Does Judge Rakoff Smackdown of Heinous JP Morgan Conduct Mark Beginning of a Sea Change?

Tonight provides yet another example of a blogger who brought an important stories to light not being credited by the MSM, in this case, a harsh preliminary ruling against JP Morgan in a dispute involving its client Televisa.

I was going to post on Felix Salmon’s story, which discussed some extraordinarily dishonest conduct by JP Morgan, for two reasons: first, to remind readers that the obsession with Goldman chicanery is providing a nice smokescreen for the rest of the industry, and second, for its larger legal implications. And now we have a third reason, the MSM not giving Felix the credit it would provide to a conventional reporter. Felix pointed out two days ago that the decision was made last month, yet the story was peculiarly ignored by the MSM; suddenly, the story graces the front page of the Wall Street Journal.

JP Morgan in particular is being treated with a degree of respect that it does not deserve. For instance, banking industry expert Chris Whalen derides the notion that JP Morgan was in better shape than the broker-dealers that teetered on the verge of failure in 2008. He describes JP Morgan as a $76 trillion (notional) derivatives exchange with a $1.3 trillion bank attached, and that serious turbulence in the derivatives markets would have been fatal to JPM. And let us not forget that while Goldman has become the bank that everyone loves to hate, there is no reason to think its behavior was materially worse than that of its peers (its brazenness and tone-deafness, however, are a completely different matter).

The second reason was the reasoning behind the in the smackdown by Judge Jed Rakoff against JP Morgan for its conduct involving a loan to a long-standing Mexican client, Televisa.

And now there is a third wrinkle, the Wall Street Journal’s belated interest in the piece and how the WSJ version leaves out some key details presented by Felix, and the omissions are all of items that make JP Morgan look even worse. Although I’ll give a recap and discuss some of the additional issues this case raises, I encourage readers to look at both pieces in their entirety. I think you’ll agree that Felix’s version is, hands down, a better job of reporting.

Brief synopsis: longstanding JP Morgan client Televisa raised $225 million in a loan through its subsidiary Cablevision to fund the acquisition of a fiber optics company. But the loan closed in 2008 and JPM was unable to syndicate it. JP Morgan turns to a bank owned by Carlos Slim…..who happens to be Televisa’s biggest and fiercest competitor….for help.

As Felix explains, JP Morgan could either assign the loan to the Carlos Slim’s bank, Inbursa, or sell it a participation. But an assignment required Televisa’s consent, which it refused to give. JP Morgan then threatened Televisa, saying it would proceed and sell a 90% participation. Televisa responded in writing that it believed this move would violate the credit agreement. But it gets better. Televisa said it was willing to give the same discount to buy back the entire loan that that Inbursa had offered for 90%. JP Morgan led Televisa to believe it was no longer negotiating with Inbursa when it is in fact finalizing that deal. (Note: the Wall Street neglected to mention the buyback offer and that JP Morgan misrepresented its dealings with Inbursa).

Felix adds:

….this was no ordinary participation agreement, either. It had all manner of extra bells and whistles in it, all of which were designed to (a) make it look very much like an assignment rather than a participation; and (b) extract information from Cablevisión and hand it over to Inbursa. As Rakoff says, “the agreement permits Inbursa to request and receive nearly unlimited information from Cablevisión”. And what’s more, if Cablevisión for any reason refuses to hand over such information, Inbursa can declare Cablevisión in default, and automatically convert the participation to a fully-fledged assignment.

Yves here. The Journal failed to say that the participation agreement was unusual, which could leave the reader with the impression that the information demands were typical. Without this key tidbit plus the Televisa offer to buy the loan back, it simply looks like Televisa is balking at JP Morgan, which wants to get out of the loan, having Inbursa as its only exit. Thus a reader might conclude that the information provided was reasonable, and JP Morgan was guilty of putting its interest ahead of its client’s only by having gone to Inbursa. The article completely leaves out the most duplicitous, destructive action: that JP Morgan rejected what on paper was a BETTER out, selling the entire loan back to Televisa, and instead conspired with Televisa’s biggest competitor in a scheme to suck competitively sensitive information out of Televisa.

Judge Rakoff, the same judge who rejected the initial settlement that the SEC and Bank of America had negotiated over the Charlotte bank’s failure to disclose Merrill’s deteriorating to shareholders pre the vote on the acquisition, was again unafraid to deliver a sharp rebuke:

JP Morgan, acting in bad faith, used the guise of a purported “participation” to effectuate what is in substance a forbidden assignment, with unusual provisions demanded by Inbursa that are calculated to give Inbursa exactly what the assignment veto in the Credit Agreement was designed to prevent. JP Morgan thereby violated, at a minimum, the covenant of good faith and fair dealing automatically implied by law in the Credit Agreement…

Yves here. I’m actually a bit gobsmacked to see this as the basis for a ruling, and hope it stands. I welcome input from corporate litgators, but this is my non-expert reading on what happened.

The normal basis for litigation under a contract are violations of the terms of the agreement (although counter suits can bring in issues outside the agreement. For instance, a colleague hired a decorator who proceeded to draft grandiose plans and refused to come up with anything within the budget stipulated at the outset. When he fired her, she submitted an outrageous final bill, what the entire project had he completed it with her should have cost. His attorney looked her drawings, which were blueprints and called for plumbing and walls to be moved. They sued her for practicing architecture without a license. She suddenly became much more willing to negotiate).

Now notice what happened here. Televisa had told JP Morgan in writing that it regarded going ahead as a breach of good faith and fair dealing. JP Morgan went ahead anyhow, because it clearly regarded this as a weak line of attack, one it thought would not fly in court. And my understanding is that good faith and fair dealing arguments are not common outside employment law.

A “bad faith” argument does not claim that the other side violated a particular contractual provision, but rather operated in a way that might be permissible on a narrow, technical reading. but flies in the face of the logic of the larger objectives of the agreement. Good faith and fair dealing is an assumption that undergrids all contracts. And before the “sanctity of contracts” crowd starts hooting and hollering, a general premise that parties will behave reasonably and perform in accordance with the objectives presupposed by the contracts is necessary for any system based on agreements to work. It is simply impossible for contractual system to function if both parties can easily resort to narrow, legalistic readings of the deal to screw the other side. As much as contracts often contemplate various scenarios, it would far too costly, both in negotiation and drafting costs, to devise contracts detailed enough to address all the ways sneaky people might welch on a deal.

This is merely a preliminary injunction, and Judge Rakoff has scheduled further hearings, but certainly looks like he is not buying what JP Morgan was selling.

This is a very encouraging sign, because the financial services industry has made an art form of sneaky practices and if good faith and fair dealings arguments become more successful as a tactic (possible given how badly the industry has overplayed its hand) that would be a badly needed counterbalance. Unfortunately, it is far too early to tell. This is only the first skirmish in this suit: JP Morgan might settle. But even if the case goes to trial, JP Morgan may believe that it can get the ruling overturned on appeal. I would not regard pursuing this suit as a wise move; Televisa could demand that JP Morgan and Inbursa produce their documents and e-mails about the the proposed “participation”, particularly those unusual terms that would have required Televisa to cough up sensitive information to its biggest competitor. Given that Televisa offered to match Inbursa’s purchase price, it isn’t hard to imagine that JP Morgan was willing to sacrifice (literally in this case) its client for either some fees or a promise of future business.

Even if JP Morgan might get a verdict against it overturned on appeal, the damage to its reputation of exposing the gory details of its double-dealing would outweigh any financial winnings. Bankers Trust made that error of judgment in a suit brought by Proctor & Gamble, and it never recovered from the repercussions of the public getting a full view of its predatory conduct.

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  1. attempter

    -More good work from Rakoff. It looks like they have quite a rogue judge on their hands.

    -Although it’s generally best to focus on Goldman as the most noxious gang, it is good that the often whitewashed or free-passed JPM and MS are gradually getting the bad rep they deserve. (This post reminded me of Tett’s whitewashing of JPM in Fool’s Gold; how they were the “innovators” and constructive “users” of extreme securitization, not the nasty “abusers”, and how they were so much more prudent than everyone else about the super-senior debt, about the signs of the bubble bursting, and so on.)

    -It’s a measure of how entrenched psychopathic ideology has become that anyone would even have to say that the very concept of a contract presupposes a baseline of decent, civilized behavior, let alone have to argue about it.

    It’s like those who bleat “keep your gubmint hands off my property“, forgetting (or lying about the fact) that any kind of concentrated wealth and property could never exist at all without a strong, aggressive government dedicated to enabling its existence, and that therefore by definition property owes a great debt of gratitude to society, including being a good citizen and paying its fair share of taxes.

    -As the MSM increasingly abdicates, we’re seeing more and more of this plagiarism. It’s a hoot for the much-reviled blogosphere, and a de facto admission of the MSM’s growing fecklessness.

    Unfortunately, since pretty much by definition only the blogosphere will be the medium of this particular story, it’ll probably be awhile before the general public knows about it.

    (That’s why the NYT, NYPost and others actually have formal policies against crediting bloggers.

    Here they really think if a blog reports something in the woods and no one except the MSM heard it, then when the MSM repeats it, it’s as if the blogs never made a sound.)

  2. kevinearick

    for those who don’t know, markets are like bookies, taking bets on each side of a trade, setting the spread to match buyers with sellers, taking a fee for the transaction. when a bookie bets, with asymmetric information obtained by watching the bets, the system collapses.

    JPM and GS, Warren Buffet, all the others, not only bet with asymmetric information, but they also “created” information.

    Ms. Born made the mistake of looking inside the black box, and taking action without lining up the ducks.

    1. kevinearick

      The old economy is entirely artificial. Now, the corrupt bookies are programmed into the computers, just waiting for orders to bet against both sides of the spread, while millions of people still pay attention to the roulette wheel, as if it’s going to magically sprout economic profit.

      Sorry, the economy was false, the pensions were false, their cash flow was leveraged up 100s of times, as the foundation of the false economy, inside the black box, and they are gone.

      Real unemployment is 20% and the state and municipal government workers are going to get their pink slips. The new motor can pull the load, but the amount of intermittent pain will depend on how effectively the new circuit is constructed. That will depend on:

      1) how quick capital re-establishes the talent pricing mechanism, to bring up return to labor, cash flow to asset prices;

      2) how diligently the middle class has been reorganizing in its off-time to re-open the NPV window;


      3) when the constitution is restored or replaced.

      Like it or not, everyone is completely dependent on the kids who have been acting stupid, and no one will know for sure which is which. Unlike capital, small labor takes in kids from all walks of life, and accepts them as its own.

      1. kevinearick

        the kids will start acting smart when all the kids are paid to act smart.

        most of the people I have worked with think I am the stupidest helper they ever saw; why would I bother trying to prove them wrong, when their basis of productivity is compliance, and if I don’t intercede, they perish?

        the easiest way to identify crony capitalism is when individuals in the system treat you like an idiot, hoping that you will try to prove them wrong, taking credit for your resulting work, and discarding you in the process.

        there is absolutely no trick these kids have not seen.

        1. kevinearick

          from the perspective of capital, contracts are made to be broken, by the party with control over the legal process. MBA 101. that closes the NPV window, locking the uninitiated in with capital, which now has a gun, heads it wins, tails the uninitiated loses. capital has consumed all the resources in its environment.

          the longer the term, the greater potential for losses to the uninitiated – pensions.

          1. kevinearick

            the money came out in the form of insurance nexus agency fees – boats, mansions, and BMWs, and wild speculation in non-performing assets.

            it would have been much less expensive to invest in the kids.

            there is nothing left, but the supply-side economy, dead inventory.

  3. jake chase

    The implied covenant of good faith and fair dealing has been a cornerstone of commercial law since the universal adoption of the Uniform Commercial Code in the 1950s.

    Good for Judge Rakoff to finally notice it applies to banks.

  4. Neil D

    Implied convenant of good faith and fair dealing? May I suggest, Ms. Smith, that you explain that concept to your fellow blogger George Washington? His conspiracy theories seemed designed to undermine that cornerstone of law and civilized human relations.

  5. DownSouth

    The United States created this monster called Carlos Slim, and now the monster is turning on its creator.

    Ah, the joys of neoliberalism! The Washington Consensus comes home to roost!

    Many here in Mexico claim Slim is little more than a presta nombre, that is a front man, for Carlos Salinas de Gortari. Salinas is Mexico’s ex-president whose brother Raul presided over the nation’s narco business right out of Los Pinos (the Mexican equivalent of the White House). Salinas is the one who “sold” Telmex, the nation’s telephone monopoly, to Slim. No regulation whatsoever was implemented to control the monopoly, so needless to say, we here in Mexico for many years paid three or four times the rate for telephone services that you paid in the US. And let me assure you, none of those exorbitant rates made their way down to Telmex workers, who make a fraction of what telecommunications workers make in the US. Ah, but Mexico wins the booby prize–it can proudly claim to have produced the world’s richest man.

    Salinas surrounded himself with, as Carlos Fuentes observed in A New Time for Mexico, “the technicians, the economists, the boys at the blackboard.” The members of this group, Fuentes goes on to elaborate,

    are graduates of Ivy League and eastern universities (Harvard, Yale, MIT). For them, the economy unfolds on a blackboard, never in real life; it is something that happens to statistics, not to flesh-and-blood men and women. This group is increasingly distanced from public opinion and the raw material of the nation. It holds out the promise of Adam Smith’s optimistic eighteenth-century definition of economics—the science of human happiness—and ends up confirming Thomas Carlyle’s pessimistic definition in the nineteenth: the dismal science.

    And of course when the dark clouds converged on Mexico’s Libertarian-Austrian-Neoliberal paradise in 1994, and Washington fucked over Mexico just like Brussels wants to fuck over Greece now, the boys at the blackboard were nowhere to be found:

    Even after taking into account the executive branch’s lack of controls, its internal agenda, the tradition of secrecy, and the deluded complicity of Washington, a bitter doubt remains in Mexico. If the devaluation of the peso was not done in time, why was it also done so badly? What happened to the technicians, the economists, the boys at the blackboard? Why did they not negotiate with the U.S. government before the devaluation, so that credit could be obtained at less risk to our national sovereignty? Why was it all done so late, so ineptly? In the last days of January 1995, when the illusion of a rescue loan was fading, our supplicant diplomats returned home with empty hands, equipped with only with nails to scratch ourselves with.

    Ah, but there is poetic justice. The US thought it could impose neoliberalism on Latin America, as often as not at the point of a gun, without suffering any repercussions back home. But it wasn’t to be so. As Argentina’s former president Nestor Kirchner predicted in a speech to the IV Summit of the Americas back in 2005:

    Neoliberalism is a deathtrap, a deathtrap that first ensnares the weak, but later, in one way or another, also affects the strong.

    The sad part is that most Mexicans never wanted to tear down the American Dream. They just wanted to be part of it.

    1. Siggy

      Love your stuff.

      But . . . . could you give a little definition to: “Libertarian-Austrian-Neoliberal”. Something short, say no more than five declarative sentences.

      As to Mr. Helu, while Mexican by birth, there appears to be some Lebanese culture in the family blood line. So, if one wanted to be crude, one could say; ah, Carlos Slim, another crafty Lebanese rug merchant. On the other hand, give him his due. He inhereted a lot and made it larger.

      As to Mexico, been there, not my cup of tea. Strikes me as lacking a middle class and the government appears to be extremely corrupt.

      As to your comments here, I do enjoy your postings and I do marvel at your ability to muster citations. I really do want know how you do it. Could it be that you are a retired teacher? Given the rigor of some of your quotes, are you a Jesuit?

      And, as to the Libertarian-Austrian-Neoliberal appellation, that strikes me as being a bit over the top. I do have a concept that fits neoliberals, and I do have a concept that fits Austrian economic thought; and, I do have a concept that fits libertarians. I need a thought set that fits your triptych. A little help, please.

      1. DownSouth


        When I speak of the Libertarian-Austrian-Neoliberal constellation, it is a synthesis of the three sub-groups. In practice, I’ve found that there’s not much difference between the three separate parts, regardless of what those who hail from one part of the constellation might say. When their theories are put in practice and everything blows up, which it always does, they always point the finger at each other, kind of like the metaphysical debates between the scholastics and nominalists that Erasmus famously described as “higher lunacy.”

        But basically, it is the combination of policy prescriptions rolled out in Chile in the 1970s:

        • A fetish for monetary control, with monetary policy taking on talismanic qualities
        • Extreme fiscal austerity
        • Privatization of all state-owned enterprises
        • Deregulatory absolutism
        • Free capital flow absolutism
        • Free trade absolutism
        • Belief in supply side or trickle-down economics
        • Disdain for government
        • Disdain for the common man
        • Disregard for democracy and democratic processes
        • Disregard for national sovereignty

        As far as putting a face on the Libertarian-Austrian-Neoliberal constellation, there are no better than the two that showed up in Chile in the 1970s—Milton Friedman and Frederick von Hayek.

        For a much more in-depth discussion, see this article by Greg Grandin:

        Another in-depth case study is provided by Carlos Fuentes in A New Time for Mexico, which I quoted extensively in a comment in response to this post:

        Fuentes eloquently and concisely summed it up as “a demonization of national states, a delusional faith in the free play of market forces, and the cruel complacency of social Darwinism.”

        1. carping demon

          • A fetish for monetary control, with monetary policy taking on talismanic qualities
          • Extreme fiscal austerity
          • Privatization of all state-owned enterprises
          • Deregulatory absolutism
          • Free capital flow absolutism
          • Free trade absolutism
          • Belief in supply side or trickle-down economics
          • Disdain for government
          • Disdain for the common man
          • Disregard for democracy and democratic processes
          • Disregard for national sovereignty

          Look, anybody can drop in a bulleted list of Republican talking points, don’t need to be a jesuit for that.

    2. Anonymous Jones

      From HFRO:

      Konovalov Crewman: Torpedo, Dead Ahead!

      Andrei Bonovia: [to Captain Tupolev] You arrogant ass! You’ve killed *us*!

      [moments later, the Konovalov explodes.]

      Not to get *too* paternalistic, but there is a good argument that all actions based on greed are counterproductive (to even one’s utility) in the very long run. Of course, in the very long run, we’re all dead; so I guess if you die before the counterproductive consequences of your own greed manifest themselves, you win!!!

    3. Doug Terpstra

      DS, truly fascinating stuff as always—more fantastic than fiction. I come here to bask in greatness.

      My wife, originally from Mexico, and I lament that our El Norte culture and economy seems to be “equalizing” with Mexico’s—that is, devolving into a destitute plutocaracy. But, where Mexico should be rising, it in turn seems periously close to collapsing into a failed narco state—perhaps pre-revolutionary convulsions, of which there have been salvos already in Oaxaca and Chiapas.

      We were disappointed that Obrador ‘lost’ the ’06 elections. The Mexican people are incredibly long-suffering. Perhaps 2012 will be a more propitious year for todos Norte Americanos de los dos lados.


  6. dwight baker

    By Dwight Baker

    Judge Rakoff may fair well and then he may not. The big bucks that control most of everything might find a way to persuade.

    Yes, as one said or alluded too — we are in a generation of dysfunctional liars. But then I ask could a liar be OK? When we as a Free People accept the fact that liars can be OK then MY TAKE We the People in our Nation are on the road to perdition

    I submit the practice of the SEE SAW YAW of the LAW becomes even more complex when traps and vices are planted in convoluted text that begets any form of sanity in civility.

    So what is the CURE? I believe that soon very soon a re-take and re-birth of how to provide Capital in a Capitalist society will come about.

    1. Jason Rines

      Correct, evolution is guaranteed. We as a species have become clever enough to suppress evolution toward our ultimate destiny. We are not smart enough to skip the pain of the snapback in correction. A better era will emerge, it is guaranteed.

  7. Mark

    Breaking the original story was fantastic work on Felix’s part. It is unfortunate that it took the WSJ two more days to report a watered down version of the story (and offered no credit to Felix).

    Bad faith cases are relatively common in insurance litigation. It is surprising that the cases are not more common in banking. This seems like a case where a bad faith ruling is clearly appropriate (if not in this case, when?), but sadly I would not be surprised if it does not stand.

  8. i on the ball patriot

    “Does Judge Rakoff Smackdown of Heinous JP Morgan Conduct Mark Beginning of a Sea Change?”

    No! Absolutely not! Same old scam “Rule of Law’, that, like derivative products, becomes more convoluted and complex each day. And every crooked election insures that it further tilts the playing field in favor of the wealthy ruling elite while at the same time it denies opportunity and freedom to the greater majority.

    Deception is the strongest political force on the planet.

  9. Francine McKenna

    Dear Yves,

    Great catch. I would not cry too much for Felix. He gets plenty of attention and although he “blog”s he does it, very well, for Reuters. But this shabby treatment by WSJ of a bigger, better story that he broke is inexcusable no matter who is involved. This is what I have seen with the WSJ. My stories are glommed for ideas, tidbits and then WSJ, and others, gives them a once over leavaing out the best details, not quoting me and running late. Why? In my case, one call to the audit firms smacks down any hint of controversy or wrongdoing. The PR for the Big 4 talk the inexperienced reporter and knowledge-lacking editor around the block and, before you know it, the story has no legs. The other is time. These reporters have no time or authority to do investigative reporting. They are charged, like the guy over at NYT Deal Blog, with putting stories up, filing something weeks later on what everyone has started to talk about because of a non-MTM story and then walking away. They take what’s written, regurgitate it, do the requisite verification by calling any subjects mentioned and then any semblance of controversy is squashed down by squeamish editors who are afraid to shake things up.

    The Wall Street Journal had been improving with some good reporting of Wall-Mart and their auditor EY and tax evasion. And they quoted me on their KPMG-New Century billion dollar lawsuit story. A few writers are on top of things like Michael Rappaport, who typically writes only for the subscription only side. It’s a reporter by reporter thing. But in, general, slop when it comes to my beat…

    1. Doug Terpstra

      The WSJ, now owned by Robber Murdoch of Faux News infamy, seems likely to degenerate much further.

  10. mitchw

    MSM has been retreading stories for yonks. It’s only now getting around to ripping off bloggers. What appears in the NYT has usually been known to its peculiar community for some time. Why should bloggers be treated any different.

    Also, I wonder if this sentence reads as you wish it to, Yves…”The article completely leaves out the most duplicitous, destructive action: that JP Morgan chose what on paper was a BETTER out, selling the entire loan back to Televisa, and instead conspired with Televisa….”

  11. rita

    “Good faith and fair dealing” and breach of fiduciary duty causes of action are usual in lender liability lawsuits. They are generally alleged along with more specific contract breaches. If there are no specific contractual breaches and the good faith and fair dealing and/or breach of fiduciary duty claims are the only causes of action, the behavior of the bank has to be egregious in order to get far in litigation. The granting of the preliminary injunction is a good sign but the game is far from over unless the parties decided to settle. The preliminary injunction suggests that the judge thinks the underlying cause of action has some merit and that the plaintiff will suffer irreparable harm if the injunction is not granted.

    The allegations as presented are certainly ugly but at this point they are allegations not yet proven.

  12. bandarlogician

    In my experience at least, good faith and fair dealing arguments are fairly commonly made, less commonly winners. Anyone filing a complaint for breach of contract, though, would pretty much automatically include a separate claim for breach of the implied covenant of good faith and fair dealing.

    This principle goes back much further than the UCC (which probably wouldn’t apply to a credit agreement anyway – Article 9 maybe).

    Yves, I think your definition, while accurate, might be a bit too narrow. The implied covenant of good faith and fair dealing basically says that once you have contracted to do something (in JP’s case, not to assign the loan without Televisa’s consent), you can’t behave in a way that nullifies or undermines your obligation in order to avoid it without technically breaching the contract (here, assigning the loan without Televisa’s consent, just trying to put form over substance and call the assignment something else, a participation). Anyone who thinks this interferes with the sanctity of contracts needs to think about just which part of a contract is the sacred part.

  13. Seal

    JPM is a tool of the US government and, as such, protected. No ruling will come down to damage their involvement in the manipulation [“$76 trillion (notional) derivatives exchange”] of the financial markets – such as the huge short positions in silver. Were they, by some legal aberration such as an honest judge, fined the USG – taxpayers – would pay it one way or another.

    1. Jimbo

      And Televisa is a tool of the Mexican government. Televisa has 70% of the broadcast market, and, over the last six years, with the complicity of the RightWing PAN which fraudulently seized the last presidential election, has 50% of the cable TV market. It also has 90% of the DTH market via its ownership stake in Sky Mexico. Just one week ago, the government allowed Televisa to buy 30% of Nextel Mexico. What do you hear nightly during Televisa’s news broadcasts? That any politician who wants to redistribute wealth is a “Marxista”, this in a country that collects only 10% of GDP in taxes, with no capital gains tax, nor a tax on dividends. Indeed, FoxNews would be considered a liberal news source next to Televisa Noticias.

      1. DownSouth


        You say “Televisa is a tool of the Mexican government,” but don’t you think a much more accurate statement would be that the Mexican government is a tool Televisa and a handful of other monoploists like Carlos Slim?:

        Mr. Slim’s style of wealth accumulation is not rare in modern Mexico. From television to tortillas, vast swaths of the Mexican economy are controlled by monopolies or oligopolies. Many of Mexico’s billionaires were created by the government during the privatization of state-owned companies in the 1990s.

        That is what is most difficult to swallow for a Mexican. The United States government split up Rockefeller’s Standard Oil Company. A court imposed a consent decree on Mr. Gates’s Microsoft to curtail its monopoly practices. In Mexico, Mr. Slim’s monopoly is understood to be the natural order of things. Ask former President Vicente Fox, who appointed a former Telmex executive as minister of communications in 2000.

        The United States today is heading toward a Mexican-style social contract. The concentration of 44 percent of the nation’s income among the top 10 percent of taxpayers is on a par with Mexico’s disparities. It’s getting hard to find government officials in Washington without deep ties to corporate interests.

        1. Jimbo

          Excellent points. Mexico has come a long way from the 70s, when the government controlled business, to today, where business controls the government. But I would differ with you a bit with respect to Slim and Azcarraga. Slim, while not explicitly supporting AMLO in 2006, implicitly did so. And he has drawn the displeasure of Los Pinos over the last three years due to his comments regarding economic policy. Indeed, many believe that this is why the government has refused to allow Telmex to transmit video over its copper and fiber network. In short, I believe that Televis is by far the most significant impediment to democracy in Mexico today, far more than Telmex.

  14. Robespierre

    These days it seems that the only public officials that have not been bought by the major banks are Rakoff and Cuomo. Sorry state of affairs I have to say…

  15. beesymph

    This is an excellent article. The only point of departure is that I do not believe that reputation matters on Wall Street anymore. In two posts I lay out the history of Goldman Sachs. From the Sidney Weinberg era through the early 1990’s reputation was everything to Goldman. (as i suspect it was at many other Wall Street firms. Reputation has been sacrificed at the expense of quick profits. Reputation is a long-term investment that Wall Street firms are not interested in making. Like the spoiled girl in Willy Wonka, the profit making and compensation mantra has become,”I want it and I want it now.”

    You are also correct it is more than Goldman it is the entire Wall Street culture. The middle class is waking up to this reality and the Tea Party contingent only augers worse things to come.

  16. Otto

    “Fair and in good faith”
    Who determines whats fair, Yves, me,Rakoff,GS, MS, Geithner, Bernenke, Krugman, Independent Accountant, Robespierre, etc?
    Who has the monopoly on morality?Why you of course. The rest us are greedy.
    One man’s meat is another man’s poison.
    Lets stop this this silly , I’m moral, X is not.let’s determine what caused the financial crisis .
    If the law gives someone an unfair advantage, then advocate changing the law with logic and reason.
    Now here is the height of silliness :)
    2 Sam 23:3″.. He that ruleth over men must be just in the fear of God.”
    When you reduce everything to its lowest common denominator its not really silly at all.

    1. Robespierre

      “If the law gives someone an unfair advantage, then advocate changing the law with logic and reason.”

      That statement by itself shows the hypocrisy and the complete lack of moral compass that exits in the financial industry. Do I need to remind you who paid our elected officials millions of dollars (via campaign contributions) to change the rules and laws so as to get as you put it “an unfair advantage”. Logic and reason never entered into that transaction

  17. HallOfMirrors

    These comments are becoming more and more of an echo chamber.

    I look forward to being told they are not by the ext 50 posters

  18. jedwards

    “This is merely a preliminary injunction…”

    My understanding is that a preliminary injunction is actually a very strong statement that the original claimant will win. Is this not the case?

    1. Brown Ram

      Granting a preliminary injunction requires the judge to balance likely harm to the plaintiff if the injunction is not granted against likely harm to defendant if the injunction is granted. The judge is also supposed to take into consideration the merits of claims and the likelihood of success on the merits.
      Accordingly, without reading the actual decision or order, it seems that Rackoff has decided that Televisa’s claim has solid legs and it won’t hurt JPM to hold onto the loan for a few more days or weeks.

  19. Nelson

    Fine work as always.

    One question: is that a typo where you call JPM a “$1.3 billion bank”? $1.3 billion or $1.3 trillion?

    Thanks for your efforts,


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