Financial Criminals Still Running the Show

News of more looting of the US by the Financial Criminals at the major banks is breaking today.  This time the energy trading activities of JPMorgan, Barclays Plc and Deutsche Bank are being accused of Enron-like manipulation of energy prices throughout the US, resulting in hundreds of millions in energy over-charges to US consumers.  JP Morgan is a serial offender as I've blogged before.  It comes up once again as a prime offender.

The FERC staff said yesterday that the energy-trading unit was involved in five market-gaming strategies in California from September 2010 to June 2011, leading to overpayment “far above market prices.” The company engaged in three gaming strategies in Midwest energy markets October 2010 to May 2011, the staff said.
In one scheme, JPMorgan traders made low end-of-day bids to attract large orders from buyers to provide power the next day, the FERC said. In the first two hours the next day, the bank demanded higher rates for making the power available, a maneuver that led the grid operator to pay it millions of dollars for a period in which demand is typically low.
In another strategy, traders offered low rates for providing electricity the next day to lure orders from grid operators, then gamed the bidding system to reap higher payments “far above market prices,” the FERC said without elaborating.

Once again the bank is too big to jail, and is negotiating a fine with the FERC for repeated criminal acts of fraud and market manipulation. Public Citizen had a statement on the situation.

J.P. Morgan Ventures Energy Corporation is under investigation for practices that may have resulted in overcharging consumers $73 million or more on their household utility bills. J.P. Morgan Ventures Energy Corp. operates under the oversight of JPMorgan Chase & Co.’s head of global commodities, Blythe Masters.

In September 2011, ISOs in California and the Midwest noticed that certain payments to power sellers for ensuring that energy would be available if needed (bid cost recovery) had more than quadrupled. Bid cost recovery rules allow power marketers to be paid just for making a bid to sell power, even if the bid isn’t accepted, and ISOs authorize these costs to be passed on to consumers. It’s a loophole that CAISO says J.P. Morgan Ventures Energy Corp. took advantage of: making bids at prices it knew would not be accepted so it would be paid for power it did not and never intended to provide.
In March 2012, CAISO asked FERC for permission to change the rules to avoid these overpayments, alleging that J.P. Morgan Ventures Energy Corp. was the power seller grossly overcharging its customers. If Blythe Masters’ unit is found guilty of the allegations, losing her job won’t be justice enough. FERC should take the additional step of permanently revoking J.P. Morgan Ventures Energy Corp.’s market-based rate authority and send a shockwave across the entire industry that market manipulation will not be tolerated.