This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

JPMorgan Is in a No-Win Situation of Its Own Creation

Stocks in this article: JPM

 

NEW YORK ( TheStreet) -- JPMorgan Chase reports second-quarter earnings before the opening bell on Friday, and I can tell you right now that no matter what kind of numbers it reports, it is going to be dumped on.

If JPMorgan's $9-billion-and-counting trading loss is a drag on earnings, it is going to be dumped on. If it isn't, it is going to be dumped on.

As a matter of fact, you might say that JPMorgan -- and all the major banks, for that matter -- are in a pretty much no-win situation during earnings-reporting season. If they make a ton of money, it calls attention to the fact that the banking sector is thriving while the rest of the economy is suffering because of a recession that they helped create. If they don't make money, they are criticized for being inept or inattentive, just as JPMorgan has been for that credit-derivatives trading loss that keeps getting bigger.

JPMorgan CEO Jamie Dimon is the first to decry the bad rap that the banks are getting, and on the face of it, it doesn't seem especially fair or even rational. After all, it is argued, shouldn't we be happy that at least one sector of the economy is doing well -- so well that even a $9-billion-and-counting trading loss isn't likely to do the bank very much damage?

The answer is "no." We shouldn't be happy. We should be furious. The public has every reason to be resentful about how the banking sector and Wall Street are flourishing when the rest of the economy is suffering and unemployment is still stubbornly hovering above 8%. There are two reasons for this:

1. JPMorgan is a government-subsidized institution, and;

2. It treats its customers like dirt.

According to a study by the International Monetary Fund and some numbers-crunching by Bloomberg, JPMorgan gets a $14 billion-a-year subsidy from the U.S. taxpayer.

In recent decades, you see, the government has stepped in to be sure that all bank creditors are paid in full. See, that's one of the unseen advantages of being too big to fail. The system is so interconnected that international banking becomes like one big game of dominoes, so that the collapse of one can cause the entire banking system to go "pfffft," as the Eli Wallach character pointed out in Oliver Stone's Wall Street sequel, Money Never Sleeps.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs