Weil on Finance, P.M.: Addicted to QE

Afternoon links on finance from Bloomberg View columnist Jonathan Weil

Happy Thursday, View fans. And now on to more fun with afternoon links.

In search of Mr./Ms. Senior Management at JPMorgan

Aside from the fact that JPMorgan Chase admitted to violating federal securities laws but refused to say which ones, here's another frustrating part about the Securities and Exchange Commission's London Whale settlement with the bank today. The SEC's order referred to "senior management" more than 100 times, and it seems these people did some bad stuff -- whoever they are. Most of the time you can't tell whom the SEC was talking about. The London Whale report by Carl Levin and the Senate Permanent Subcommittee on Investigations was far more informative.

Why hasn't JPMorgan settled with the CFTC?

The bank cut a deal with the SEC and banking regulators, but not the Commodity Futures Trading Commission. Wayne State University law professor Peter Henning explains why that might be. The admissions to the SEC aren't harmful, unlike the claims being pursued by the CFTC. "The SEC gets the benefit of an admission of wrongdoing, but JPMorgan suffers no appreciable jeopardy to its legal position in private litigation," he writes. "The same can't be said about the possible enforcement case that the Commodity Futures Trading Commission has said it plans to pursue" where "the issue is whether the bank's extensive trading manipulated the derivatives markets in violation of the Commodity Futures Act. That law gives private investors a claim for damages against traders who sought to manipulate the value of futures contracts."

First step toward recovery is admitting you have a problem

Commenting on the Federal Reserve's quantitative-easing quagmire, Gillian Tett writes in the Financial Times that "Western finance cannot be fixed without tackling credit addiction" and that "the danger with addictions is they tend to become increasingly compulsive." She's right, of course. No matter. We're hopelessly addicted. Central banks keep supplying.

More on the Fed's never-ending bond purchases

From writer and investment banker Christopher Whalen: "When you read news reports about yesterday's `surprise' decision by the FOMC, just remember that the only people who were surprised are Wall Street traders and their captive economists. For people who live and work in the real world, job losses and tough economic times more generally are no surprise. But what is really needed from the Fed is the recognition that current monetary policy is just making a bad economic situation in the U.S. worse."

Meanwhile, borrowing for a home is still unbelievably cheap

Nifty stat from Trulia, a real-estate data provider, cited in a story today by Bloomberg News reporter Heather Perlberg: "For renting in New York to become cheaper than buying, 30-year mortgage rates would need to rise to 7.5 percent and in Orange County, California, borrowing costs would need to be 7 percent." The average rate this week was 4.5 percent, according to Freddie Mac, which is a percentage point higher than it was in May when Fed Chairman started his taper talk. Just a reminder of how insanely low interest rates remain.

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 jweil16@bloomberg.net

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