site in front of those Buyers and Sellers looking for real estate help in your area. We’ll talk a lot more about these critical processes in future posts.
Want to learn more about creating a low cost effective lead generating website? Just visit www.PSSPROS.com and click on “Internet Marketing” for more information.
Lee Dworshak - Site Admin
PSS Staff Writer
Guest Writer
Tyler Spraul - Contributor
Derek Morton - Contributor
Neel Kamal - Contributor
Stephanie Hofman - Contributor
Izzy Woods - Contributor
