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Financial News: JPMorgan (NYSE:JPM) Rally Signals Recovery for Financials

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Plus, how did a former trader for UBS (NYSE:UBS) get away with proprietary trading?

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This column highlights the most interesting and useful financial news from around the Web.

MarketWatch
Link: Financials Bounce Back With JPMorgan Jump
"US financial stocks recovered early losses on Monday and headed higher as key stocks like Bank of America Corp. (NYSE:BAC), JPMorgan (NYSE:JPM) and others bounced back and assumed market leader roles.

"Bank of America Corp. initially led financial stocks lower on Monday as investors paused in the stock's attempt to reach $10, a milestone the shares haven't seen since March."

"And in an interesting comment on the times, the New Haven Register, the Connecticut paper ran a story about the company's attempts to resolve a mortgage modification dispute with homeowners.

"According to the paper, 'Bank of America offered the couple a chance to modify the loan on the Jones Street house they've owned for 10 years in order to make payments more manageable, but only with conditions that include essentially agreeing to a gag-order when it comes to the deal and the financial institution. That means keeping quiet about opinions of the bank on Facebook, blogs, websites and in the media, and taking down any existing postings - something that may be unexpected in a document relating to a financial matter.'"

Economist
Link: Risk Seeking
"How did he do it and how did his big bets remain undetected for so long? These were the questions at the center of the trial last week against Kweku Adoboli, the former trader at UBS (NYSE:UBS), who is accused of losing the bank $2.3 billion through illicit trading activities. He is charged with two counts of fraud and two counts of false accounting.

"When Mr Adoboli was arrested on September 14, 2011, he had run up an exposure to equity futures of $8.75 billion, according to Ron Greenidge, Mr Adoboli's boss until April 2011 and one of the witnesses at the trial. In taking those positions, Mr Adoboli used the bank's own money, a practice known as proprietary trading.

"To hide his big bets, Mr Adoboli booked fake trades, which offset the exposure he had created. Since his trades appeared covered, others working at the bank were unaware of the risk Mr Adoboli was taking on, Mr Greenidge told the court."

DealBook
Link: About-Face for Bankers' New Lobbyist
"'I went to Wall Street and told them to get their snout out of the trough because they are some of the worst offenders when it comes to bailouts and carve-outs and special deals.'

"That was Tim Pawlenty, the former Republican governor of Minnesota, just over a year ago while running for president, railing against big banks.

"So what's he up to now?"

"Last week, he was named president of the Financial Services Roundtable, one of Wall Street's most influential lobbying organizations. In his new job, in which his predecessor was paid $1.8 million annually, Mr. Pawlenty will spend his days shuttling around Washington, trying to convince lawmakers that those 'carve-outs and special deals' really are beneficial for the nation's banking system, though presumably without putting his 'snout in the trough.'"

"Last summer, when the banking industry - and the Financial Services Roundtable, specifically - was lobbying Washington to raise the debt ceiling to avert a default, Mr. Pawlenty was taking a different tack.

Jamie Dimon of JPMorgan Chase had called a potential default 'catastrophic.' Mr. Pawlenty's view? 'Well, we don't know that,' he said when asked on MSNBC about the many dire predictions of the fallout of a default. He suggested that Republicans play chicken with the Democrats, questioning the very premise that the country was on the verge of default. 'I hope and pray and believe they should not raise the debt ceiling,' he told voters in Iowa."
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