July 22, 2009 – 12:49 am

JP Morgan continues to reap the benefits of an investment made at Jekyll Island nearly a century ago. And as the credit crisis roils in this new century, JP Morgan ruthlessly applies a business plan as timeless as it is corrupt, thereby reaping instant investments gains at the expense of others.

Officially, Bear Stearns did not fail, but rather received a bail out at the charity of the ever-benevolent JP Morgan. This official position rings as ridiculous as the day is long. The failure of Bear Stearns was merely grand larceny perpetrated by its insiders and wrapped in a the dirty diaper we know as the $55 billion Morgan bailout. Everyone should wonder how a company with a derivatives book larger than Citigroup’s can already appear as though the worst of the financial crisis is suddenly over.

Where is Bear Stearns?

JP Morgan beat the Street by reporting a $2.7 billion profit for it’s fiscal second-quarter 2009, on a record $27.7 billion in revenue.

JPMorgan Chase & Co., the second- largest U.S. bank, said profit rose for the first time since 2007 on record investment-banking fees. Chief Executive Officer Jamie Dimon predicted more losses on consumer loans.

Second-quarter earnings increased to $2.7 billion, or 28 cents a share, from $2 billion a year earlier, the New York- based bank said today in a statement

the Investment Bank reported record overall revenue for the first half of the year, which included record fees and Fixed Income Markets revenue for this quarter.

Contributing to the $27.7 billion record revenue was the investment bank that reported record fees for the first half of 2009 and record revenues in the fixed income markets for the second quarter. For the first time since the credit crisis broke in 2007, JP Morgan did not take multibillion-dollar write-downs on the value of decaying mortgage-backed securities or leveraged loans. The company even managed to bring down the value of the loans on its books by $40 billion.

Jamie Dimon, Morgan’s dirty little CEO, whistled up the $25 billion in tarp funds and paid them back. With the cash flowing so freely, why not. But then again, let’s take a closer look. What of the $40 billion handed over from the FDIC and the cash stolen from taxpayers through the ATM cookie jar called AIG? Oh, oops, I don’t guess we were supposed to mention that.

Apparently, Dimon believes money from the shadow bailout system is not printed red. But red or green, cash pays and JP Morgan seems suddenly awash in cash. But how? This is where we have to ask that nagging little question: where is Bear Stearns???

When the credit crisis bit into Morgan’s fragile underbelly and threatened drag it down, CEO Jamie Dimon turned not to his financial engineers or mathematicians, but to his influence peddlers on K street.

The business of better influencing Washington, begun in late 2007, was jump-started just as the financial crisis hit and the capital displaced New York as the nation’s money center. Then Mr. Obama’s election brought to power Chicago Democrats well-known to Mr. Dimond from his recent years running a bank there.
With the crisis, Mr. Dimon, a longtime Democratic donor, has become even more politically engaged, in the process becoming perhaps the most credible voice of a discredited industry. Other onetime giants like Citigroup and Bank of America find themselves muted as wards of the state.
Coincidentally, here in its fiscal second quarter, the company finds itself posting a strong profit on record revenue and reducing its loan load by an amazing $40 billion. Regarding the above mentioned values of loans on it’s books, witness:

JPMorgan now holds loans with a market value of $3.3 billion, down from $43 billion in September 2007, including loans acquired from failed investment bank Bear Stearns Cos.

So far  Morgan has written down $18 billion in loans due to the credit crisis, meaning that someone bought more than $25 billion in crap loans from Morgan. It naturally begs the question who? Whoever it was and whatever they say about the Public-Private Investment Partnership you can bet that it is firmly in place, and you are a partner – like it or not.
On Wall Street, competition is sin, and as the sinful get righteous, Bear Stearns and Lehman Brothers are gone, leaving JP Morgan and Goldman Sachs to become beneficiaries to an increasing share of an ever-decreasing market. But standing as it does in the cool twilight of ponzi capitalism, there are also fewer profits to be found. This means Jamie Dimon goes back to the drawing board to drum up the same old business plan: bank robbery.

With the crisis, Mr. Dimon, a longtime Democratic donor, has become even more politically engaged, in the process becoming perhaps the most credible voice of a discredited industry. Other onetime giants like Citigroup and Bank of America find themselves muted as wards of the state.

And we are still asking where is Bear Stearns?
An omni-present enabler, the mainstream financial media feigns cautious optimism where reckless pessimism ought to go.

“The credit problems, although they have stabilized, we’re still not out of the woods,” said Gerard Cassidy, a banking analyst at RBC Capital Markets in Portland, Maine, in a Bloomberg Radio interview. “For JPMorgan Chase, the challenge going forward is going to continue to be deterioration of credit.”

A bear market stock rally does not stabilize the credit markets, JP Morgan Chase is experiencing and will continue to experience the ill effects of that deterioration.

JPMorgan’s retail bank posted income of $15 million as home-equity and prime mortgage defaults continued to rise. Home- equity charge-offs climbed to $1.3 billion, or 4.61 percent. Prime mortgage defaults were $481 million, or 3.07 percent, versus $104 million, or 1.08 percent a year earlier.

Credit cards lost $672 million, compared with income of $250 million in the second-quarter last year. The managed charge-off rate, which generally tracks unemployment, climbed to 10.03 percent, from 7.72 percent in the first quarter and 4.98 percent in the year-earlier period, according to the statement.

JPMorgan said losses in its Chase credit-card portfolio may be 10 percent next quarter and will be “highly dependent” on unemployment after that. Losses for cards issued by Washington Mutual, which the bank acquired in September of 2008, may reach 24 percent by the end of the year, the company said.

All told, the company charged off more than $2.36 billion in bad loans, and it has set aside more than $30 billion to cover future losses from surging credit card charge-offs and mortgage and home equity losses.

But as JP Morgan vaults ahead of the competition on the back of the taxpayer, the challenge going forward will no longer be deterioration of credit. For JP Morgan the challenge going forward will be to say the right thing,

Dimon, 53, said the firm supported “proper consumer protection” and that pending legislation setting up an agency to monitor consumer lending practices would hurt short-term profits in credit cards.

Mr. Dimon is also gearing up for a series of battles in Washington. One is over tighter regulations for derivatives, a business where the bank generates lucrative fees as one of the industry’s largest players.

Another is the creation of a new consumer protection agency, which could threaten the profitability of the bank’s mortgage and credit card businesses if it introduces tougher regulations.

Right there are the two most serious dangers to JP Morgan’s future success and therefore the least likely to occur as Dimon throws the weight of his company saved by the taxpayer back at the taxpayer. The taxpayer, stripped bare by the bailouts, ripped off by years of inflation, and standing in ever-longer unemployment lines has no ally in Dimon and has no high caliber lobbyist on his behalf. Aside from Texas Congressman Dr. Ron Paul, he has no friend in DC.  With JP Morgan and Goldman Sachs sucking the lifeblood from the taxpayer, much as a tick or leech does its host, the taxpayer is sure to go the way of Bear Stearns. By the way, where is Bear Stearns?