This is something I have seen an I have been confronted with in some form. Yet when the NY Times reported on ‘Why Banks Are Suddenly Closing Down Customer Accounts’ (at https://www.nytimes.com/2023/11/05/business/banks-accounts-close-suddenly.html). I was taken aback a little. This is not some case of criminal activity, that I would accept. Here we see “Bank customers get a letter in the mail saying their institution is closing all of their checking and savings accounts. Their debit and credit cards are shuttered, too. The explanation, if there is one, usually lacks any useful detail” with an additional “the telltale pause and shift in tone. “Per your account agreement, we can close your account for any reason at any time,” the script often goes”. There are two settings that come to mind (of the top of my head). The first one comes via Dutch journalist and entrepreneur Luc Sala “the world will have two types of people, those who have and those who do not” it is a statement he made 30 yeas ago and we have been moving towards that setting. A stage of enablers, consumers and others. The second thought that came to mind is seen with “Individuals can’t pay their bills on time. Banks often take weeks to send them their balances. When the institutions close their credit cards, their credit scores can suffer. Upon cancellation, small businesses often struggle to make payroll — and must explain to vendors and partners that they don’t have a bank account for the time being.” I see this as the case that to some degree saw with the SVB bank in march. They are so close to the edge that they are closing down all accounts that are not labelled as enablers or consumers. The algorithm is set to what in some circles would be called platinum or gold customers, the rest is cut as a liability. It is all so that they can continue a little longer. As long as they stay away from the edge they will be ‘safe; for another week (or two). And the explanation by Jerry Dubrowski, a spokesman for JPMorgan Chase, the nation’s largest bank with 80 million retail customers and six million small-business ones does not help. The stage where we are given “whose former account holders sent nearly 200 complaints to The Times” is a metric. So how many complaints did The Times get in the preceding 6 months? How many in 2022, 2021 or 2020? These are metrics that we can use and they would give me something to go on, most likely that the two reasons I just mentioned are not merely the most likely ones. It shows that I got it right. The second excuse “We act in accordance with our compliance program, consistent with our regulatory obligations” is seen by me as equally bogus. You see in June 2023, we were given “JPMorgan Chase is fined by SEC after mistakenly deleting 47 million emails” with the added text “The deletions occurred after JPMorgan’s corporate compliance technology department, which had been trying unsuccessfully to delete some communications from the 1970s and 1980s, sought help from an outside vendor managing the bank’s email storage”. Now consider that an additional 40TB for storage costs $2,899. Now consider the two parts “According to the SEC, JPMorgan has been unable in at least 12 civil securities-related regulatory probes to comply with subpoenas and document requests for communications that had been permanently deleted.” Is the first part. The second part is seen when you consider that these activities required the cost of an external deleter (this is not a free skill) and the fact that they tried to delete 53 year old emails implies that the setting was on shaky grounds to begin with. So where was the side of “our regulatory obligations” then? Then we return to 2020 where we see ‘JPMorgan Chase & Co. Agrees To Pay $920 Million in Connection with Schemes to Defraud Precious Metals and U.S. Treasuries Markets’ which amounts to another setting of ‘obligations’ as such the spin is turned back to JP Morgan Chase. This is about (my personal view) algorithm and the ‘dangers’ that these numbers represent. It makes my mind turn to a movie called Margin Call (2011) with Kevin Spacey, Paul Bettany and Zachary Quinto. At some point we get the quote “Fuck me… Once this thing gets going in the wrong direction. The losses are greater than the current value of the company…?” I do not think that the banks are there yet, but with my view on US treasury bonds several banks are now on the edge and they are trimming all the liable fat they have, so those who are not enablers or consumers are cut. I doubt it is only JP Morgan Chase, but they are the first to visibly twitch. If this is right those who saved ALL THEIR LIVES are about to lose a hell of a lot.
Am I wrong?
That remains the question and it is a fair question and it can be debunked by giving the people (all of us) a clear list of where all those bonds are and who (especially banks) owns more than $50,000,000 in bonds. I reckon that several banks have way more than that and they relied on the quote ‘too big to fail’, but that myth has been taken to bed and treated to the medicinal use of a 12 gauge.
As such my view could be dispelled easily enough and I made that same request around the SVB bank months ago, even as the media NEVER looked in that direction (for unknown reasons).
The second mistake by Jerry Dubrowski was “the vast majority of closures are correct, consistent with the regulatory obligations we are required to follow” it comes with the realisation that ‘vast majority’ implies that plenty are wrongfully cut and when was there a bank that relied on “You could be wrongfully culled, but that is how regulatory obligations work” said no one ever. It is the relying on ‘vast majority’ that gives the edge to the victims of this. And now JP Morgan will either be required to give full explanation to EVERY ACCOUNT (as I personally see it) or cop another fine of millions, but they are tax deductible and that is the most likely path they will be on. But that could merely be me and I could be wrong.
In this article Ron Lieber and Tara Siegel Bernard give a good account and I could have looked at it earlier, but I did not. This happens and I have no regulatory obligations. And it was only 6 hours ago when we saw ‘Analyst view: Goldman Sachs rates Polycab as ‘Buy’, JPMorgan still bullish on Reliance Industries Limited’ with the added “JPMorgan (NYSE:JPM) has maintained an “Overweight” rating for Reliance Industries Limited (RIL)” I see no “impressive retail sector performance” I see a reliance on algorithm to get every penny away from the ‘edge’ as possible. I could be wrong there too, but there is every chance that JP will have to call itself ‘JPMorgan Edging’ soon enough. There is another side, but that is an icky one (always wanted to have a reason to use the word icky). It takes me back to the shores of the Dutch SNS bank. Several sides and they might be the first bank in Dutch history that gives a view that white collar crime pays. One got 12 months, 4 got suspended sentences and the Dutch government is down €804,000,000. This relates to the JP case because of the algorithm. How was the bad bank script invoked? How was it ‘allowed’ on paper to fraud and corrupt? Where were the ‘regulatory obligations’ there? It is what the law allows for and as such we see the hardship on the people who are cut (and optionally merely hit hard times). So now consider that the banks cut all those who hit hard times, and still all non-cut customers of that bank are due their fees. So where was the risk management there? The risk has become too great and they are all cut now. That is how I (optionally wrongly) see it.
The last ‘issue’ is that only the NY Times has this, none of the other newspapers have it. The NY Times has enough credibility, but my mind races. There is absolutely no way that JPMorgan Chase is alone here, so why is the NY Times the only one that has this? I doubt it is merely algorithm. This makes me wonder (yet again) how much in US Treasury bonds does JPMorgan Chase has at this moment?
Just a question. Enjoy the day. I am two minutes from Thursday, Vancouver is only just starting Wednesday.
Lawrence van Rijn - Law Lord to be 