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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Regulators Lump JPMorgan With Crisis-Era Banks (Update 1)

Stocks in this article: BACCJPM

Update with afternoon market action and comments from Mark Williams, a former Federal Reserve bank examiner and current lecturer at the Boston University School of Management.

NEW YORK ( TheStreet) -- The onslaught against JPMorgan Chase (JPM) continues unabated.

Maybe whoever leaked confidential regulatory rating information to the Wall Street Journal was jealous that the bank all but sailed through the credit crisis while casually absorbing the " London Whale" trading losses last year. The company posted 2012 earnings of $21.3 billion -- increasing from $19 billion in 2012 -- despite taking at least $6.2 billion in losses while winding down the hedge trading losses that were at the center of a bombshell Senate report last week.

JPMorgan shares were up slightly in afternoon trading, to $49.30.

In its report on the London Whale losses, the Senate Permanent Subcommittee on Investigations disclosed that the Office of the Comptroller of the Currency lowered JPMorgan Chase's CAMELS rating in July 2012 for main banking subsidiary, JPMorgan Chase Bank NA. The rating was lowered because of "lax governance and oversight" of the bank's Chief Investment Office, which is the group that handled the hedge trades leading to the losses.

The OCC determined that JPMorgan Chase's "board and management failed to ensure that CIO management was properly supervised, and that an adequate risk management and control infrastructure was in place," according to the Senate committee report. One of the Senate committee report's conclusions is that bank regulators should finalize their implementation of the Volcker Rule, which bans proprietary trading by banks and has been championed by Senate Permanent Subcommittee on Investigations Carl Levin (D., Mich.)

Banking is among the most highly regulated industries, for reasons that are all too familiar to most residents of the U.S. in the wake of the housing and credit crises. But bank examination reports are confidential, with good reason. With banks' management teams, financial results and business strategy subject to a very high degree of scrutiny in the reports, it would be grossly unfair, not to mention highly disruptive in the market, for the examination reports to be made public.

CAMELS is an acronym standing for capital adequacy, asset quality, management, earnings, liquidity and sensitivity to risk. According to the Journal, JPMorgan Chase was lowered to a CAMELS 3 rating, which is a "needs improvement" rating. That's the same rating that Citigroup (C) and Bank of America (BAC) were lowered to, at the height of the credit crisis.

1 of 2

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!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

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