JPMorgan Chase Faces Federal Probe Over Energy Trading 'Schemes'

JPMorgan Chase Faces Federal Probe Over Energy Trading 'Schemes'
by Eamon Murphy
dailyfinance.com
Updated May 3rd 2013

Federal investigations are nothing new for JPMorgan Chase (JPM), but the latest government inquiry into the behavior of the country's largest bank by assets bears uncomfortable similarities to one of the most notorious chapters in the history of American business.

The New York Times reports on the contents of a confidential government memo sent to the bank in March, "warning of a potential crackdown by the regulator of the nation's energy markets":

Government investigators have found that JPMorgan Chase devised "manipulative schemes" that transformed "money-losing power plants into powerful profit centers," and that one of its most senior executives gave "false and misleading statements" under oath.

Connoisseurs of corporate scandal -- and probably every investor who remembers the start of this century -- will immediately think of Enron, the energy market-manipulating giant that went from six-time consecutive winner of Fortune's "most innovative" award (1996-2001) to what was at the time the largest bankruptcy in U.S. history.

The "schemes" in question reportedly originated in Houston, where JPMorgan traders under pressure to make big returns are alleged to have swindled California and Michigan out of $83 million by presenting deceptive energy prices. The bank says everything was on the up-and-up.

There's more alleged wrongdoing at the bank, including improper collection of credit card debt and silence over suspicious trading by Bernie Madoff, the biggest Ponzi schemer in history.

The Times also says JPMorgan CEO Jamie Dimon, who is not personally under government scrutiny, met with prosecutors and the FBI this week to discuss the infamous "London Whale" case, a massive trading loss that prompted accusations of a cover-up and led to a blistering Senate report.

For more on this story, as well as other developments moving the market today, check out the DailyFinance Market Minute video below.

McCain's energy policy: stay away when there's a vote on solar and wind energy

Eight Strikes and You’re Out
By THOMAS L. FRIEDMAN
Published: August 12, 2008

"John McCain recently ...[told] a motorcycle convention that Congress needed to come back from vacation immediately and do something about America’s energy crisis. “Tell them to come back and get to work!” McCain bellowed.

"Sorry, but I can’t let that one go by. McCain knows why.

"It was only five days earlier, on July 30, that the Senate was voting for the eighth time in the past year on a broad, vitally important bill — S. 3335 — that would have extended the investment tax credits for installing solar energy and the production tax credits for building wind turbines and other energy-efficiency systems.

"Both the wind and solar industries depend on these credits — which expire in December — to scale their businesses and become competitive with coal, oil and natural gas. Unlike offshore drilling, these credits could have an immediate impact on America’s energy profile.

Senator McCain did not show up for the crucial vote on July 30, and the renewable energy bill was defeated for the eighth time. In fact, John McCain has... missed all eight votes over the last year — which effectively counts as a no vote each time. Once, he was even in the Senate and wouldn’t leave his office to vote..."