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Hooray! Jamie Dimon Says New Capital Rules Will Kill Zombie Banks!

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It really is a sign of how complete a victory that the banks have won over the rest of us that Jamie Dimon has the nerve to complain about banking regulations. Even worse, he is egging on a effort by Republican bank-owned Congresscritters to roll weak bank capital rules back.

His position is pure, simple, unadulterated bank propaganda: what is good for banks is good for America, when the converse is true. Simon Johnson warned in his May 2009 article “The Quiet Coup” that the financial crisis had turned American into a banana republic with a few more zeros attached, a country in the hands of oligarchs, in this instance, the financiers. And we playing out the same script he saw again and again in emerging economies:

The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions—now hemorrhaging cash—and usually restructure a banking system that’s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.

Squeezing the oligarchs, though, is seldom the strategy of choice among emerging-market governments. Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government. Under duress, generosity toward old friends takes many innovative forms. Meanwhile, needing to squeeze someone, most emerging-market governments look first to ordinary working folk—at least until the riots grow too large.

And if you doubt the idea that squeezing the bankers will be bad for the rest of us, pretty much everyone who has looked at this question who is not a bank-paid shill begs to differ. We’ve pointed multiple times to an estimate by Andrew Haldane, Executive Director of Financial Stability for the Bank of England that a mere 1/20th of the low end of the estimated fully-loaded costs of the crisis just past exceeds the market capitalization of the biggest global banks. They are destructive on such a massive scale that doing anything to rein them in would be progress. Similarly, the IMF warned against coddling banks in a study of 124 banking crises:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.5 Of course, the caveat to these findings is that a counterfactual to the crisis resolution cannot be observed and therefore it is difficult to speculate how a crisis would unfold in absence of such policies. Better institutions are, however, uniformly positively associated with faster recovery.

Economists continue to affirm these same observations. For instance, from a short paper by Stijn Claessens and Ceyla Pazarbasioglu of the IMF, posted yesterday at VoxEU:

The comparisons between the global financial crisis and past episodes have been many, but this column argues that policymakers should look again, and closer. It says that without restructuring financial institutions’ balance sheets and their operations, as well as their assets, the economic recovery will suffer – and the seeds will be sown for the next crisis…..

Acknowledging the unique and global nature of the recent crisis and varying country circumstances, our analysis suggests that the diagnosis and repair of financial institutions and overall asset restructuring are much less advanced than they should be at this stage….Consequently, vulnerabilities in the global financial system remain considerable and continue to threaten the sustainability of the recovery.

This is polite bureaucrat-speak. Translation: “You blew it”.

So what does Jamie Dimon claim? We get hyperventilating, which makes perfect sense, since the facts are not on his side. From the Financial Times:

Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks”.

Regulators are negotiating international capital standards for the biggest banks but Mr Dimon said setting the new requirements too high, or allowing overseas banks to calculate their asset base differently, could disadvantage US banks and was already stifling economic growth.

“If you want to set it so high that no big bank ever goes bankrupt … I think that would greatly diminish growth,” he told a US Chamber of Commerce conference. Too large a disparity in capital requirements between Europe and the US would mean “you’re pretty much putting the nail in our coffin for big American banks,” he said.

Actually, Dimon is both exaggerating (the banks wouldn’t die but would morph and shrink, which would first and foremost hurt top executive pay) and misrepresenting (that shrinking the banks would be bad for the rest of us). And the idea that being nice to the banks by letting them run with too little capital helps growth is a flat out lie. Yes, before things blow up, the economy might run at a faster rate, just as athletes using performance-enhancing drugs do better too. But as Haldane showed, the PERMANENT growth losses of financial crises greatly exceed the benefits.

And as we’ve also stressed, we don’t need big banks, at least for traditional banking services. They are less efficient on a cost per dollar of asset basis (the overwhelming majority of studies say the efficiencies top out at $5 billion or below; reader Ishmael confirms that notion but says he can accept the idea that it might peak as high as $25 billion in assets).

The open and thorny question is what to do with the dealer operations, that is the capital markets functions of major financial firms. These do have strong economies of scale. The best solution may be to regulate them as utilities, strictly limiting their balance sheets to highly liquid assets (which was the profile of traditional investment banks) and severely restricting their role in OTC derivatives (which are used to a significant degree for regulatory arbitrage and accounting games, which are not socially productive uses).

Claessens and Pazarbasioglu recommend remedies that are the polar opposite of Dimon’s “do as little as possible” demands:

Establishing the long-term viability of the financial system requires recognising non-performing assets at financial institutions and a deeper operational restructuring of debts of enterprises and households. Regarding the persistent weaknesses in bank balance sheets, in-depth diagnoses still need to be conducted, including through strict and transparent stress tests. When the diagnoses call for credible recapitalisation plans or restructuring of liabilities, they should be carried out swiftly in ways that do not worsen sovereign debt burdens. Conditions in some countries require government interventions, including targeted programmes to alleviate debt overhangs in the household and commercial real-estate sectors. More broadly, asset restructuring needs to be driven by market forces, supported by tighter regulations –including in the areas of loan-loss classification, provisioning, and disclosure – and enhanced supervision.

In most countries, more effective resolution tools are required to preserve financial stability in an increasingly complex and interconnected global system.

The policy mix applied in the recent crisis has greatly intensified moral hazard. ….Measures are needed to restore proper incentives and market discipline. Governments need to rethink how to reduce the threat that large financial institutions pose to systemic stability, including through reduced complexity, better capital structures, and, possibly, restrictions on their scope and activities.

The policy mix applied in the recent crisis is unlikely to be repeated in response to a future crisis. It would be too costly economically and too controversial politically.

The last observation, that the bailouts just past will not be repeated (or at least not to the same extent; the next wipeout is guaranteed to be bigger, central bankers will have little latitude to drop interest rates, and the political cost of rescues will be much higher) is something the banksters and their regulators simply do not grasp. As Michael Hirsh reported:

“Bottom line: Nobody on Wall Street believes that these big institutions are no longer too big to fail,” says Dan Senor, a New York City hedge-fund manager who doubles as an informal Republican advisor in Washington. “No one believes they would not be bailed out and backstopped in some way by the government. That’s just the reality.”

And the officialdom is enabling this view in a bizarre, ongoing display of cognitive dissonance, pretending that unworkable measures like the Dodd Frank special resolution authority are viable (see the testimony by Josh Rosner for details), yet also aggressively promoting policies that would increase costly bank welfare programs (the most appalling was a New York Fed paper recommending that all asset backed securities be government guaranteed. In the rest of the world people have a right to health care; instead, we seem to be working on a plan to guarantee debt slavery via heavily subsidized credit).

The only good news is that even the MSM is starting to report on how crazy and unsustainable this all is. The fact that a piece like “Tax the Super Rich now or face a revolution” has appeared on MarketWatch, even if it is an isolated sighting, is a sign that the images of unrest in the Middle East, Greece, and London (where an estimated 250,000 to 400,000 turned out to protest against the banks) may start to penetrate the defenses of a sheltered ruling class. And if not, they may learn that the “Après moi, le deluge’” school of thought didn’t do Louis XVI much good.

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45 comments

  1. chris

    Wow, great article. I can’t believe what has happened to our country. We have become a country with no representation for the majority. The wealthy, and I have nothing against wealth but when the elites take away most opportunity for the common man, and continue to control more and more of the country’s assets, something has to be done.
    Our government has failed the people repeatedly and now they are turning our future over to the likes of J Dimon and the rest of the bankers who are free to break the law ans screw the people.

    We might as well just have a King and Queen and no real representation.

    1. DownSouth

      I think it’s important to recognize that with these Jamie Dimon types you’re not dealing with individuals with complete emotional packages. As Simon Baron-Cohen noted in an article from yesterday’s Links: “Zero degrees of empathy does not strike at random in the population.”

      Robert D. Hare, who is perhaps considered to be the leading expert on the sort of personality disorders that result in zero degrees of empathy, explores the subject in much greater detail in this article:

      The terms psychopathy and sociopathy refer to related but not identical conditions. Psychopaths have a pattern of personality traits and behaviors not readily understood in terms of social or environmental factors. They are described as without conscience and incapable of empathy, guilt, or loyalty to anyone but themselves. Sociopathy is not a formal psychiatric condition. It refers to a pattern of attitudes, values, and behaviors that is considered antisocial and criminal by society at large, but seen as normal or necessary by the subculture or social environment in which it developed. Sociopaths may have a well-developed conscience and a normal capacity for empathy, guilt, and loyalty, but their sense of right and wrong is based on the norms and expectations of their subculture or group. Many criminals might be described as sociopaths. Narcissistic and histrionic personality disorders are described in DSM-IV, and their differences from psychopathy are outlined in “Snakes in Suits.” Briefly, narcissistic personality disorder involves an excessive need for admiration, a sense of superiority and entitlement, and a lack of empathy. It does not necessarily include the lifestyle and antisocial features of psychopathy, outlined earlier. Histrionic personality disorder is defined by excessive and overly dramatic emotionality, attention-seeking, and a strong need for approval. It lacks the lifestyle and antisocial features of psychopathy.

      In trying to explain the behavior of someone like Jamie Dimon, I thought the following was most relevant:

      What do psychopaths want? What are their motivations?

      Hare: They want many of the same basic things that the rest of us want, but, in addition, have an inordinate need for power, prestige, wealth, and so forth. They differ from most of us in terms of how much they “need,” their sense of entitlement to whatever they want, and the means with which they are willing to achieve their ends. They also differ dramatically from others in the communal nature of their needs and goals. That is, the sense of altruism, concern for the welfare of family, friends, and society, and the social rules, expectations, and reciprocity that guide most people are irrelevant to psychopaths. They operate according to their own self-serving principle: look out for number 1, no matter what the cost to others, and without guilt or remorse.

      When I observe what has happened, and indeed what is happening, to the United States, I am always reminded of what Eric Hoffer said of 1930s Germany:

      It colors my thinking and shapes my attitude toward events. I can never forget that one of the most gifted, best educated nations in the world, of its own free will, surrendered its fate into the hands of a maniac.

      1. KnotRP

        If this generational world war is economic,
        maybe this generations’ Hitler will prove to be a banker.

    2. philo2011

      “We might as well just have a King and Queen and no real representation”

      ***

      Actually a monarchy would be far less likely to fall into this enormous trap.
      The POTUS has to kowtow to the banks to fund his and his party’s re-election.
      Monarchs do not.

      The POTUS and his party comrades must look to their post-government prospects.
      Monarchs are for life. For the monarch there are no post-government prospects to consider.

      Actually the solution to our ongoing financial catastrophe screams for an emperor’s touch.
      I would prefer a Marcus Aurelius, but would settle for a Tiberius.
      Hell, Nero could’ve done better than this lot.

      1. Anonymous Jones

        “Monarchs are for life.”

        Thus the major incentive to end that life when the elites want regime change.

        If you don’t think monarchs were subject to enormous pressures from their associated nobles, you don’t understand the history of monarchies.

        Even monarchs rule with the consent of the governed (the relatively powerless wield power in groups, as we’ve seen in many of the revolutions just this year).

        That’s how life works.

        1. philo2011

          I’m using Imperial Rome as a template, not the consortium of monarch/lord found in medieval history.
          If you include the Eastern Empire, Rome lasted for nearly 1,400 years and used nothing but hard money (gold, silver and bronze) from start to finish.

          There’s no way this teetering Republic will last even another century at this rate, much less a millennia.
          As for our hard money, it’s already debased to mere paper.
          This ongoing failure of a system is all but finished.

          Give us an emperor with the power to throw these Jamie Dimon’s to the lions – literally!
          That would be a government worth fighting for.
          jmo

          1. Tertium Squid

            The number of Roman emperors who died violently at the hands of their subjects would counterindicate your statement.

            Every nation, kingdome, collective or anything else has a social contract, written or unwritten.

            And every one of them also has a self-interested elite who are a constant threat to the big boss.

          2. philo2011

            “The number of Roman emperors who died violently at the hands of their subjects would counterindicate your statement.”

            ***

            Emperors came and went but the Empire lived on.

            I don’t know how the fact that some of the Emperors got snuffed counterindicates any statement I made.

            1,400 years speaks for itself anyway. I haven’t got to defend it.
            The US Govt as it’s currently constituted will be lucky to last another 1,400 days.
            All jmo

          3. Jason Rines

            After receiving funding from Prescott Bush and JP Morgan, Adolph Hitler seemed to do a bait and switch.

            The idea of funding Hitler was a united Europe, a new economic engine and trade bloc. Hitler bombing London and invading the Soviet Union didn’t seem like part of the plan. To me it looked an awful lot like a pure act of revenge for the humiliation visited on Germany in post WWI reperations, inability to service the debt, money printing and hyperinflation.

            Financeers come in all nationalities but the Jewish bankers seemed to draw Hitler’s ire the most.

            Hitler seemed like a wonderful national leader to the Germans right into the early 1940′s. They didn’t realize the scope or penchent of his maniacal revenge. I don’t think the American people would realize such an individual either until too late. Dictatorship may be the most oft historic outcome of a government collapse but I don’t think it is something I personally wish for.

  2. Toby

    “It really is a sign of how complete a victory that the banks have won over the rest of us”

    Playing their game their way ensures they “win over the rest of us”, but what have they won? ‘Complete’ control of an unsustainable system and of useless, obsequious, clueless politicians? Enjoy it while it lasts, I say, because this ship is going down fast. And just because sociopaths are steering the Titanic does not mean we are not allowed to plan our escape and start building lifeboats.

    Again, we’re past the stage where we need to prove, over and over again, that The Great They are corrupt beyond redemption. Open and unprejudiced discussion of all decent alternatives is called for, not endless picking over of the zombie’s rotting carcass.

    I know, I can take my attention elsewhere (I do by the way), but this is important enough a message to risk the scorn of those still dedicated to proving the already blindingly obvious.

    1. financial matters

      I agree that this will eventually tumble under its own weight but I think it’s useful to debunk some of the folk status or financial smarts that some of these people seem to engender in some quarters.

      http://www.nakedcapitalism.com/2010/12/matt-stoller-end-this-fed.html
      Matt Stoller: End This Fed

      The ambiguous identity is the reason the Fed was able to bureaucratically box out the FDIC as a center of intellectual gravitas. It also leads to overt corruption. Jamie Dimon, for instance, was on the board of the New York Fed when JPMorgan was negotiating with the New York Fed to buy Bear Stearns. Pete Peterson is a former New York Fed President, and hired Tim Geithner to be the New York Fed, who he is now presumably pushing to cut entitlements. Steven Friedman was on the NY Fed board, buying Goldman stock at the same time.

      http://www.nytimes.com/2010/01/15/opinion/15krugman.html
      Bankers Without a Clue
      By PAUL KRUGMAN

      There were two moments in Wednesday’s hearing that stood out. One was when Jamie Dimon of JPMorgan Chase declared that a financial crisis is something that “happens every five to seven years. We shouldn’t be surprised.” In short, stuff happens, and that’s just part of life.

      As an aside, it was also startling to hear Mr. Dimon admit that his bank never even considered the possibility of a large decline in home prices, despite widespread warnings that we were in the midst of a monstrous housing bubble.

      http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=398
      Martin Mayer: Audit the Fed! Ben Bernanke: Beneath the Banksters

      When members of Congress such as Rep. Barney Frank (D-MA) and Senator Chris Dodd (D-CT) kowtow to JPMorgan Chairman Jamie Dimon, and they do grovel so shamelessly, they are merely repeating the political dance performed by members of both parties for more than a century. When the public reacts in anger at the spectacle of the Congress bailing out the banksters, with the Treasury buying bank stock with public funds, and borrowed money at that, the initial reaction of Washington’s criminal class is indifference.
      It is only when the public mind is sufficiently focused on the comfortable and corrupt relationship between Washington and the banksters who run Wall Street, events like Enron and WorldCom, that change becomes possible.

      http://market-ticker.org/akcs-www?post=181055
      Our Biggest Financial Firms Don’t Scam

      But I thought Jamie Dimon has repeatedly told us that JP Morgan was a very ethical company, and never did anything wrong? Ambac disagrees.

      JP Morgan adopted a strategy to deliberately and systematically deny the financial guarantors’ legitimate repurchase demands to avoid JPMorgan Chase & Co. from bringing onto its financial statements the massive off-balance sheet exposure and, in doing so, effectively engaged in accounting fraud.

      1. Toby

        I believe that the debunking is also complete. All that’s left is the repetitive message that all’s well, shit happens, there’s no other way, and so on. It is now a waste of time and energy to firefight the infinite bullshit. An decent FAQ would suffice, since the needed information to pierce the myths is already ‘out there.’

        It’s discussion of proposed alternatives we need–which anyway would, in part, entail debunking the existing paradigm–not endless reactions to that endless output which is only distracting us from the business of defining a way out of this mess.

        1. financial matters

          To me the best way out is to deal with the mess that has been created. This seems to take the generation of a lot of grassroots political momentum to counter the platitudes we are getting from tptb and prosecute the massive frauds that are right before us..

          1. Toby

            The mess has to be dealt with of course, that goes without saying, but more important is addressing its cause, if we want to avoid ever larger messes till there’s no way back. Some say we are past the point of no return already. I like to hope there’s still time to tackle the underlying problem, the system itself. But then, who am I to shape public opinion. ;-)

            I’m repeating myself, but addressing the causes, that is, the deeper system, is part of defining a new system, and cannot help but deal with the mess as we go forward. It’s a question of focus and vision, and right now, generally speaking, humanity is wrong on both counts (Naked Capitalism included, for all its fine work).

        2. Jason Rines

          I agree with you Toby. It is worthwhile now to decide how to add new and stronger layers to the societal foundation of our monetary system.

          Central Banking is a franchise, TBTF Primary Dealers are the agents. Like all business models (this one is couple hundred + years old now) they eventually evolve or die.

          I believe the Internet was the game changer leading to the answer of the question: Is this time different? Mass exposure of a business model workings means the evolution either happens willfully or it flails around injuring its customers in the process.

          In the case of Central Banks, risk of injury are vast both in financial as well as lose of life through world war spurred by resource hoarding. After this next great world war that everybody can smell in the air, I do not believe their franchise will survive.

          If such an event unfolds Nuremberg style trials afterward would likely also include bankers this time around. If I was Chairman Bernanke, I would not play along and instead evolve the model facing death in the process. But my legacy and how my children view me after I am gone is important to me. Perhaps it is not so much with Ben Bernanke. Hard to say as I don’t know the man.

      2. monday1929

        The billions in settlements that welfare-queen banks have paid gives full lie to any claims of rectitude.

  3. monday1929

    Jamie Dimon knows that he is a failed banker. Why do we listen to the words of a failed banker? I thought this country worshipped sucess?
    In a controlled, and legal way, the children of criminal bankers must be informed of the sins of their fathers. Other than the loss of all his money, what could hurt Jamie more? Are Geithner’s and Larry Summer’s children aware of the children who starve because of their actions?

    If the bankers want a world with no rule of law, are they prepared for the consequences? I fear that expert military types, frustrated by non-enforcement of existing laws, may decide to execute leading bankers. I also predict that the elderly,the evicted, and those with fatal diseases, will form a movement to “take out” those bankers they deem criminal, before taking their own lives. It will be tragic, but is preventable- just enforce the laws.

    1. craazyman

      Very cinematic!

      Made me think of the zombie scenes in Michael Jackson’s Thriller video.

      Can just imagine them all now, silently pressing forward in the thousands, torn clothes, filthy faces, bloodied bandages and crutches, some in wheelchairs even, mute and relentless, thronging the streets of Greenwich CT with ropes and machetes under a full moon . . . hunting banksters.

      bwoahahahahahaha

      1. Cedric Regula

        Personally, I’m appalled at the lack of empathy we are showing for Captain Morgan. Sure he and his kind may exhibit textbook signs of psychopathology, but psychopaths are people too, are they not? And if we all turned into brain eating zombies, even the vegetarians amongst us, and swarmed over bankers, devouring their oversized cranial cavities, doesn’t that make us no better than them? Would we not set a bad example for the rest of the Western World (dba Civilized World), and perhaps incite British and European commoners to eat their bankers’ brains? Would we want that on our collective conscience? I think not.

        Remember that Micheal Jackson had his problems too, even tho he did start out life as a black guy.

        Captain Morgan has bigger and more important problems to deal with. The International Banking system has run out of customers to lend too, and has also priced all financial assets beyond perfection. The Captain knows International Banking is not in the biz of being bagholders. Where to steer the international banking fraternity now is a terrible responsibility falling on the able shoulders of Captain Morgan and his peer group of privateers whom are navigating the waters of commerce around the entire globe.

        Have some respect for the Captain’s problem, but most of all, empathy.

  4. Constant Diligence

    Well said All, Jamie Dimon is the Government and the Devils Banker and epitomizes the state of decay! NYTimes 8 page spread called him the “least hated banker in America… It is kind of surreal. I have faith the Average Americans will remember we are The Home of the Brave and bring the money we spend fighting abroad, home. Stand up individually and fight to remain Free under the Tyranny of Evil Men… http://diligencegroupllc.net/ American Middle-class Homeowner -AMH

    “If “ – Rudyard Kipling, 1910
    If you can keep your head when all about you
    Are losing theirs and blaming it on you;
    If you can trust yourself when all men doubt you,
    But make allowance for their doubting too;
    If you can wait and not be tired by waiting,
    Or, being lied about, don’t deal in lies,
    Or, being hated, don’t give way to hating,
    And yet don’t look too good, nor talk too wise;
    If you can dream – and not make dreams your master;
    If you can think – and not make thoughts your aim;
    If you can meet with triumph and disaster
    And treat those two imposters just the same;
    If you can bear to hear the truth you’ve spoken
    Twisted by knaves to make a trap for fools,
    Or watch the things you gave your life to broken,
    And stoop and build ‘em up with worn out tools;
    If you can make one heap of all your winnings
    And risk it on one turn of pitch-and-toss,
    And lose, and start again at your beginnings
    And never breath a word about your loss;
    If you can force your heart and nerve and sinew
    To serve your turn long after they are gone,
    And so hold on when there is nothing in you
    Except the Will which says to them: “Hold on”;
    If you can talk with crowds and keep your virtue,
    Or walk with kings – nor lose the common touch;
    If neither foes nor loving friends can hurt you;
    If all men count with you, but none too much;
    If you can fill the unforgiving minute
    With sixty seconds’ worth of distance run –
    Yours is the Earth and everything that’s in it,
    And – which is more – you’ll be a Man my son!

    1. DownSouth

      But because he [Kipling] identifies with the official class, he does possess one thing which “enlightened” people seldom or never possess, and that is a sense of responsibility… A humanitarian is always a hypocrite, and Kipling’s understanding of this is perhaps the central secret of his power to create telling phrases… It is true that Kipling does not understand the economic aspect of the relationship between the highbrow and the blimp. He does not see that the map is painted red chiefly in order that the coolie may be exploited. Instead of the coolie he sees the Indian Civil Servant; but even on that plane his grasp of function, of who protects whom, is very sound. He sees clearly that men can only be highly civilized while other men, inevitably less civilized, are there to guard and feed them.
      ▬George Orwell, “Rudyard Kipling”

      1. monday1929

        Was it Churchill who talked of the “rough men” who were slitting throats so the English could sip their tea?

  5. TC

    Here is Captain Morgan’s address yesterday to the Chamber of Commerce. No comment made on JPM’s ten years and running dead money, nor any light shed on why, if JPM indeed didn’t need government assistance (as Captain Morgan insists), has not its dividend been restored to its pre-crisis, per share return.

  6. LAS

    This is amazingly un-politicized all things considered. Treasury (unelected) and many elected politicians are too skilled at avoiding frank public discussion as to what they’ve done for banks/financial services that they have not done equivalently for home owners and tax-payers in general.

    I would like to see politicians forced into taking outspoken policy positions before voters in advance of elections. Instead they are permitted to dance around issues with empty slogans and after being elected enact policy for which the voters by no means gave them any such mandate whatsoever.

    Elected politicians can be accountable for the performance of unelected ones. Obama really should be grilled about the performance of his Treasury.

    It wouldn’t at all surprise me to learn one day that US involvement with Libya was partially decided to distract attention from failure in domestic financial services policy and reforms.

  7. Schofield

    Such is the level of delusion in Misanthropic Neo-Liberalism it’s a fierce dragon to slay but its internal contradictions regarding human welfare are such that it will be slain!

  8. ep3

    Are you sure this is Jamie Dimon crying? Or is this some sort of “i will go cry in public so it looks like u (obama) are being tuff on me so it helps your polling numbers” campaign strategy? Remember what a “savvy guy” Dimon is.

  9. Schofield

    Personally, I think it stretches things too much to label Neo-Liberals like Jamie Dimon psychopaths. Much like the babies in Romanian orphanages their empathy function was probably never fully developed due to insufficient and/or deficient nurturing/parenting.

  10. rps

    “If you want to set it so high (danger warning systems) that no big bank (enforced size limitations)ever goes bankrupt (implodes the economic welfare of a nation) … I think that would greatly diminish growth (profit gouging and excessive risk-taking)” Between-the-lines translation of psych-ops bank-terrorist Dimon

    “Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves . . . I intend to rout you out, and by the Eternal God I will rout you out!” — Andrew Jackson

  11. Francois T

    Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks”.

    But…Jamie boy! Don’t you understand this is exactly what we’re trying to achieve here? This country does not need gigabanks to thrive and be prosperous. YOU need it for personal power, ego and wealth.

    But not the majority of the people in the US. We didn’t have you guys when we went to war against Adolf or Ho Chi Minh. We built the Hoover Dam, the whole water infrastructure, the interstate highway, the whole enchilada and we weren’t burdened by this disgusting sludge of CDSs RMBS CDOs and all that grade-AAA steaming pile of enzyme-free donkey fazoo.

    In a word Jamie Boy…blow!

  12. Just a thought...

    If I’ve said it once I’ve said it a thousand times…

    The crisis we are in is not at its foundation a failure of regulators, mid-level bureaucrats, loan processors, securitizations, academics, etc… the problem has always been and will continue to be the corruption of our representative government and that government’s failure to represent the interests of average Americans. And more specifically, those elected or appointed to govern, because they are the will of the governed, not the career bureaucrats reviled by the majority of readers on this site.

    I don’t identify with the plight of the economically disadvantaged or the unemployed, I am neither. But I do identify with the tax base and economic engine of this country, the employed middle class, and have long recognized that the redistribution of the economic product of my labor isn’t downward, as argued by so many GOPers and Tea Baggers who bitch and moan about welfare and other assistance programs, but upward to the pockets of those with the most economic and, subsequently, political capital (and I’m an independent consultant. Ironic, isn’t it?)

    So the actual point of my long-winded comment is this, the stories Yves posts about foreclosure fraud, loan processors, OTC market failures, etc.. are all interesting, but don’t lose sight of the bigger picture (and check the last hyperlink in Yves’ original post if you haven’t already – a bit conspiracy theoristish but there is some truth in the hyperbole). Until the political landscape is changed, fixing the other issues is just cosmetic. Those with power will simply find another way to extract economic rents from rest of us and we’ll continue to receive post-mortems from the Haldanes, Rosners and Johnsons of the world. (FYI – not disparaging any of the above. Have heard two to the three speak in person and met one. Nothing but respect for their work.)

    Wealth and politics must be separated.

    1. Wyndtunnel

      Good point about Wealth and Politics… especially since the power of the Church had to be severed from politics for pretty much the same reasons…no? Per Thomas Paine: “All national institutions of churches, whether Jewish, Christian or Turkish, appear to me no other than human inventions, set up to terrify and enslave mankind, and monopolize power and profit.”

      1. KnotRP

        We’ve only got one branch of government.
        They provide the funds to pay the lawyers who write the
        laws that our congress doesn’t read yet votes to approve.
        The provide funds to elect those crucial officials
        who can weaken or ignore their role in checks and balances.

        We have neglected our roles as members of civil society,
        and we will pay dearly, whether we succeed or fail at
        restoring it.

  13. momnday1929

    Fotunately, Dimon’s video cut off after 6 minutes. Amazingly, he brought up the “rule of law”, in the context that it is the lack of tort reform which threatens it. The low level of his engagement with reality is slightly encouraging (in that he may not realize the level of his criminality and may not have protected himself very well. His underlings will have much to tell a jury).

    The Pentagon recently floated a trial balloon attempting to blame the (most recent)financial collapse on foreign terrorists. Well, they were close. Soon they may be forced to look a little closer to home.
    Mr. Dimon, before this is over you will be tried for treason, and if found guilty, you may be hung by the neck until dead. Then you will understand the rule of law.

    1. ScottS

      Why hang him? I’ve always imagined he would make an excellent janitor, or day-laborer. I’m sure some honest work would do his soul wonders.

  14. sherparick

    With notably rare exceptions, large banks have not needed taxpayer bailouts over the last 30 years.

    With notably rare exceptions, politicians have not voted for bills that amounted to political suicide.

    With notably rare exceptions, the ruling classes has not ceded power, rights, and money to the many except whend driven to by fear of revolution.

    Eventually, this restoration of the “Old Order” under Jaimie Dimon and Grover Norquist will end in tears.

    http://www.nytimes.com/books/00/11/26/specials/schlesinger-crisis1957.html

    1. financial matters

      Excellent article, thanks for posting it..

      Dimon’s callousness towards the municipal bond market is also notable…

      http://www.bloomberg.com/news/2011-03-30/dimon-says-hundreds-of-municipalities-in-u-s-won-t-make-it-out-of-debt.html

      Dimon Says a Hundred Municipalities in U.S. Won’t ‘Make It’ Out of Debt

      “You’re going to see some municipalities not make it. I don’t think it’s going to shatter America, I just think it’s a part of the credit cycle.”

      http://www.bloomberg.com/apps/news?pid=20601109&sid=aAePAQdl8rKc
      Conspiracy of Banks Rigging States Came With Cash
      By Martin Z. Braun and William Selway

      West Virginia was just one stop in a nationwide conspiracy in which financial advisers to municipalities colluded with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers Holdings Inc., Wachovia Corp. and 11 other banks.

      They rigged bids on auctions for so-called guaranteed investment contracts, known as GICs, according to a Justice Department list that was filed in U.S. District Court in Manhattan on March 24 and then put under seal. Those contracts hold tens of billions of taxpayer money.

      It was so commonplace that people talked about it on the phones of their employers and ignored the fact that they were being recorded.”

      As the banks were steering the world’s financial system to the brink of catastrophe by loading more than $1 trillion of subprime mortgage loans into opaque debt investments, they were also duping public officials across the U.S.

      As much as $7 billion in bond-issue proceeds were invested in GICs but never spent for the intended purpose of providing services to taxpayers.

      1. KnotRP

        “I just think it’s a part of the banker’s harvest season”

        There, fixed that for ya…

      2. monday1929

        The bagmen who paid off the local politicians in these municipal deals on behalf of the banks could be turned by a first year prosecutor. If any exist who wish to do their jobs.
        Some of these bribes are in the hundreds of thousands, authorization would have to have come from near the top.

  15. blunt

    The results of pursuing one’s own self-interests to the exclusion of anything else, when self-interests are defined according to wealth and money rather than in a more Epicurean fashion.

    Yes, Marcus Aurelius would certainly be a desirable ruler.

    Except part of the difficulty that Americans have never quite grasped is that the founders had Rome and its imperial past in mind as a paradigm for this republic. Think of the empire as yet another colossus grown due to the interests of its merchants and money-lenders.

  16. francis

    Heh, Hooray! is exactly the right tone!

    Nobody gives a shit about you or your bank Jaime, fuck off already.

  17. beno

    I keep looking for a balanced view, some contrary thought to ‘eat the rich’. Obviously no-one here has been helped to get a home by a bank. Everyone saved and paid in cash. That’s not to say the banks didn’t make an error. They forgot to calculate risk and just saw reward. Therefore they got in trouble. I for one would have said, ‘Wecome to the real world. Bankruptcy is up the corridor and to the right. Have a nice day!’ Saving them was the biggest mistake! We have virtually assured another episode of financial stupidity. After all people learn from consequences to themselves or seeing it happen to others. We had a teachable moment and we threw it away. And don’t look now but the gov is still helping them. Shame!! Check the politicians’ voting record and if they voted to support banks don’t vote for these fools again. Send a message. That’s what democracy is about or else there will be revolution as our founding fathers and their Constitution suggests.

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