The following is an excerpt from SUZANNE MCGEE | July 2, 2012 | ThefiscalTimes.com |
This article was updated on Monday, July 2, at 2:45 p.m.
Big banks just can’t seem to catch a break. While publicly griping about the costs involved with all the new regulations that have been introduced since the financial system teetered on the brink of collapse back in 2008, they seem to remain intent on reminding us just why those regulations – or something else of the same kind – were needed in the first place.
Making matters all the more worrying, the two banks that provided those reminders last week have until now been seen as relatively healthy institutions, and “winners” in the wake of the crisis.
Barclays (BCS), hit with a regulatory penalty of about $450 million after some of its employees sought to rig the key LIBOR inter-bank lending rate, rode out the crisis without needing to seek an infusion of cash from the government, and ended up expanding its footprint when it picked up assets of the bankrupt Lehman Brothers. True, Marcus Agius, the chairman of the bank who resigned on Monday, did take some heat for turning to investors from Abu Dhabi and Qatar, rather than existing shareholders, to raise emergency capital during the financial crisis. Yet Barclays emerged from the crisis as more of a global powerhouse, propelled by its now-embattled American CEO Bob Diamond.
JPMorgan Chase (JPM) was also a clear winner; while it did take TARP funds, they were rapidly repaid, and the bank also ended up in a dominant position, having picked up Bear Stearns and Washington Mutual at firesale prices at the height of the crisis. Then came the “London Whale” and the complex trades that CEO Jamie Dimon confessed might cost the bank upward of $2 billion in losses. Now, if media reports are accurate, the real figure could be closer to $9 billion – considerably more than even the most bearish observer had predicted.
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