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James Quinn, a “senior director of strategic planning for a major university,” says that JPMorgan’s 76% second quarter earnings gain was “a gigantic fraud,” since it included a $6.3 billion reserve release that was set “at the complete discretion of Jamie Dimon.”
That’s not right. Actually, let me put that another way: that’s delusional. FASB rules see to it that bank managements have very little discretion setting reserves. There is simply no way that Jamie Dimon can conjure up a $6.3 billion reserve release on his own without running seriously afoul of GAAP. ( For that matter, if Dimon is fraudulently releasing reserves now, why did he bother larding them up at the depths of the crisis in the first place?)
No one expects senior directors of strategic planning at major universities to understand the nuances of bank accounting, but they might have the basics right--especially if they’re going to publicly accuse bank CEOs of fraudulently cooking the books.
P.S. The tone of Quinn’s responses to skeptical commenters leaves one with the distinct impression that he needs to get his prescription rebalanced ASAP. . . .
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