Yves here. The irony is delicious. Chief bank apologist Andrew Ross Sorkin accidentally elicited a damning admission from JP Morgan chieftan Jamie Dimon. But that also reveals Dimon’s confidence that he is a member of a protected class, which sadly happens to be true.
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
I want to give a hat tip to a recent Wall Street Journal article that brought to my attention two damning admissions by JPMorgan’s (JPM) CEO and Chairman of the Board, Jamie Dimon. The irony is that Dimon was lulled into making these admissions because he was basking in the perfect calm created by the confluence of Sorkin’s and CNBC’s storied sycophancy at the one place on earth where elite bankers feel most loved, honored, and protected – the annual meeting of the ultra-wealthy in Davos, Switzerland. Sorkin was the only interviewer, so Dimon faced no risk of tough questions. It may well have been this perfect setting that caused Dimon to let slip the mask and reveal two illustrative sins of elite bankers reported in the WSJ article.
“A spokesman for J.P. Morgan declined to comment on the continuing investigations. Mr. Dimon said in a January 2014 interview on CNBC that it has been a ‘norm of business for years’ for banks to hire [ex government officials and the] sons and daughters of companies’ [controlling officers] and to give them ‘proper jobs’ without violating the law.
‘But we got to figure out exactly how to create a safe harbor for that so you don’t…end up getting punished,’ he told the interviewer, according to a CNBC transcript.”
Yes, you read that correctly. It has been a “norm of business for years” for multinational corporations to hire the “sons and daughters of companies’ [controlling officials]” and to hire “ex government officials” in order to secure the favor of those powerful officials for the banks. Dimon’s concern is that it is essential that firms should be able to continue to purchase this influence with other elites in this manner with no threat of ever “getting punished” for buying influence with such powerful foreign officials.” JPM’s priority is “to figure out exactly how to create a safe haven for that.” The elite firms’ “norm of business for years” is not an admission from Dimon’s perspective, but rather a claim of right. Anything that elite firms have done successfully for years to purchase influence with other elites (including hiring “ex government officials”) is obviously something that they have a right to continue to do – with total impunity from “getting punished.” It’s not bribery, it’s buying influence with powerful officials who run firms and government agencies and ministries.
I promptly found the CNBC interview transcript, and it was such a classic of its genre that one can see how Dimon could let down his guard and make these admissions, or as he presented them, legitimate demands on the U.S. government to create such a “safe harbor” for U.S. multinational corporations.
Two Good Ol’ Boys at Davos
The joy begins with the professional tone and distance that Sorkin brings to sycophancy. Dimon reinforces this professionalism throughout the interview. Their opening exchange sets the stage.
ANDREW ROSS SORKIN: Jamie Dimon, thanks for being here.
JAMIE DIMON: I’m thrilled to be here, Andrew.
The interview ends on the same high, professional tone.
ANDREW ROSS SORKIN: –thank you very much, Jamie. Appreciate it. Thanks.
Just two good ol’ buys shooting the breeze in Davos.
JPM’s “Chinese Princelings” and JPM’s “Purity”
Sorkin brings up the fact that JPM hires “Chinese princelings” to curry favor with their parents. Dimon responds that “I’m not going to through any of the current” governmental investigations of JPM. To Sorkin’s credit, he asks a follow-up about JPM losing a potential IPO engagement with a Chinese firm due to a “Chinese princeling” issue. Dimon responds with this a fabulous line: “we’re trying to make decisions that try to make us as pure as possible.” Yes, Dimon rebrands JPM as purer than Ivory soap. His very next argument is this is why it is essential that the governments create a “safe harbor” so that JPM can hire the princelings and ex government officials in order to curry favor with the elites that control firms and governmental agencies without any risk of “punishment.” You know, “as pure as possible.”
Sorkin Closes for the Killer Interview Question to Dimon
It’s an incredible set up for Sorkin. Sorkin pounces for the kill, leaping on his now helplessly hypocritical prey. Or, alternative B, he doesn’t actually listen to Dimon’s amazing answer to his question and instead interrupts the answer just as Dimon demands the creation of a “safe harbor” under which firms like JPM can continue to hire “Chinese princelings” and “ex government officials” for the express purpose of buying corporate and governmental influence without any risk of “getting punished.”
ANDREW ROSS SORKIN: Is there anything in this–
JAMIE DIMON: –getting punished.
ANDREW ROSS SORKIN: –whole thing that you’ve read that’s made you uncomfortable?
JAMIE DIMON: I’m not– actually I don’t want to go anymore into that one, yeah.
When Dimon blows off Sorkin’s inane question about whether he has read anything that has made him “uncomfortable,” Sorkin switches to the perfect Davos question. “Is the stock market out over its skis relative to where we are in the true economy?”
Who’s Your Daddy?
It never dawns on Sorkin during the interview that there might be something desperately wrong about Dimon’s belief that multinational corporations have the inalienable right to buy influence through their hires of “ex government officials” and “Chinese princelings” and that the duty of the U.S. government is to create a “safe harbor” for JPM’s officers so that they can be assured that they can freely buy influence with no risk of “getting punished.” There epitome of merit-based hiring at JPM’s China operations is based on the answer to the colloquial question: “who’s your daddy?”
Hey, can I get one of those jobs? The extra income would be very welcome–not to mention desperately needed. Doesn’t have to be an important sounding title, I’m not looking for anything grand. Decently remunerative would be terrific.
‘Hey, can I get one of those jobs?’
Terribly sorry, but no.
As with the yacht — where if you have to ask the price, you can’t afford it — if you’re the sort of person who needs the paycheck from one of these jobs, you’re really not our kind of people.
I hope this helps to clarify matters.
But, yeah, great catch here by Bill Black.
“Had he learned nothing from all those years of teaching Hawthorne? Through story after story he’d led his boys to consider the folly of obsession with purity – its roots sunk deep in pride, flowering condemnation and violence against others and self.” Tobias Wolff
So he’s jawboning for a repeal of the Foreign Corrupt Practices Act…..I mean what are the chances that this administration (or any administration in the medium term future) would try to prosecute the masters of the universe under that law?
If the PTBs stay true to themselves, they’ll use the Foreign Corrupt Practices Act to keep the ‘underlings’ in line. You know the drill; some select prosecutions that never come anywhere near the top levels. The U.S. Government did it that way with the Abu Ghraib torture prosecutions. The potential problem with that is that, as in Abu Ghraib, the ‘afflicted ones’ will go on to become your worst enemy. (Can we say, whistleblower ‘informed’ stockholder revolt?)
Most people have considered this a damning admission. Who knew Nixon was establishing a legal precedent that would be applied to the plutocrats as a class?
Who knew at the time that Nixon, in all his corrupt misery, would turn out to be the last truly honest president?
Although, it should be added, there’s evidence out there now that Nixon himself was had at the expense of the truly radical right of his time. What to believe anymore?
Are you making a reference to Russ Baker’s book “Family of Secrets”?
I voted for Nizon, and in spite of all the truly bad things that he did, he remains one of the most progressive Presidents since that time. I always wondered why an operator like Dick Nixon would approve any activities like those at the Watergate Hotel. I knew Nixon wasn’t above acting outside the law, but Watergate seemed so stupid. I couldn’t see Nixon authorizing it. I am and was very much to the left of Nixon. I was appalled at how little control McGovern was able or willing to exert over the chaotic Democratic convention. Although I favored his policies I was concerned that he had no capacity to execute them. Nixon forgot his promises after election, as every president will … the War went on, and on and on to no purpose. Nixon became a tragedy to mimic Richard III, but still, his downfall seems as contrived as any of the assassinations of that time.
Dimon may be the best deal-maker in the world, but his ineptitude at Q&A–apparently, thanks to this piece, even the slow pitch softball variety–is just stunning. He came apart at the seams in the Senate 2 years ago from one question by Sen. Merkley, and not a particularly good question at that. Dimon threw a tantrum and forgot his script from the FCIC hearings, claiming that JPM didn’t “need” bailouts instead of not “seeking” bailouts. (The former is true, the latter isn’t.)
His handlers would have to be completely insane to let the man anywhere near a witness stand in court.
Plutocracy / oligarchy in action.
I can’t believe that Black missed this juicy tidbit:
Dimon: “So if you talk about mortgage, 80% were Bear Stearns and WaMu. There is no one at this company who’s responsible for 80%. And i would tell you we shouldn’t have paid for 80%, but that’s neither here nor there.”
What’s hysterical about that comment, is there is a deposition of a JPMorgan Chase 30(b)(6) designee, Lawrence Nardi, who testifies that “we don’t know what Chase bought from the FDIC. It would be great if there was [a list of loans purchased between FDIC and Chase] but we haven’t been able to find it.”
The 30(b)(6) designee goes on to state that they “looked for something like that for a lot of different litigations” but they have never found anything that provides anyone any proof of what loans were purchased in the WaMu/FDIC/JPMorgan Chase “purchase”.
And another little tidbit about the WaMu/FDIC/JPMorgan Chase purchase:
there also exists another deposition testimony from Jeffrey Thorpe that exposes that there is an undisclosed 118 page addendum to the FDIC/JPMorgan Chase purchase of WaMu that designates Chase with the liabilities of WaMu, which Chase is now trying to dump on the government.
Jamie Dimon is a modern day Dracula, sucking the life-blood from this government and this global economy. Someone needs to drive a wooden stake into his cold, blood-less heart. I will offer up my services to do so for the good of the planet.
Huh? I wasn’t writing about that subject. I have written an entire column taking apart Dimon’s claims about the acquisitions.
Sadly, there is nothing new here. Sorkin has been auditioning for his next role, as the former-journalist-now-Wall Street-protege/heir apparent to one of the masters o/t universe whose knob he has so assiduously been polishing for the last decade – ie, the Felix Rohatyn to Sorkin’s Steven Rattner. The NYT’s business page still has good journalists (Floyd Norris, G. Morgenstern, and sometimes James Stewart) but Sorkin is an embarrassment. He’s like a Maria Bartaromo (sp?) without the penis.
This is sort of ridiculous. In what industry isn’t there nepotism? Bill Black, chill out. Naked Capitalism, please go back to posting about how the oil trade funds ISIS and the grifting of PE.
“But Mom, everyone else is doing it.” would have been more succinct.
Your TINA response to nepotism shows how far down the rabbit hole we are, at least referring to Western social organization. The Western plutocratic families and aspiring newdowells are now holding on to global power via the US MIC. Unless they chose global extinction, the West will lose “economic” supremacy as soon as viable alternative financial structures are in place.
IMO, there are more humans in the world that want to survive in a more just and equitable manner then there are global plutocrats and their hired/brainwashed support. It is going to be hard to suppress 7-8 billion people on any ongoing basis.
And Yves, please keep posting about entitled plutocrats and the way their government bought and enabled hypocrisy undermines mutually beneficial human interchange and interaction.
To the contrary, nepotism — or, put differently, nepotistic preference — sort of makes sense in terms of organizational security. If you run a bank, you depend on your entry level hires to not, like, fuck things up too much. Under that consideration, which candidate can you depend on more with regards to loyalty: (A) a 4.0 GPA, good interviewer, etc. or (B) a 4.0 GPA, good interviewer, but also has a close relative who got him in the door and thus whose reputation said candidate is committed to dignifying? If money — namely the transference thereof — is an exchange of trust, then so too, a smart bank employer wants employees that she knows she can trust.
My point, though, wasn’t even so much to justify corporate favoritism. But, c’mon, this is JPMorgan were talking about, and frankly they do a lot of shit much worse than hiring Some Important Guy’s nephew.
I think Fool makes a point here. I mean, upstream there is a lenghty and fascinating dismissal of “meritocracy” as somewhat delusional. Throw in the reality of how elites have acted throughout history and….
Also, I would like to point out the irony of your assertion that the West will lose economic “supremacy” considering this happened in China…
And to think, the Foreign Corrupt Practices Act is worded SO STERNLY….! Why does the US even have FCPA legislation…never could figure that one out.
Those jobs may look great but look at all the bankers from Chase that have their careers end in so called suicides. Those need to be looked into.