The 5 Dumbest Things on Wall Street This Week: Aug. 16

5. Holder Loses Grip

Hold on a second, Holder! We here at the Dumbest Lab are quite familiar with government agencies making massive data revisions. So much so, in fact, that we now wait an extra month to get monthly nonfarm payroll numbers we can believe in.

(Seriously Bureau of Labor Statistics? The economy added 162,000 jobs in July? Yeah, right! We'll see what you say in September!)

Nevertheless, hearing the FBI restate its figures, well, that is arresting indeed.

The Department of Justice said late last Friday that it had severely overstated the results of a year-long mortgage fraud initiative in a press conference last October. Attorney General Eric Holder originally said that the "Distressed Homeowner Initiative," a nationwide effort to target fraud schemes that preyed upon suffering homeowners, had resulted in 530 criminal charges. Holder added at the time that the cases involved over 73,000 borrowers with losses totaling $1 billion.

It turns out, however, that those numbers coming from President Obama's top cop were way, way off.

The number of criminal charges was actually 107, admitted the FBI after being pressed by our buddies at Bloomberg. Federal agencies also corrected victim's losses to $95 million from $1 billion and the number of victims to 17,185 from more than 73,000.

Somebody get Alanis Morrisette on the phone. Forget "rain on your wedding day," that's not ironic at all, it's just bad luck. If you want to talk irony, well, a prime example would be the point man for the Obama Administration's Mortgage Fraud Working Group publicly announcing fraudulent statistics!

Perhaps even sadder was the fact that these fearless crime-fighters tried to sneak out this correction late on a Friday to sidestep the news cycle. Um, excuse us, officers, but unlike the shady hedge fund managers and insider traders that you fail to put away, we journalists work full days during the summer. We don't jet out to the Hamptons at noon to beat traffic and bad PR.

"We cannot merely investigate after the fact," said FBI Associate Deputy Director Kevin Perkins last fall when the phony numbers were first announced. "We must use intelligence and sophisticated techniques to identify and stop those who seek to defraud American homeowners."

Hilariously, it turns out that the FBI didn't investigate after the fact at all. It left that to Bloomberg, which in turn left the agency looking far less than sophisticated and anything but intelligent.

4. Auf Wiedersehen Ackman

The board room of J.C. Penney ( JCP) is probably still alive with the sound of music following Bill Ackman's decision to step down Tuesday. And we can only imagine that Penney's Chairman Thomas Engibous and CEO Mike Ullman have been enjoying as many of their favorite things as possible since the activist investor said so long, farewell.

Of course, they haven't totally solved their problem named Bill Ackman. His Pershing Square hedge fund still owns almost 18% of the once-iconic retailer's shares, so he could still do further damage to the company he and his handpicked CEO Ron Johnson have essentially destroyed. Bill has lost a whole lot of Do-Re-Mi on this stock, and as much as he likes to climb every mountain, we expect him to ditch that position faster than the von Trapps fled Austria now that he's off the board.

Seriously, you'd have to be smoking edelweiss to think he's going to stick around considering all that's happened. But let's not dwell on that for now. We'd rather sing.

(To the Tune of So Long, Farewell from The Sound of Music)
(JCP Board Members)
There's a sad sort of clanging
From a schmuck in the hall
And the bells around Plano, too
And here in Penney's board room
An absurd little bird
Is leaving us, cause he's coo-coo
(Coo-coo, coo-coo)

(Bill Ackman)
Regretfully they tell me
But firmly they compel me
to say goodnight
To you

(JCP Board Members)
So long, farewell
Auf Wiedersehen, goodnight
I hate to go and leave this petty fight

(JCP Board Members)
So long, farewell
Auf Wiedersehen, adieu

Screw you, Screw you
To you and you and you

(JCP Board Members)
So long, farewell
Au revoir, Auf Weidersehen

I'd like to stay
And drive Ullman insane

(To JCP Chairman Thomas Engibous) Yes?
(Engibous) No! What are you nuts?

(JCP Board Members)
So long, farewell
Auf Weidersehen, goodbye

I leave, but unlike
at Target (TGT) I won't cry.
(JCP Board Members)
Fine! Will you just leave already? Nobody here is going to miss you.
I'm glad to go
I cannot tell a lie.
I'm getting reamed
by Carl on Herbalife (HLF)!

(JCP Board Members)
Are you still here? You really are a megalomaniac. Just get out already! Somebody call security. Better yet, get Carl Icahn on the phone!

The sun has gone
To bed and so must I.
So long, farewell
Auf Weidersehen, goodbye

Good...Hello? Charlie Rose? Yeah, it's me Bill...Sure I'll tell you my side of the story. The board was totally out to get me. And so is Carl Icahn and Dan Loeb and George Soros and Howard Schultz and Vanity Fair and...Am I what? Paranoid? How dare you?

3. Armstrong's Apology

Sorry, Tim Armstrong, but we don't accept your apology. In our eyes, you remain a turd.

AOL's ( AOL) CEO ate crow Tuesday, apologizing to his employees for his very public firing of a creative director for the company's Patch local-news business. Armstrong sacked Abel Lenz last Friday in front of his fellow employees -- not to mention a thousand more co-workers listening in on a conference call -- for taking his picture during a company-wide meeting. For the record, Lenz photographed Armstrong at similar gatherings many times before. According to Armstrong, however, he was previously ordered to refrain from taking pictures, which resulted in his immediate ouster.

"Abel, put that camera down right now! Abel, you're fired. Out!" Armstrong ordered Lenz before coolly returning to his original topic of turning around the money-losing Patch service.

Yep, Armstrong raised his inner Cain and slew Abel so everybody at the company could see. Too bad tough-guy Tim didn't realize the rest of the world was watching as well.

Talk about inspiring the troops, Timbo! We can only imagine the talent that must be lining up to work for you after that Trump-esque episode.

Who are we kidding Timmy-boy? Even the Donald's famed firings on The Apprentice are less cringe-worthy than your outburst. At least Trump shows some emotion during his staged dismissals so viewers at home can see that he means business. You were so eerily calm while canning Lenz it looked like business as usual.

"I am accountable for the way I handled the situation, and at a human level it was unfair to Abel," Armstrong said in a memo to employees. "As you know, I am a firm believer in open meetings, open Q&A and this level of transparency requires trust across AOL."

How very human of you Tim. We're sure you'll gain a lot of trust after this eye-opening incident.

2. Airline Insanity

You gotta say this about Eric Holder's curious bid to block U.S. Airways ( LCC) merger with American Airlines: At least the Attorney General doesn't kick them when they are down.

Too bad in this case, the opposite is even worse. He's kicking them when they are finally up.

The Department of Justice filed a law suit to block the planned merger of the two airlines Tuesday, saying the combination would be anti-competitive. Shares of bankrupt American, which trades primarily on the expectation of a return in the merger, fell 45% to $3.17 Tuesday while US Airways, which has been in and out of bankruptcy twice in the past decade and is finally seeing its stock take off, saw its stock sink 14% to $16.36. US Airways was top performing stock among the Fortune 500 in 2012.

"By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price -- in higher airfares, higher fees and fewer choices," said Attorney General Eric Holder.

Um, wait a second Eric. You forgot higher unemployment, higher industry uncertainty and ultimately more airlines filing for bankruptcy once the inevitable price war ensues.

"Anyone who has seen what one weak carrier -- the name 'Eastern Airlines' comes to mind -- can do to pricing in the airline industry must now shudder at the thought that our government wants to prevent a merger that would have created a third major global U.S. competitor," writes TheStreet's airline ax Ted Reed.

Reed adds that he can't predict which carrier will be weakened to the point of bankruptcy, "but the industry is so competitive, the operating conditions are so difficult and the exogenous factors are so influential that it seems clear that at some point, something bad will happen. It always has."

Look. It's not that we have a problem with airline price wars, as consumers we love them. Nevertheless, over the long term they tend to be more destructive and costly than their short-term benefit to travelers.

And a quick check of airline history shows that price wars inevitably lead to consolidation anyway. In fact, the same type of consolidation that this very same DoJ used to love when it approved the mergers of Delta ( DAL) and Northwest, United ( UAL) and Continental and Southwest and AirTran in the past five years.

"Other companies have found themselves in similar circumstances and gone on to successfully close their merger," said U.S. Airways CEO Doug Parker, echoing our bewilderment as to why Holder decided to draw the line here.

And despite Holder's statements that he is looking out for the little guy, he chose the worst possible time to delay the deal, which was about to be approved in bankruptcy court this very week. American has been operating under Chapter 11 of the bankruptcy code since November 2011. A simple approval would have triggered wage and benefit increases for U.S. Airways and job security for American employees.

That's not going to happen now that, for some dumb reason, Holder said hold on.

Dimon's Dilemma

Jamie Dimon's little teapot is looking more Thunderdome than short and stout lately. Isn't it?

Not that you're going to find him anywhere near it.

U.S. prosecutors fired off criminal charges on Wednesday against two former JPMorgan Chase ( JPM) workers involved in the "London Whale" trades that cost the bank $6.2 billion last year. In a wild twist, the "Whale" himself, trader Bruno Iksil, was not accused with his former colleagues Javier Martin-Artajo and Julien Grout of what now being characterized as a rogue trade, seemingly because he pushed back against the pair's efforts to cook the books to hide their losses. Iksil is cooperating with the government about the scandal, which CEO Jamie Dimon originally dismissed as a "tempest in a teapot."

Speaking of Jamie, where is that guy anyway? Dimon? Dimon? Bueller?

Yeah, just like we didn't see Goldman Sachs ( GS) CEO Lloyd Blankfein anywhere near the trial of his formerly fabulous employee-turned-convicted-fraudster Fabrice Tourre -- although he was footing Fab's legal bills -- we doubt we'll see Jamie joining hands with Javier and Julien as they enter the courtroom. Now that the Feds have put these two foreign faces to the alleged fraud, Jamie can finally exhale because his mug is no longer associated with the case.

Sorry, Javier and Julien. It's your Whale now.

Alas, Jamie exits the scene with his luxurious hair unruffled, while these two nobodies become the poster boys for all the troubles at the nation's largest bank. (More precisely, "Wanted" poster boys since we are still waiting to learn of their extradition. Grout is French, while Martin-Artajo is Spanish and both live overseas.)

Yes, once again, we know that despite taking $6.2 billion in reported Whale losses, the nation's largest bank still managed to earn a record $21.3 billion, or $5.20 a share during 2012. So perhaps this whole debacle was "not that big a deal," which is what Jamie called the scandal back in May 2012.

Nevertheless, according to the Justice Department's criminal complaint, Martin-Artajo and others "artificially increased the market value of securities in order to hide the true extent of hundreds of millions of dollars of losses."

And while that's chump change to JPMorgan Chase, it's real money in the real world and certainly enough to reopen the discussion as to whether the nation's largest bank can be run from the famous "To-Do List" in Jamie Dimon's pocket.

Simply because Jamie can now point the finger at these two jokers does not address the problem that his bank is too big to manage. Or fail.

-- Written by Gregg Greenberg in New York

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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