Jamie Dimon's TARP Warrant Trick: the Smartest Motherf&%#er in Banking Outsmarts the Treasury Again

While I'm publicly rooting for Bank of America's Ken Lewis to break free from the government yoke, let's face it, the prospect is pretty dismal at this point.

Meanwhile, JP Morgan's Jamie Dimon is still showing his spectacular gangsta stripes, after telling Timmy to shove it, this is but one more fabulous Dimon trick to show off JPM's massive low-hanging pair.

You go, Jamie Dimon. You have my total support in sticking it to the Treasury - in fact, I think you can do better. Harder, better, faster, stronger, JD, come on now!

Anyway, Clusterstock calls this move "suspicious" but I call it fucking genius:

Morgan Stanley, for instance, paid something along the lines of 68 cents on the dollar for the warrants, according to some estimates. Elizabeth Warren, the TARP watchdog for Congress, thinks that lowball deals have shortchanged taxpayers by $2.7 billion.

Of course, not everyone underpaid. The best estimates from economist Linus Wilson tell us that Goldman Sachs, BB&T and American Express paid fair value or more for the warrants. Of course, all of these are just estimates. All along we've said that it would be better to have a market auction for the warrants.

But JP Morgan's decision to do exactly this is now raising questions: what are they up to? Why didn't they want to cheaply buy back the warrants?

Megan Barnett at Minyanville writes:

You can just imagine the talks around the boardroom. "Hey, I've got an idea! Let's potentially lose money by letting the public bid on our warrants instead of just lowballing the Treasury like everyone else did. It would be so much more fair to Americans."

Forgive the cynicism, but fairness has never been a driving factor in dealmaking before, so it's tough to see why now is the time for it to start. It's also difficult to imagine how the bank officials expect to get a better deal from the auction than they would by spending an afternoon with Treasury officials.

Perhaps JP Morgan executives believe in karma, hoping that the goodwill accumulated by this stunning public relations coup will translate into more checking accounts and customer loans. Perhaps it's all part of a bigger effort to give Americans a warm and fuzzy feeling when they see the Chase sign down the street.

And perhaps they're right to do so. After all, how many $33 overdraft fees does it take to make up for the potential losses from a fair and open warrant sale?

This strikes us as overly suspicious. At this point, many are ready to assume that just about everything banks do is a scam of some sort. Maybe just this once a bank wanted to be as transparent as possible, if perhaps just to avoid getting grilled by lawmakers about the price they paid.
Listen, Dimon is just trying to set himself apart from those peasants at Wells Fargo, that's all. He also knows that fair value will work in his favor if he can put these out there in time. I'm a little sketchy on the timing and think he might do well to hold off until the shit hits the fan (again) but I guess there's no use in trying to auction warrants in an imploded market.


There is, of course, an alternative motivation that could be behind this. Either Dimon knows that somehow auction will snag these warrants below fair market value or he will just arrange for one of his Wall Street Mafia counterparts to snatch them up on JPM's behalf for less than whatever the robots say they are worth.

Either way, Dimon comes out smelling like roses because his excuse is a bulletproof one. After a move like this, no one can accuse him of ripping off the taxpayer like those pricks over at Morgan Stanley, right? This will come in handy when the unwashed masses start rioting over those increased credit card/overdraft fees that JPM is bending them over for.

I applaud Dimon for being a clever, capitalist pig. He's still a dick but he's a clever dick and that earns him the Jr Deputy Accountant stamp of approval.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.