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Fed Issues An Ominous Warning To JPMorgan Chase And Leaders Flock To Secret Meetings

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This article was written by Daisy Luther and originally published at The Organic Prepper

Tick. Tock.

Do you hear that? It’s the clock on the time bomb, and it appears to be ticking relentlessly toward our economic collapse.

It seems like every day, there is a new threat to the financial well-being of the disappearing middle class in America. Of course, less affected are the members of Congress and their buddies on Wall Street. You know, the ones that put the politicians in office to get favorable decisions made on their behalf in Washington.

But if you happen to have been ignoring the folks Obama calls “peddlers of fiction” who have been warning us all of an impending economic crisis along the lines of the last financial collapse, you might want to pay attention now, because a disturbing series of events is in motion.

First of all, the Fed just issued a terrifying warning to the biggest bank in the country.

Finally, the Fed has admitted that we just can’t take another hit without incurring an epic disaster.

And by “admitted” I mean they’ve issued a chilling warning to JPMorgan Chase, the biggest bank in America.

The letter is addressed to Teflon-coated Jamie Dimon, the leader of the bank (who seems to have made a deal with the Devil to become completely immune to prosecution, no matter what he does.)

It is 19 pages and heavily redacted, but here are some excerpts that should send a chill down your spine. The emphasis is mine.

The Agencies also identified a deficiency in the 2015 Plan regarding the criteria for a rational and less-complex legal entity structure. In order to substantially mitigate the risk that JPMC’s material financial distress and failure would have systemic effects, JPMC should ensure that its legal entity structure promotes resolvability under the preferred resolution strategy across a range of failure scenarios. Flexibility—or “optionality”—within the resolution strategy helps mitigate risks that, if not overcome, could otherwise undermine successful execution of the strategy and, more broadly, pose serious adverse effects to the financial stability of the United States.

Then there’s this:

These divestiture options do not appear to provide sufficient optionality under different market conditions.

The divestiture options in the 2015 Plan also were not sufficiently actionable, as the 2015 Plan sections fore did not contain detailed, tailored, and complete separability analyses. For example, only one obstacle to divestiture to the [redacted] key vendor contracts was adequately analyzed; the analysis of the other key obstacles cited regulatory approvals, client communications [redacted]

This is also concerning:

JPMC does not have an appropriate model and process for estimating and maintaining sufficient liquidity at, or readily available to, material entities in resolution (RLAP model). This is notable given J?MC’s liquidity profile in its 2015 Plan, which relies on the firm’s ability to shift substantial amounts of liquidity around the organization during stress, as needed. As explained below, JPMC’s liquidity profile is vulnerable to adverse actions by third parties.

Even without a degree in finance, I know this is bad:

JPMC’s 2015 Plan relied on roughly  of parent liquidity support being injected into various material entities, including its U.S. broker-dealers, during the period immediately preceding JPMC’s bankruptcy filing. This includes reliance on funds in foreign entities that may be subject to defensive ringfencing during a time of financial stress.

Here’s the long and the short of it:

Every year, large banks must create a contingency plan that explains what they’ll do if they begin to go under. The biggest bank in the country has such a lackluster, half-baked plan that the Fed called them out on it for 19 pages and warns that their nonchalance could be responsible for the financial instability of the entire country.

PS: Since this isn’t my first rodeo, I downloaded the entire PDF. It’s funny how things have a way of disappearing off the Internet when the mainstream media wants to ignore them.  You can download it yourself, too, at this link:

Living-Will-Letter-Issued-to-JPMorgan-Chase

JPMorgan Chase is not alone.

But they’re not the only ones.

Bank of America and Wells Fargo also saw their contingency plans rejected. Zero Hedge reports:

Three of the five largest U.S. banks (JPMorgan Chase, Bank of America and Wells Fargo) have now had their wind-down plans rejected by the Federal agency insuring bank deposits (FDIC) and the Federal agency (Federal Reserve) that secretly sluiced $13 trillion in rollover loans to the insolvent or teetering banks in the last epic crisis that continues to cripple the country’s economic growth prospects.

Are all three banks going down?

But that isn’t even the scariest part.

And just in case you think it’s just a normal day at the Fed…It isn’t just these warning letters that should make you pay attention. At the risk of sounding like I’m selling Ginsu knives, there’s more.

The Great Recession Blog posted a bullet list that should blow your mind when taken in conjunction with the news above. (Be sure to read the full article – it goes into a lot more detail.) It seems that there’s enough concern to spark a flurry of secret meetings among those in power.

  • The Federal Reserve Board of Governors just held an “expedited special meeting” on Monday in closed-door session.
  • The White House made an immediate announcement that the president was going to meet with Fed Chair Janet Yellen right after Monday’s special meeting and that Vice President Biden would be joining them.
  • The Federal Reserve very shortly posted an announcement of another expedited closed-door meeting for Tuesday for the specific purpose of “bank supervision.”
  • A G-20 meeting of finance ministers and central-bank heads starts in Washington, DC, on Tuesday, too, and continues through Wednesday.
  • Then on Thursday the World Bank and the International Monetary Fund meet in Washington.
  • The Federal Reserve Bank of Atlanta just revised US GDP growth for the first quarter to the precipice of recession at 0.1%.
  • US banks are widely expected this week to report their worst quarter financially since the start of the Great Recession.
  • The European Union’s new “bail-in” procedures for failing banks were employed for the first time with Austrian bank Heta Asset Resolution AG.
  • Italy’s minister of finance called an emergency meeting of Italian bankers to engage “last resort” measures for dealing with 360-billion euros of bad loans in banks that have only 50 billion in capital.

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Brandon Smith

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