Category Archives: Corporate governance

Time to Put the Heat on the Fed and FDIC to Fix Lousy Governance at TBTF Banks

Adam Levitin makes a sensible recommendation in a new post:

…what’s at stake in the corporate governance of a too-big-to-fail bank like JPMorgan Chase is not just the share price, but also the public fisc. There is a strong federal regulatory interest in having good governance at too-big-to-fail banks because of our explicit (FDIC) and implicit (bailout) insurance of too-big-to-fail banks.

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Is Jamie Dimon Really Out of the Woods With Shareholder Thumbs Down on Splitting CEO/Chairman Roles? (Updated)

There’s a surprising degree of blogosphere acceptance of JP Morgan’s messaging on the shareholder vote today regarding whether to split the CEO and Chairman roles, that this result was a vote of confidence in his prowess as CEO. Huh?

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Has Walmart Been Engaging in Large Scale Accounting Fraud?

We’ve been poking at Walmart of late because the Bentonville giant appears to have feet of clay. It has been pursuing its relentless cost-cutting strategy to the point where it is damaging its franchise. Bloomberg (and later, the New York Times) described how the retailer had cut headcount to the point where it was having difficulty keeping shelves stocked and checkout lines to a tolerable length. Proving the validity of the Bloomberg account, over 1000 Walmart customers e-mailed the news service, describing their crummy experiences.

But Walmart may have started going off the rails even earlier than the counterproductive staffing cuts suggest.

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Ian Fraser: Stephen Hester, the Great Escape Artist

By Ian Fraser, a financial journalist who blogs at his web site and at qfinance. His Twitter is @ian_fraser. [An edited version of this article was published on pages 34-35 of the Sunday Herald on February 10th, 2013].

It has been described as the biggest banking felony in history … yet no-one has been prosecuted for the Libor fixing scandal. Ian Fraser looks at the RBS sacrificial lambs.

During Royal Bank of Scotland’s IT meltdown last summer, chief executive Stephen Hester referred to the risk “that you turn over rocks and find new things [that you have to clean up].” Last Wednesday, nearly five years on from the £45.5 billion taxpayer funded rescue of the Edinburgh based lender, a vast rock was hoisted aloft by three regulators. What lurked underneath was not a pleasant sight.

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Ian Fraser: Corruption allegations, major fraud inquiries, links to pornographic magazines … and a luxury yacht. Welcome to the world of banking

Police are (still) poised to press charges against several HBOS bankers and consultants after a two-year investigation into large-scale fraud, money laundering and corruption involving the Edinburgh-based bank.

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Robots Don’t Destroy Jobs; Rapacious Corporate Executives Do

By William Lazonick, professor of economics and director of the UMass Center for Industrial Competitiveness. He cofounded and is president of the Academic-Industry Research Network. His book, “Sustainable Prosperity in the New Economy? Business Organization and High-Tech Employment in the United States” (Upjohn Institute, 2009) won the 2010 Schumpeter Prize. Cross posted from Alternet

Americans are understandably upset about profits without prosperity. Corporate executives seem to be the big winners, while the middle class is declining and young people face a bleak economic future. How did this happen? It's easy to blame technology, especially the automation that supposedly displaces workers. But that's not the real story. The fact is that automation creates jobs. It's the misuse of corporate profits that are destroying them.

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Citi Cuts 11,000 Jobs Rather Than Lower Pay, Illustrating Rentier Capitalism in Operation

Citi is a particularly blatant example of a way of operating that has become endemic in American business: when things get tough, throw as many employees as possible under the bus, and use that to maintain or even increase the pay of the top echelon.

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Paying Dexia’s Debts: The Risks of Globalized Finance

American readers may tell themselves that the failures and stresses of European banks are Europe’s problem. That’s a simplistic view. Major European banks are significant lenders in the US, particularly to corporations. And European banks also fed heavily at the trough of US rescue facilities, as did the bank in case study, Dexia.

Dexia is a classic example of a not very sophisticated bank deciding to get into the big leagues and coming to ruin.

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New Zealand’s Company Register: Even More Out of Control Than You Thought

My last post on this little mess implied that there was pretty slack official monitoring of the NZ Company Register for obviously false or impermissible registration information. But one or two other sightings invite the question: does anyone in New Zealand take Para 1, Section 377 of the Companies Act seriously, any more? 377 False statements […]

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Michael Crimmins: Why Hasn’t Jamie Dimon Been Fired by His Board Yet?

By Michael Crimmins, who has worked on risk management and Sarbanes Oxley compliance for major banks

JP Morgan’s jawdropping revelations in its Friday earnings call don’t seem to be attracting the attention they deserve. The market may have shrugged off the size of the losses and the corporate governance modifications plans, but the announcement opens the door wide for the next phase of this scandal. The biggest question is whether Jamie Dimon should keep his job.

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Mark Ames: Failing Up With Citigroup’s Dick Parsons

Last month, shareholders finally rebelled against Citigroup, the worst of the Too Big To Fail bailout disasters, by filing a lawsuit against outgoing chairman Dick Parsons and handful of executives for stuffing their pockets while running the bank into the ground.

Anyone familiar with Dick Parsons’ past could have told you his term as Citigroup’s chairman would end like this: Shareholder lawsuits, executive pay scandals, and corporate failure on a colossal scale.

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