Versailles Watch: John Mack Whines About How Badly Wall Street CEOs are Treated

You cannot make this stuff up. Reader Chris kindly sent this snapshot from a Google search:


The interview that produced these headlines below:

The CNBC story flags the inflammatory portion, which starts at 5:23:

He [Mack] said he would love to see people “stop beating up on Lloyd and Jamie.” He added: “I think that would make a lot of sense, and I’m in favor of that.”

He said a debate over compensation was necessary and “healthy,” but he emphasized that chief executives should be judged according to their companies’ performance.

“As long as shareholders reward performance — what these companies have delivered — we can argue is it $10 million too much or $1 million too much,” Mr. Mack said.

Robert Peston, today writing about Barclays, by happenstance rebutted Mack’s efforts to off brush the fact that the leader of the banks that drove the global economy off the cliff were still employed at lavish pay levels:

The problem is that there is blank incomprehension from those not in the industry that the going rate remains so high for people widely seen as being more than walk-ons in the epic near-destruction of global financial capitalism just a short while ago.

The worst is that Mack and other members of his class (elite financiers and the 0.1%) really don’t get it. They live in such a cloistered world that the fact that they’ve gotten away with abject incompetence, malfeasance, and in the case of JP Morgan, almost certain criminal conduct (among other things, as we have discussed in considerable detail, Sarbanes Oxley violations and the criminal case that the DoJ settled rather than prosecuted), according to Mack, is perfectly kosher if investors don’t mind. And why should investors mind? Last I checked, crime and predatory conduct are very lucrative businesses if you can get away with it.

In fact, it’s even worse than that. Andrew Haldane, the executive director of stability at the Bank of England, did a simple analysis that demonstrated that banks couldn’t even begin to pay for the damage they did to society as a whole via periodic financial crises that result in the loss of jobs and the destruction of savings. That means the financial services industry as now constituted is negative value added from a societal perspective. It is purely extractive. Any reforms that reduce its ability to do damage would be hugely productive. But those are precisely the sort of reforms that badly captured governments and cowardly or corrupt regulators have refused to implement.

Similarly, Mack’s argument presupposes that large financial firms should enjoy the freedom of private enterprises. But as the crisis demonstrated, banks get far in the way of government subsidies and support than any other industry. They cannot properly be considered to be private enterprises and should be regulated like utilities.

These banks have thumbed their noses at the public, when they’d be dead without taxpayer bailouts and the continued taxes on savers known as ZIRP and QE, by paying themselves supersized bonuses rather than building capital levels, or even better, curbing the worst conduct. But having the Obama administration firmly in their camp, despite the occasional wet-noodle lashing, means they can tell themselves since no one has seen fit to punish them, clearly they did nothing wrong.

All we’ve done, as the continued whining of our top elites proves, is that like spoiled children, they’d become insatiable ids of more demands and more and more reckless conduct. And until someone finds a way to cut their grandiosity and their privileges down to size to discipline them or the bank CEOs manage to break the global economy beyond repair, they will have the bad taste to not only continue looting, but to add insult to injury, keep insisting that we serfs really should think and talk more respectfully about them.

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  1. profoundlogic

    Your are right that they don’t get it. They haven’t gotten it in quite some time. When they’re squealing from the pain of their own personal violation as Bubba gives them a lesson in reciprocity from the confines of a dark, damp prison cell, perhaps at that point will they truly “get it”.

    Maybe we should round up all these whining criminals and put them on their own island, one where the per-capita income is something on the order of a “living wage”. Let them practice their form of capitalism on themselves, free to let their innermost psychopath run wild.

    1. TheCatSaid

      They get it all right. Watching the “Inside Job” documentary again last night, it’s clear the principal players have practised their “uncomprehending blank stares”, raising it to a new art form along with their malfeasance.

    2. steelhead23

      It really is disgusting to watch these morons. It kind of reminds me of the well-traveled quote from Mr. John Dillinger, a bank robber. When asked why he robbed banks, he shot back, “Because that’s where the money is.” It is likely that Dillinger and his gang would have continued robbing banks, was he not gunned down upon exiting a theater. Similarly, da boyz are going to continue to rob us until we stop them. And while Dillinger was hunted by the feds, it would appear that as regards Blankfein and Dimon, the feds have got their backs.

      God bless Better Markets! (please see Yves post from yesterday)

    3. RepubAnon

      Oh, no – they get it, all right. They’re worried that things have gotten so bad that no amount of money poured into campaigns will get their minions elected in sufficient numbers to maintain control. So, they’re pushing back with arguments that are met with knowing nods on their yachts’ afterdecks, or in the smoking room of their chateau in the South of France.

      What’s happening is that they’ve decided that their PR flacks aren’t getting the job done, so they’re trotting out arguments that they themselves find convincing. This smacks of desperation.

  2. j gibbs

    If these guys are lucky they will only wind up in the stocks and the pillory. If they are unlucky any damn thing might happen to them. Mack should have the good sense to shut up and just shovel up the money, but such people never, never do.

  3. Ben Johannson

    American banks should be regulated like public utilities because they are utilities and have been since the Federal Reserve Act. They leverage government reserves to make their profits. They fall completely under the jurisdiction of the Federal Reserve and a host of other agencies. Agents of the Fed can enter any bank, fire any executive and replace them at a moment’s notice.

    These are not private entities, but they are excellent examples of what can happen when public institutions are allowed to behave as though they are.

    1. j gibbs

      Yes. And they should be limited geographically and functionally to business and commercial and real estate loans. Believe it or not, they were as recently (I think) as 1970. Then, the banksters pushed through the European model. It started with petrodollar ‘recycling”, which was a big bank scam with the Arab sheiks as stooge front men. Walter Wriston led the charge with sovereign loans, which produced the late seventies inflation and the 1981 melt down. Since then, we have had one bank led crisis after another, as well as nonstop asset inflation and consumer usury. By all means make the banks public utilities and put all the bankers on a floating island. We won’t miss them.

  4. Gabriel

    Didn’t one business professor proudly and vociferously suggest that such leading capitalist lights should receive a grateful country’s appreciation, such as recognition from Congress? Why not the Congressional Medal of Honor for William Gates or sidekick Warren Buffett?

    Heck, let’s go all out – why not a Nobel for Mark Zuckerberg – and so globally enshrine capitalism?

    1. Vatch

      Gabriel: Good idea! Both Henry Kissinger and Barack Obama won the Nobel Peace Prize. Those prizes set the bar kinda low, so I’m sure that Zuckerberg would qualify.

    2. F. Beard

      Why do you guys insist on conflating government-backed banks with capitalism when it is clearly fascism instead?

  5. Clive

    And it just gets worse and worse (if that’s even possible). Freed from any financial, social or moral obligation to improve conduct, banks are now more-or-less brazenly indulging in bankruptcy for fun and profit by looting perhaps slightly distressed but nevertheless solvent enterprises to make good the holes in — minor consideration — their balance sheets and — major consideration — their earnings.

    RBS: Living-dead proof that zombies really do need to consume healthy flesh to survive.

    1. flora

      Some of that “slight distress” is no doubt caused, in the US at least, by the big banks refusing to roll over some well performing loans of small/midsized businesses they’ve done business with for years. Suddenly the banks drag their feet or flat refuse to renew a performing loan. No real reasons given. It can’t be poor performance or increased risk. Midsized businesses so treated have to scramble to renew financing somewhere at some rate. Sure looks like the banks are setting up said businesses for looting opportunities.
      Note to FED: QE won’t reach Main Street as long as Wall St. banks are in charge of its distribution to the wider economy. Wall St. may be recovering but Main Street is still in deep recession.

  6. flora

    So the pirates think themselves ill used do they?
    From 05/30/09 Huffington Post:

    “Sen. Dick Durbin (D-Ill.) has been battling the banks the last few weeks in an effort to get 60 votes lined up for bankruptcy reform. He’s losing.

    “On Monday night in an interview with a radio host back home, he came to a stark conclusion: the banks own the Senate.

    “”And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,” he said on WJJG 1530 AM’s “Mornings with Ray Hanania.” “

    1. psychohistorian

      And those banks and bankers are, for the most part, owned by the global plutocrats…..just to keep the focus on the head of the rotting fish.

      To the issue of CEO compensation, again keeping the focus on the head of the rotting fish; CEO and banker compensation is as high as it is, IMO, because that is what it takes to entice sociopaths to operate organizations that are destroying our world and our species along with it… have to BELIEVE that you are doing God’s work…..even if it is the God of Mammon instantiated by the global plutocrats.

      The other point of clarification I want to make concerns the terms we are using. Vampires are a more appropriate term for the plutocrats and their puppets and Zombies is more appropriate for the proletariat being consumed by the Vampires. David McNally has a good book about that.

        1. psychohistorian

          We are the bokor you are looking for.

          Let me quote the last paragraph of McNally’s book:

          “There is a magic at work in liberation, then, one that brings persons and things back to life and breaks the spell of zombieism. That magic resides often in stories today, just as it did in Marx’s tales for his daughter. Lurking in such stories, observes Silko, are ‘relentless forces, powerful spirits, vengeful, restlessly seeking justice’. In Almanac of the Dead, she thus imagines ‘Marx as a storyteller who worked feverishly to gather together a magical assembly of stories to cure the suffering and evils of the world…’.49 Ulti- mately, as Marx well knew, magical stories press to be taken up by ‘magic hands’, to borrow Fanon’s term. Rather than the detached ‘hands’ to which capital tries to reduce them, the world-proletariat needs to become a many- headed and many-handed monster, like Shelley’s Demogorgon (the people- monster), capable of shaking the very planets and upending Jupiter’s throne. We glimpse something of these possibilities in Jack Cade’s ramblings, in the battles of Black Tiger, in the mobs that smash the locks and burn down the prisons in Barnaby Rudge, in the ‘industrious women of the city’ who storm government-offices and police-stations in Infinite Riches. Too often, however, these insurgent crowds stop short, seeking liberation at the hands of others. This is why everything rests, as Fanon saw, on the oppressed realising
          . . . that everything depends on them . . . that there is no such thing as a demi- urge, that there is no famous man who will take the responsibility for every-thing, but that the demiurge is the people themselves and the magic hands
          are finally only the hands of the people.50
          It is those magic hands that possess the power to slay the monsters of the market. Until such time, the endless toilers of the earth will continue to nurture monstrous desires for utopia as they walk ‘the endless dream of their roads’.”

  7. DIno Reno

    At what point does the nobility creep us out so bad that we rise up and whoop their ass? Or will this be a silent revolution, when one day we wake up and everything has changed and the ancient regime is swept away? Will any us live to see the day or is this the status quo for the next 150 years? What is the rate of decay for a society so far out of whack? Now that we’ve dropped the pretense of having a constitutionally protected, free and fair society, at what point does the brittle system finally break? Pretty easy to understand the popularity of zombies in light of the current situation.

    1. j gibbs

      If I had to guess I would say the society will degenerate into chaos first. The petroleum based economy only has another 20 years at best. All those troops will come in handy as peace keepers right here at home, and that is no doubt the main purpose behind the current militarization model, since we have run out of identifiable enemies overseas. One cannot be too cynical about all this. I have discovered that as cynical as I have been for forty years I am not nearly cynical enough.

      1. MikeNY

        If you were able to abide even the newscast highlights of the SOTU address, you saw 537 plutocrat shills and vassals, who can’t collectively agree that water is wet, rise AS ONE to acclaim a soldier who had been maimed in Afghanistan and who was seated in BO’s box. It was a stirring celebration of feckless imperial war, wasted treasure, and blithe disregard for human life.

        As I’ve said before, any divine right monarch or third-world dictator knows: you’ve got to “Support the troops!” You may need them to keep your bedizened head off the pike.

    2. NotTimothyGeithner

      The next Lehman style event. They expect a bailout, but unlike 2008 when the elections except maybe Minnesota were all but over with an unpopular outgoing president bearing the brunt of the blame and doing the actual policy (the administration not dubya), conditions were right for a bailout. The elected want to be reelected, and losing in a wave means there aren’t great jobs out there or a second chance.

      As Mack demonstrates, this is a delusional class. They expect a bailout to materialize, but they don’t realize the last bailout occurred with promises of accountibility. Between the Teabaggers, scared democrats, an unpopular president, and Democrats who might demand accountability from good faith, there isn’t a workable majority. Between the half assed stimulus and poor politics practice by the democrats, voters won’t be open to reasonable arguments because demagogues will inevitably point out that is what happened last time.

      It’s important to remember the MOTUs didn’t allow the fed to help Lehman because Lehman was immoral. Inevitably, this will occur again as consumers are squeezed. Whether it’s consumer real estate or residential housing as places are overbuilt and there isn’t new household formation, prices will fall. Can they blow another bubble? When respected economists (I think the lot of them are akin to astrologists) are calling for bubble based policy, they know a problem is a foot.

  8. Banger

    They don’t get it??!!! I should think it is most of the left that doesn’t get it. Let me help you understand why these guys are complaining: socially, these guys get the odd cold-shoulder from their celebrity friends or people in less vicious industries. These oligarchs are sensitive to social appobrium however mild. On the other hand, these guys understand the political lay of the land and know that what people, on the political level, think of them is irrelevant since their class almost completely controls the media and politics. They get it and they grab what is in front of them. You think some famous actress’ shrug is going to inhibit them in their predatory ways? A level below the famous actress lie a million attractive wanna-bes who will sell every inch of their bodies to these guys since they know that, in reality, the ultimate moral arbiter in this society is wealth.

    1. just_kate

      I get their arrogance for sure. But I don’t get why some of them keep making public statements that are simply adding fuel to the growing fire. You may not think anything explosive could happen – that we will quietly keep marching towards feudalism – but there are distinct whispers of some other future possibilities going on. I for one am not going quietly.

      1. NotTimothyGeithner

        They want to be heroes, and it kills them that all of their adulation is a result of paying for it. Outside of the office, no one cares who they are.

        If you think about it, they are middle men offering a product which could easily be nationalized without losing anything. They arent astronauts. Captain Kirk agonized over the death of a social worker, not a 1930s banker. Money doesn’t buy happiness after all. When a teacher dies, legions show up for a funeral. When a price like Mack dies, the lawyer handling the estate shows up. The lack of genuine adoration drives them up the wall.

        As wealthy and as powerful as they be, they can never shake the feeling that their friends are bought or that their profession could easily be eradicated. They make these statements as an outpouring of self delusion. Their celebrity has materialized because of the negative nellies, not that that hey are useless. Outside of JR Morgan himself, no b anger today will be the subject of academia. I suppose it’s a way to mot acknowledge that they are no different than the denizens of Versailles. Yes, the king and Vergennes may be actors, but the rest are merely parasites.

        1. Ed S.

          They want to be heroes, and it kills them that all of their adulation is a result of paying for it. Outside of the office, no one cares who they are

          Heroes? No. Repect? Yes.

          In Godfather terms, they want to be Don Corleone but are actually Virgil Sollozzo.

        2. Yves Smith Post author

          No, I hate to say it, a lot of people do show up at their funerals. Go look at the reports on takeover lawyer Joe Flom’s funeral, an extremely highly paid retainer to this class. But the media noted that one of his sons basically said at the service that Flom was a bad father.

        3. Brooklin Bridge

          They want to be heroes, and it kills them that all of their adulation is a result of paying for it.

          I doubt it. I doubt for the most part they are even aware there is any other way to get respect or affection or admiration adulation except by paying for it.

      2. rps

        But I don’t get why some of them keep making public statements that are simply adding fuel to the growing fire………

        Simply, they crave constant attention. It really doesn’t matter if its negative or positive attention; as long as its all about them. From my decades of parenthood, I have duly noted it begins at an early age; and best known as the ‘pay attention to me mommy’ syndrome. This seems to be a component of the male psyche (for the most part, boys look for attention and girls look for approval). For those who haven’t emotionally matured into adulthood, the public chastisement of male ‘bad behavior-antics’ is an endless craving. The reward is their face in the news with the knowing wink and nod of I got my ‘mommy’s full attention!’ At the public level, Their high is that of a junkie and always looking for the next hit. The ga-billionaire Dimons, Buffett, Gates, Blankfein, Bloomberg, etc.. are infantile attention-needy crack addicts.

        Reminds me of the character Tom Sawyer and his craving for Aunt Polly’s constant chastisement.

      3. Banger

        I believe the rich believe they are invulnerable to public outcries at their policies. On the other hand, they are, at present, invulnerable. There are no movements around that counter their hegemony in politics. Both parties are solidly for policies that largely benefit the rich, there is virtually no support for greens or socialists or even social-democrats except at the margins–why should they feel threatened when there’s no organized force to threaten them? Individuals can complain but what can they do?

        Eventually, it will catch up to them–but we’re not there yet.

        1. Synopticist

          These guys couldn’t give a tinkers cuss what we “normals” think of them.
          They know the politicians and journos have their back, so they’re quite content.

  9. John Merryman

    There was a time when government was private enterprise as well. It was called monarchy. They didn’t get it either, that their business served a public function and eventually did have to be turned into a public trust when those in charge proved incompetent in services rendered.
    The fact is that the only way the situation will lead to banking as a utility is for the bankers to completely destroy their own model and while it will be quite messy for the rest of us, that’s just how Old Mother Nature functions.

  10. papicek

    After people like Mack have been squeezing every penny possible from customers, while chopping jobs, wages and benefits, while simultaneously whittling away at the value of their products (who ever heard of a 4 lb bag of sugar – for the same price as the 5 lb bag we’re all used to seeing? Maybe it’s me but that looks an awful lot like a 20% price hike.) American prosperity is gone. Except for shareholders (rentiers). And who are they?

    95% of all stock wealth is held by the top quintile.
    85% of all wealth held in stocks is held by the top 10%
    35% of all privately held stock wealth is held by the top 1% of households.

    That includes whatever measely holdings people have in their retirement savings plans, btw, and if stock ownership is any guide, it means that 80% of us have little or no savings at all in any liquid form.

    Corporate profits have risen, and what do they do with that wealth? Raise wages? Cut prices? No. We’re seeing unprecedented numbers of share buybacks & dividend hikes.

    Of course John Mack thinks capitalism’s just fine. Of course the rest of us (rightly) think he’s a scumbag. Anyone who makes even the most cursory effort to keep up realizes the game is rigged.

  11. Jesse

    As I recall isn’t John Mack the guy that got an SEC investigator reprimanded/silenced/fired for daring to investigation some strong indications that J. M. was doing some insider trading?

    Sets a bad precedent, when they think money is power and they are above the law.

  12. Ché Pasa

    They’ll stay on their merry-go-round ride, hurling invective at the rabble watching them go round and round, until something stops the ride with a jolt.

    We keep thinking it ought to be some kind of uprising, but it doesn’t have to be like that at all.

    There used to be this thing called “monkeywrenching” which at one time happened with fair frequency. It was highly effective in modifying the behavior and attitude of the Overclass, but — with a few notable exceptions — the rabble seems to have forgotten about it.

    It seems to me the financial elites that behave this way are particularly vulnerable to some forms of monkeywrenching. They know it, but we can be damn sure they don’t want you to think about it.

    Their constant whining, pissing and moaning may be nothing more than entertainment for the multitude, keeping the focus on their wretched personalities rather than on their appalling practices.

    1. Ulysses

      Along with monkeywrenching we need to develop a far less deferential attitude towards the wealthy in our daily lives. I’m not suggesting being uncivil and rude, simply stop affording people undue respect just because they’re rich.

  13. down2long

    I think this is a conversation the oligarchs are going to regret starting. Today Bud Konheim of Nicole Miller (of the $800 sequined tiny purse) told CNBC the 99% should shut up and realize how lucky they are. This of course was roundly applauded by the cretins on Squawk Box who joined in Greek-chorus style.

    The National Review also brought up Marie Antoinette, (Google “Bone Appetit”) as did one other right wing source recently. This is what I find interesting: The disconnect: The 1% see the French Revolution as a disaster (as of course it was for the aristocracy.) What they fail to realize is that is sounds like a really good plan to many of the rest of us. I think many of us long to see Jamie “Slimin'” Dimon’s arrogant and perfectly coifed head in the guillotine basket, never to smirk at us again. Happy, happy, joy, joy! I’m not really sporty, but I’d toss it around a bit.

    Keep up the class warfare talk one percenters. As Lambert pointed out on this site a week or so ago re: the Kristilnacht (sp? )comments, and the resultant “apologia” on Bloomberg, it is a no-no to actually talk about “class” in the U.S. Because, the talking point of the ruling classes is that class does not exist: we all exist in a delightful fluid meritocracy.

    Who would’ve thought these a**holes would do so much to further the OWS conversation on class that had gone somewhat silent. For that, at least, a hat tip in your insolent direction you ungrateful vermin.

    1. Malmo

      They aren’t allowing comments. Wonder why?

      Bud Konheim is a sicko. Hope Yves posts something on this because that article has my blood really boiling to comment further.

  14. F. Beard

    They [banks] cannot properly be considered to be private enterprises … Yves Smith

    True. So restitution by the government for previous theft via government privilege is due to nearly the entire population. See Steve Keen’s “A Modern Debt Jubilee” for an example. And that, btw, would greatly restore aggregate demand and thus employment.

    and should be regulated like utilities. Yves Smith

    What utility steals purchasing power and lends it for usury to those most likely (the rich) to be able to repay the stolen goods? And what about the so-called non-creditworthy? Or those unwilling to borrow for say religious reasons or because they are opposed to usury? Are they to be looted without being able to loot in their own turn?

    Banks should be 100% private with 100% voluntary depositors. If the population needs cash for things like housing and autos then:

    1) The restitution for previous banking theft should go a long way toward meeting that need.
    2) Equal (or even means tested) grants of new fiat to the entire population does not privilege the rich at the expense of the poor.

  15. Ignacio

    In the US, banks almost certainly own, in an operative manner, the Senate and the government. The same occurs in, for instance, Spain, but here we beat the US in stupidity. Our egregious Prime Minister (Mr. Rajoy) tells us that banks are the “circulatory system” of the economy, so we should sacrifice whatever necessary to bail them out and keep their managers happy. Bad analogy. I think that the finantial industry would be more like a nervous system that has degenerated into Alhzeimer disease. A malfunctioning hypertrophic nervous system that consumes too much of our resources and does not provide proper coordination of the economical body.

  16. F. Beard

    It appears my comments are being eaten.

    Fine. It can’t be said I didn’t try.

    Hand, meet feet. Now wipe the dust off and forget these folks.

  17. Brooklin Bridge

    Crime pays, particularly on this scale. To a surprisingly large degree, the 1% live very happy and fulfilling lives no matter how unjust or unfair that seems. People are under the misconception that these people have some little bird in the background telling them that what they are doing is anti-social and wrong so, for instance, that when an acquaintance or a chance encounter frowns, they get it that he or she is frowning out of disrespect and/or disapproval. For the most part, the opposite is true. The 1%, like the rest of us, adapt to their circumstances remarkably well in such a way as to filter out undesirable information as if it never existed. The 1% don’t see themselves as the 1%. They know it exists, they know at some level they are part of it, but on another level not at all; they are the exception. Moreover, again like the rest of us – even more so – they are socially very well insulated from the damage they cause or resentment surrounding it. Either they simply don’t meet people who would bring up uncomfortable subjects, or they meet them in circumstances where any discussion at all is virtually impossible.

    It goes without saying there are exceptions; even 1% who agree or are sympathetic with the 99% and would welcome justice and change that went against personal interests. And there are 1%ers who have to interface with the rest of us as part of their jobs (such as the above) and so who develop carefully crafted illusions and stereo types that work in situations such as the above -entre nous- interview. They can make noises about how people have a right to be upset AND lay-off 100,000 people all at the exact same time without missing a beat or seeing anything amiss, and they can explain it with a straight face.

    But by-in-large the 1% escape pangs of conscience along with any repercussions in their day to day lives. Life is more than good; it’s fabulous. If universal justice exists, it has a bawdy burlesque sense of humor indeed and a time frame completely our of our scope.

  18. Edward Qubain

    I guess Mack is an example of the Peter principle. He has risen/evolved to the level of incompetence allowed by the perks, privileges, and immunities offered by the banking industry.

  19. Sluggeaux

    There is NO accountability for the .01 percent. They have captured the federal government at all levels and will extract the wealth of the other 99.09 percent with absolute impunity.

    Now you know why Dante wrote The Inferno…

  20. Cujo359

    “As long as shareholders reward performance — what these companies have delivered — we can argue is it $10 million too much or $1 million too much,” Mr. Mack said.

    Does anyone else get the feeling, when reading that quote, that Mr. Mack believes that it’s the CEO who is solely responsible for his company’s performance?

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