Weil’s Views on Finance
Greetings, dear readers. Today's morning reads look more like a police blotter, with one big difference. This is Wall Street, so nobody is going to jail.
London Whale swims away to trade again another day
Bruno Iksil, the former JPMorgan Chase & Co. trader known as the London Whale, won't be sued by the Securities and Exchange Commission, according to multiple news reports. I guess being stuck with that nickname for all eternity may be punishment enough. His bosses were more to blame for the bank's trading scandal than he was. Plus, anyone who manages to keep his photograph from appearing on the Internet for this long after so much horrible publicity is a genius. We still have no idea what he looks like. Incredible, isn't it? Poor Fab, though. His picture is everywhere.
JPMorgan might admit " wrongful conduct ," whatever that means
Although Iksil may avoid penalties, JPMorgan almost certainly won't. It's in settlement discussions with the SEC. Some individuals may get pinched, but probably not senior executives. The Wall Street Journal had some curious lines in its story on the talks. It said the SEC wants the bank "to admit to wrongful conduct" as part of any deal. It also said that SEC staff members have included the London Whale probe on a short list of likely actions chosen "to showcase SEC Chairman Mary Jo White's new policy of forcing firms and individuals in certain cases to admit misconduct or be taken to court." Two points: If the SEC settles this case, it needs to get a clear admission of liability by JPMorgan. Anything short of that would be a failure. Second, JPMorgan is one of White's former law-firm clients. She isn't supposed to participate in matters related to JPMorgan. The SEC should be keeping her far away from this case.
Here's how the SEC got to be so polarized
Speaking of Mary Jo White, Floyd Norris of the New York Times has an excellent column explaining how the SEC during the past 30 years went from being a collegial body to a fractious partisan battleground. It is much the same at other federal agencies. "The result has been that chairmen of commissions can find it difficult to accomplish anything," he writes.
This guy just wails on the Justice Department for its BofA suit
Bill Black, a law professor at the University of Missouri-Kansas City and former banking regulator, writes that the Justice Department's lawsuit this week against Bank of America involving the sale of a mortgage-backed security "is an embarrassment of tragic proportions on multiple dimensions" and "might be the most pathetic in history." He backs it up, too. Worth a read, especially if you like a good screed.
Enough lawyer stuff, let's talk about Yahoo
Yahoo filed its quarterly report, the first since it bought Tumblr for $990 million. As for the purchase-price breakdown, the company allocated $751 million to goodwill and $263 million to other intangible assets. (Click on the link and see page 12 for a chart.) There were some liabilities and other assets, too, but those were the big items. So basically, for accounting purposes, Yahoo bought a bunch of air. Now it must figure out how to turn that air into money. Tumblr's former owners, including founder David Karp, already have. They sold the company to Yahoo for cash.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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Jonathan Weil at firstname.lastname@example.org