The Monitor's View:
“A survey released last week by the Pew Hispanic Center found more than four in 10 Mexicans are willing to leave their country to live in the US. One in five would risk a dangerous, illegal border crossing. Most surprising, one in three college graduates wants to flee. Before Washington takes up immigration reform this fall, it needs to take a hard look at Mexico's disillusionment.” ---- Christian Science Monitor
OBAMA and his CRIMINAL BANKSTERS –
THERE IS A REASON WHY THE BANKSTERS INVESTED SO HEAVILY IN BARACK OBAMA, ONE OF
THE MOST CORRUPT PRESIDENTS IN AMERICAN HISTORY.
NO PRESIDENT IN HISTORY TOOK SO
MUCH DIRTY MONEY FROM BANKSTERS THAN BARACK OBAMA. DURING HIS FIRST TWO YEARS
THE BANKS LOOTED MORE PROFITS THAN ALL EIGHT UNDER BUSH!
“I’m not here to punish banks!”
Barack Obama – Floor of the Senate – STATE of the UNION MESSAGE.
“Gretchen Morgenson, in a New York Times op-ed entitled
“Surprise, Surprise: The Banks Win,” wrote: “If you were hoping that things
might be different in 2013—you know, that bankers would be held responsible for
bad behavior or that the government might actually assist troubled
homeowners—you can forget it.”
the pittance of a settlement, a fraction of the billions taken in by the banks
from the sub-prime mortgage racket, the Obama administration is once again
letting the banks get away with massive crimes that have had devastating social
consequences, while giving them a green light to continue similar practices.”
Another sweetheart bank settlement on mortgage
By Andre Damon
9 January 2013
Ten major financial firms agreed on Monday to pay $3.3 billion in
cash to settle allegations of mortgage fraud by the Office of the Comptroller
of the Currency (OCC) in the latest in a string of sweetheart settlements
between the major Wall Street banks and their nominal regulators. As usual,
there were no criminal charges and no bank officials were held accountable.
The settlement, which nominally totals $8.5 billion, includes $3.3
billion in direct payments to borrowers and $5.2 billion in loan modifications
and other forms of “borrower assistance” left largely at the discretion of the
The settlement with the OCC, a branch of the Treasury Department,
relates to widespread fraud committed by the banks in their rush to foreclose
on as many homes as possible in 2009 and 2010. To expedite the foreclosure
process, the banks had employees or contractors sign off on thousands of
mortgage documents every month, swearing that they had intimate knowledge of
their contents when in reality they had not even read them.
In many cases,
banks illegally imposed fees on targeted homeowners or failed to inform them of
In concluding the
pittance of a settlement, a fraction of the billions taken in by the banks from
the sub-prime mortgage racket, the Obama administration is once again letting
the banks get away with massive crimes that have had devastating social
consequences, while giving them a green light to continue similar practices.
In all the
scandals relating to the banks’ criminality in the run-up to and aftermath of
the 2008 financial crisis, the government has deliberately avoided bringing
cases to trial. This is not only to protect the banks’ activities from further
public scrutiny, but also to cover up regulators’ complicity in facilitating
the banks’ illegal activities.
The number of households that will get a share of the $3.3 billion
in payouts, averaging $868 for each of the 3.8 million borrowers whose homes
were in foreclosure in 2009 and 2010, has not been disclosed. Under previous
guidelines issued by the federal government, homeowners who were put in
foreclosure but were not really in default would theoretically receive $15,000
and a reversal of the foreclosure, or $125,000 if a reversal was not possible.
The actual amounts that are ultimately paid out could be far lower.
The settlement puts to an end the “Independent Foreclosure Review”
imposed as a regulatory action by the OCC on fourteen banks in April 2011.
Under the program, banks paid contractors to examine each claim of improper
foreclosure. The cost to the banks had reached $1.5 billion when the government
agreed to end the investigation.
With the new settlement, the banks themselves are left to
determine where abuses took place, with only a handful of cases to be examined
Comptroller of the Currency Thomas Curry sought in a press
conference Monday to present the settlement as a means of getting money to
consumers as soon as possible. “When we began the Independent Foreclosure
Review, the OCC pledged to fix what was broken, identify who was harmed, and
compensate them for that injury,” Curry said. “While today’s announcement
represents a significant change in direction,” he continued, “it meets those
original objectives by ensuring that consumers are the ones who will benefit.”
The settlement prompted an outpouring of denunciations from
consumer advocates and even some media commentators. “The regulators have
decided to replace the fox in the henhouse with the wolf,” commented John
Taylor, head of the National Community Reinvestment Coalition, a community
development nonprofit. “It is just incomprehensible to me that they could not
find a third party that has the wherewithal and independence to fairly
determine what the damage is to homeowners.”
Morgenson, in a New York Times op-ed entitled “Surprise, Surprise: The
Banks Win,” wrote: “If you were hoping that things might be different in
2013—you know, that bankers would be held responsible for bad behavior or that
the government might actually assist troubled homeowners—you can forget it.”
includes Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, MetLife Bank,
PNC, Sovereign, SunTrust, US Bank and Aurora. Four other banks that were
included in the investigation refused to take part in the settlement.
The settlement by the OCC is of a piece with the agreement
announced last February between 49 state governments and five top Wall Street
banks over similar types of mortgage fraud. In last year’s settlement, the
federal government put pressure on state attorneys general to wind down their
investigation into criminal abuses by the banks, leaving them to pay only $5
billion in payouts and a largely meaningless $17 billion in mortgage
Under the de facto protection of the government agencies that
are supposed to police them, the banks are allowed to violate securities and
other laws knowing that they can treat any fines that may eventually be imposed
as part of the cost of doing business.
The same applies to the settlement also announced Monday between
Bank of America and the government-sponsored mortgage finance giant Fannie Mae,
in which the bank will pay $3.55 billion to Fannie and buy back 30,000
low-performing mortgages for $6.75 billion.
The settlement covers allegations that Countrywide Financial,
bought by Bank of America in 2008, knowingly sold Fannie Mae toxic mortgages
that produced billions of dollars of losses. The loans were made between 2000
and 2008 and were originally valued at $1.4 trillion. The collapse of these
assets triggered a $116 billion government bailout of Fannie and helped
precipitate the financial crisis that led to the loss of millions of jobs.
The deal follows a similar 2010 agreement in which Bank of America
repurchased $2.87 billion of bad loans from Fannie’s fellow government-backed
mortgage company, Freddie Mac.
More than four years after the financial crash of September 2008,
not a single top Wall Street executive has been criminally prosecuted.
NO PRESIDENT IN HISTORY HAS TAKEN MORE LOOT FROM CRIMINAL
BANKSTERS THAN BARACK OBAMA! WHILE HIS DOJ IS OUT HARASSING LEGALS ON BEHALF OF
OBAMA’S LA RAZA PARTY BASE OF ILLEGALS, THE BANKSTER GO UNPUNISHED!
DURING OBAMA’S FIRST TWO YEARS ALONE, HIS CRIMINAL
BANKSTERS’ PROFITS SOARED GREATER THAN ALL EIGHT UNDER BUSH!
BANKSTERS’ PROFITS AND CRIMES ARE SOARING… so are
Records show that four out of Obama's top five contributors
are employees of financial industry giants - Goldman Sachs ($571,330), UBS AG
($364,806), JPMorgan Chase ($362,207) and Citigroup ($358,054).
Consider the Obama administration's choices for the four
most important positions in financial sector law enforcement. The attorney
general (Eric Holder) and the head of the Justice Department's criminal
division (Lanny Breuer) both come to us from Covington & Burling,
a law firm that represents and lobbies for most of the major banks and their
industry associations; indeed Breuer was co-head of its white collar criminal
defense practice, and represented the Moody's rating agency in the Enron case.
Mary Schapiro, the head of the SEC, spent the housing bubble in charge of
FINRA, the investment banking industry's "self-regulator," which gave
her a $9 million severance for a job well
done. And her head of enforcement, perhaps most stunningly of all, is Robert
Khuzami, who was general counsel for
Deutsche Bank's North American business during the entire bubble. So zero
prosecutions isn't much of a surprise, really.
Banking Is a
Criminal Industry Because Its Crimes Go Unpunished
just this month's news in financial services.
Barclay's has been manipulating the Libor, the main interest rate upon which
most other interest rates and financial transactions are based, since 2005.
Moreover, Barclay's traders were colluding with traders in many other banks to
assist them in manipulating the Libor too, so that they could all profit from
their bets on it.
JP Morgan Chase is having a really great month. Recent reports describe how it
is resisting Federal subpoenas related to
price-fixing in U.S. electricity markets. It is also accused (by former
employees among others) of deliberately inflating the performance of its
investment funds to obtain business. And finally, JP Morgan's failed "London
trade, which has now cost over $5 billion, is being investigated to determine
whether the loss was initially concealed from regulators and the public.
HSBC is paying a fine because it allowed
hundreds of millions, perhaps billions, of dollars of money laundering by rogue
states and sanctioned firms, including some related to terrorist activities and
Iran's nuclear efforts. But HSBC is only one of at least 12 banks now known to
have tolerated, and in some cases aggressively courted, money laundering by
rogue states, terrorist organizations, corrupt dictators, and major drug
cartels over the last decade. Others include Barclay's, Lloyds, Credit Suisse,
and Wachovia (now part of Wells Fargo). Several of the banks created special
handbooks on how to evade surveillance, created special business units to
handle money laundering, and actively suppressed whistleblowers who warned of
drug cartel activities.
a new private lawsuit cites documents indicating that Morgan
Stanley successfully pressured rating agencies into inflating the ratings of
mortgage-backed securities it issued during the housing bubble.
Visa and Mastercard have just agreed
to pay $7
billion to settle a private antitrust case filed by thousands of merchants, who
alleged that Visa and Mastercard colluded to fix fees and terms of service.
another month in financial services. Is it unusual? No, it's not. If we go back
just a little further, we have UBS, HSBC, Julius Baer, and other banks actively
marketing tax evasion services to wealthy U.S. and European citizens. We have
senior executives of several banks (including JP Morgan Chase and UBS) strongly
suspecting that Bernard Madoff was running a Ponzi scheme, but deciding to make
money from him rather than turn him in. And then, of course, we have the
financial crisis and everything that led to it. As I show in great detail in my
we now possess overwhelming evidence of massive securities fraud, accounting
fraud, perjury, and criminal Sarbanes-Oxley violations by mortgage lenders,
investment banks, and credit insurers (including senior executives of
Countrywide, Citigroup, Morgan Stanley, Goldman Sachs, Bear Stearns, AIG, and
Lehman Brothers) during the housing bubble that caused the financial crisis. If
we go back to the late 1990s, we have the massively fraudulent hyping of
Internet stocks, and several banks (including Merrill Lynch and Citigroup)
actively aiding Enron in committing its frauds.
July 2012 really isn't abnormal at all. The reason for this is very simple.
Over the past two decades, the financial services industry has become a
pervasively unethical and highly criminal industry, with massive fraud
tolerated or even encouraged by senior management. But how did that happen?
deregulation helped, of course. But something else was far more important. It
is the one critical factor that unites all of the episodes cited above,
including those of this month. This critical unifying factor is the total
number of criminal prosecutions of major firms and senior executives as a
result of all of these crimes combined.
what is that number?
zero. A number that neither President Obama nor Mitt Romney shows the slightest
interest in changing.
the Obama administration's choices for the four most important positions in
financial sector law enforcement. The attorney general (Eric Holder) and the
head of the Justice Department's criminal division (Lanny Breuer) both come to
Covington & Burling, a law firm that represents and lobbies for most of the
major banks and their industry associations; indeed Breuer was co-head of its
white collar criminal defense practice, and represented the Moody's rating
agency in the Enron case. Mary Schapiro, the head of the SEC, spent the housing
bubble in charge of FINRA, the investment banking industry's
"self-regulator," which gave her a $9
million severance for a job well done. And her head of enforcement, perhaps
most stunningly of all, is Robert Khuzami, who was general
for Deutsche Bank's North American business during the entire bubble. So zero
prosecutions isn't much of a surprise, really.
contrast, what do you think would happen to you if, as a lone individual, you
were caught supporting Iran's nuclear program? Do you think that you would get
off with a "deferred prosecution agreement" and a fine equal to a few
percent of your annual salary? No?
that's because you don't live right. You probably haven't been to the White
House a dozen times since President Obama took office, or attended White House
state dinners, like Lloyd Blankfein has. Nor have you probably overseen
millions of dollars in lobbying and campaign donations, or hired senior
administration officials, or sent your executives into the government in senior
regulatory positions, or paid $135,000 for a speech by someone who later became
chairman of the National Economic Council. And, well, you get the law
enforcement that you pay for.
PRESIDENT IN HISTORY HAS TAKEN MORE MONEY FROM BANKSTERS THAN BARACK OBAMA!
response of the White House was to do absolutely nothing. Not a single senior
bank executive has been criminally charged, let alone imprisoned, for crimes
that have devastated the lives of countless millions of people in the US and
around the world. Instead, the White House has shielded the corporate
An insider’s view of Wall Street
15 March 2012
Smith, an executive director at Goldman Sachs, announced his resignation
Wednesday in an op-ed piece in the New York Times, denouncing the bank's
“toxic” culture of avarice and fraud.
headed the firm’s United States equity derivatives business in Europe, the
Middle East and Africa. In his column, entitled “Why I Am Leaving Goldman
Sachs,” he describes a corporate environment that encourages and rewards big
short-term returns gained through the bilking of clients and the general
public. “It makes me ill how callously people talk about ripping their clients
off,” he writes.
of one’s clients as “muppets” and describing deal-making as “ripping eyeballs
out” are commonplace at Goldman, according to Smith. The way to advance at the
Wall Street giant, he writes, is to persuade your clients “to invest in the
stocks or other products that we are trying to get rid of,” get your clients
“to trade whatever will bring the biggest profit to Goldman,” and trade “any
illiquid, opaque product with a three-letter acronym.”
column describes an operation in which laws and regulations requiring financial
institutions to deal honestly with their clients and protect their interests
are routinely violated. The insider’s indictment of Goldman Sachs highlights a
broader process—the criminalization of American capitalism as a whole.
It confirms from the inside that three-and-a-half years
after Wall Street’s manic pursuit of super-profits triggered a global financial
meltdown and the deepest slump since the Great Depression, nothing has changed
in the boardrooms of corporate America. The same fraudulent and often illegal
practices that enriched the financial aristocracy and plundered the rest of
society continue unabated. The criminals at the top, having been bailed out
with trillions of taxpayer funds, are making more money than ever, while
millions of ordinary people are being driven into poverty and homelessness.
Education, health care, pensions are being gutted, wages are
being slashed and more austerity is on the agenda because there is supposedly
“no money.” Corporate profits and CEO pay, meanwhile, are setting new records.
This is an indictment not
simply of Goldman Sachs, or even Wall Street alone, but rather the entire
economic and political system. Every official institution—the White House,
Congress, the courts, the media, the Democratic and Republican parties—is
column was widely reported in the media. NBC Nightly News led its report
Wednesday night with the story, interviewing a former chairman of the
Securities and Exchange Commission who was brought on to deplore the type of
practices described by the former Goldman executive. The ruling class is well
aware that popular anger against Wall Street is rising and capitalism itself is
becoming increasingly discredited in the eyes of millions of Americans—a
process that found an initial expression in the Occupy Wall Street protests. It
is concerned that Smith’s piece will further fuel this sentiment.
practices to which Smith points—and worse—are well known to the Obama
administration and the financial regulatory agencies. In April of last year,
the Senate Permanent Subcommittee on Investigations published a 640-page report
outlining in detail the fraudulent and illegal practices of major banks that
contributed to the September 2008 crash. Fully 260 pages of that report were
devoted to Goldman Sachs. They explained chapter and verse, giving dates and
naming names, how the bank defrauded its clients by selling them mortgage
securities while betting against the same investments, without telling them it
was doing so.
The committee also documented
the complicity of the credit rating firms and federal regulators in the
colossal mortgage Ponzi scheme that collapsed in 2007-2008, setting off a new
world depression. It cited securities laws that had been violated by Goldman
and two other banks it examined, Washington Mutual and Deutsche Bank, and
referred this information to the Obama administration’s Justice Department.
The response of the White
House was to do absolutely nothing. Not a single senior bank executive has been
criminally charged, let alone imprisoned, for crimes that have devastated the
lives of countless millions of people in the US and around the world. Instead,
the White House has shielded the corporate criminals.
Wall Street firm after another—Goldman Sachs, Bank of America, Citigroup,
Countrywide Financial—has been allowed to settle charges filed by the
Securities and Exchange Commission out of court, paying token fines while
admitting no wrongdoing.
That this continues is seen in the filing Monday in federal court of the
sweetheart settlement between five major banks and the state and federal
governments of charges arising from the banks’ illegal processing of
foreclosures. The banks have merely to pay a combined fine of $5 billion for
illegally throwing thousands of families out of their homes, with no admission
of wrongdoing. In return, they get the quashing of state investigations that
threatened to result in tens of billions in damages and fines.
Not only does the Obama administration protect the Wall
Street criminals, it includes their representatives among its top personnel. To
cite some examples:
* Mark Patterson, a former Goldman Sachs lobbyist, is the
chief of staff to Treasury Secretary Timothy Geithner.
* Dianna Farrell, former financial analyst at Goldman Sachs,
is deputy director of the National Economic Council.
* Jacob Lew, Obama’s chief of staff, was a top executive at
Citigroup. He follows two other bankers chosen by Obama to head his White House
operations—former JPMorgan executive William Daley and former Chicago
investment banker Rahm Emanuel.
criminalization of the American corporate-financial elite cannot be separated
from the capitalist system itself. It is the product of a decades-long process
of crisis and decay, in which the ruling elite has increasingly separated its
wealth-making from the production of real value.
and the productive infrastructure have been decimated, while financial
manipulation and speculation have come to dominate economic life. The working class has suffered a
catastrophic decline in its social position at the same time that a parasitic
financial aristocracy has come to exercise a de facto dictatorship over the
all aristocracies, the American financial elite will not accept any
infringement of its wealth and power. The working class must break its grip by
mobilizing its strength in opposition to both parties of Wall Street and
fighting for the establishment of a workers’ government and socialist policies,
beginning with the nationalization of the banks and corporations and their
transformation into public enterprises under the democratic control of the
BANKSTER-OWNED PRESIDENT PROMISED HIS CRIMINAL BANKSTER DONORS NO real
REGULATION, NO PRISON TIME, AND UNLIMITED PILLAGING OF THE NATION’S ECONOMY!
THE DEVASTATION THESE BANKSTERS HAVE CAUSED AMERICANS, THEIR PROFITS SOARED
GREATER DURING OBAMA’S FIRST TWO YEARS, THAN ALL EIGHT UNDER BUSH. SO HAVE
Records show that
four out of Obama's top five contributors are employees of financial industry
giants - Goldman Sachs ($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207)
and Citigroup ($358,054).
“Barack Obama's favorite banker faces losses
of $2 billion and possibly more -- all because of the complex,
now-you-see-it-now-you-don't trading in exotic financial instruments that he
has so ardently lobbied Congress not to regulate.”
JPMorgan's Loss a Canary in a Coal Mine?
05/16/2012 4:49 pm
sound of shattered glass you've been hearing is the iconic portrait of Jamie
Dimon splintering as it hits the floor of JPMorgan Chase. As the Good Book
says, "Pride goeth before a fall," and the sleek, silver-haired,
too-smart-for-his-own-good CEO of America's largest bank has been turning every
television show within reach into a confessional booth. Barack Obama's favorite banker faces losses
of $2 billion and possibly more -- all because of the complex,
now-you-see-it-now-you-don't trading in exotic financial instruments that he
has so ardently lobbied Congress not to regulate.
again, doing God's work -- that is, betting huge sums of money with depositor
funds knowing that you are too big to fail and can count on taxpayers riding to
your rescue if your avarice threatens to take the country down -- has lost some
of its luster. The jewels in Dimon's crown sparkle with a little less
grandiosity than a few days ago, when he ridiculed Paul Volcker's ideas for
keeping Wall Street honest as "infantile."
find out more about what this all means, I turned to Simon Johnson, once chief
economist of the International Monetary Fund and now a professor at MIT's Sloan
School of Management and senior fellow at the Peterson Institute for
International Economics. He and his colleague James Kwak founded the
now-indispensable website baselinescenario.com. They co-authored the
bestselling book 13 Bankers and a most recent book, White House Burning, an account every citizen should read to understand how the
national deficit affects our future.
Chase began to collapse because of risky betting, would the government be
forced to step in again?
Absolutely, Bill. JPMorgan Chase is too big to fail. Hopefully in the future we
can move away from this system, but right now it is too big. It's about a $2.5
trillion dollar bank in terms of total assets. That's roughly 20 percent of the
U.S. economy, comparing their assets to our GDP. That's huge. If that bank were
to collapse -- I'm not saying it will -- but if it were to collapse, it would
be a shock to the economy bigger than that of the collapse of Lehman Brothers,
and as a result, they would be protected by the Federal Reserve. They are
exactly what's known as too big to fail.
I was just
looking at an interview I did with you in February
of 2009, soon after the collapse of 2008 and you said, and I'm quoting,
"The signs that I see... the body language, the words, the op-eds, the
testimony, the way these bankers are treated by certain congressional
committees, it makes me feel very worried. I have a feeling in my stomach that
is what I had in other countries, much poorer countries, countries that were
headed into really difficult economic situations. When there's a small group of
people who got you into a disaster and who are still powerful, you know you
need to come in and break that power and you can't. You're stuck." How do
you feel about that insight now?
Johnson: I'm still nervous, and I
think that the losses that JPMorgan reported -- that CEO Jamie Dimon reported
-- and the way in which they're presented, the fact that they're surprised by
it and the fact that they didn't know they were taking these kinds of risks,
the fact that they lost so much money in a relatively benign moment compared to
what we've seen in the past and what we're likely to see in the future -- all
of this suggests that we are absolutely on the path towards another financial
crisis of the same order of magnitude as the last one.
Dimon resign? I ask that because as you know and as we've discussed, Chase and
other huge banks have been using their enormous wealth for years to, in effect,
buy off our politicians and regulators. Chase just had to
pay up almost
three quarters of a billion dollars in settlements and surrendered fees to
settle one case alone, that of bribery and corruption in Jefferson County,
Alabama. It's also paid out billions of dollars to settle other cases of
perjury, forgery, fraud and sale of unregistered securities. And these charges
were for actions that took place while Mr. Dimon was the CEO. Should he resign?
Johnson: I think, Bill, there should
be an independent investigation into how JPMorgan operates both with regard to
these losses and with regard to all of the problems that you just identified.
This investigation should be conducted separate from the board of directors.
Remember that the shareholders and the board of directors absolutely have an
incentive to keep JPMorgan Chase as a too-big-to-fail bank. But because it is
that kind of bank, its downside risk is taken by the Federal Reserve, by the
taxpayer, by the broader economy and all citizens. We need to have an
independent, detailed, specific investigation to establish who knew what when
and what kind of wrongdoing management was engaged in. On the basis of that,
we'll see what we'll see and who should have to resign.
Moyers: Dimon is also on the board
of the Federal Reserve Bank of New York, which, as everyone knows is supposed
to regulate JPMorgan. What in the world are bankers doing on the Fed board,
Johnson: This is a terrible
situation, Bill. It goes back to the origins, the political compromise at the
very beginning of the Federal Reserve system about a hundred years ago. The
bankers were very powerful back then, also, and they got a Federal Reserve
system in which they had a lot of representation. Some of that has eroded over
time because of previous abuses, but you're absolutely right, the prominent
bankers, including most notably, Jamie Dimon, are members of the board of the
New York Federal Reserve, a key element in the Federal Reserve system. And he
should, under these circumstances, absolutely step down from that role. It's
completely inappropriate to have such a big bank represented in this fashion.
The New York Fed claims there's no impropriety, there's no wrong doing and he
doesn't involve himself in supervision and so on and so forth. Perhaps, but why
does Mr. Dimon, a very busy man, take time out of his day to be on the board of
the New York fed? He is getting something from this. It's a trade, just like
everything else on Wall Street.
Moyers: He dismissed criticism of
his dual role yesterday by downplaying the role of the Fed board. He said it's more like an
"advisory group than anything else." I had to check my hearing aid to
see if I'd heard that correctly.
Johnson: Well, I think he is advising
them on lots of things. He also, of course, meets with some regularity with top
Treasury officials, and some reports say that he meets with President Obama
with some regularity. The political access and connections of Mr. Dimon are
second to none. One of his senior executives was until recently chief of staff
in the White House, if you can believe that. I really think this has gone far
enough. Under these kinds of circumstances with this amount of loss of control
over risk management, what we need to have is Mr. Dimon step down from the New
York Federal Reserve Board.
Moyers: He told shareholders at
their annual meeting Tuesday -- they were meeting in Tampa, Florida -- that these
"self-inflicted mistakes" that "should never have
happened." Does that seem reasonable to you?
Johnson: Well, it's all very odd,
Bill, and I've talked to as many experts as I can find who are at all informed
about what JPMorgan was doing and how they were doing it and nobody really
understands the true picture. That's why we need an independent investigation
to establish -- was this an isolated incident or, more likely, the breakdown of
a system of controlling and managing risks. Keep in mind that JPMorgan is
widely regarded to be the best in the business at risk management, as it is
called on Wall Street. And if they can't do this in a relatively benign moment
when things are not so very bad around the world, what is going to happen to
them and to other banks when something really dramatic happens, for example, in
Europe in the eurozone?
Moyers: Some of his supporters are
claiming that only the bank has lost on this and that there's absolutely no
chance that the loss could have threatened the stability of the banking system
as happened in 2008. What do you say again to that?
Johnson: I say this is the canary in
the coal mine. This tells you that something is fundamentally wrong with the
way banks measure, manage and control their risks. They don't have enough
equity funding in their business. They like to have a little bit of equity and
a lot of debt. They get paid based on return on equity, unadjusted for risk. If
things go well, they get the upside. If things go badly, the downside is
someone else's problem. And that someone else is you and me, Bill. It goes to
the Federal Reserve, but not only, it goes to the Treasury, it goes to the
Congressional Budget Office estimates that the increase in debt relative to GDP
due to the last crisis will end up
percent of GDP, call that $7 trillion dollars, $7.5 trillion dollars in today's
money. That's extraordinary. It's an enormous shock to our fiscal accounts and
to our ability to pay pensions and keep the healthcare system running in the
future. For what? What did we get from that? Absolutely nothing. The bankers
got some billions in extra pay, we get trillions in extra debt. It's unfair,
it's inefficient, it's unconscionable, and it needs to stop.
Moyers: Wasn't part of the risk that
Dimon took with taxpayer guaranteed deposits? I mean, if I had money at
JPMorgan Chase, wouldn't some of my money have been used to take this risk?
Johnson: Again, we don't know the
exact details, but news reports do suggest that yes, they were gambling with
federally insured deposits, which just really puts the icing on the cake here.
Moyers: Do we know yet what is
Dimon's culpability? Is it conceivable to you that a risk this big would have
been incurred without his approval?
Johnson: It seems very strange and
quite a stretch. And he did tell investors, when he reported on first quarter
earnings in April, that he was aware of the situation, aware of the trade -- he
"tempest in a teacup," and, therefore, not something to worry about.
Moyers: He's been Wall Street's
point man in their campaign against tighter regulation of derivatives and
proprietary trading. Were derivatives at the heart of this gamble?
Johnson: Yes, according to reliable
reports, this was a so-called "hedging" strategy that turned out to
be no more than a gamble, but the people involved perhaps didn't understand
that or maybe they understood it and covered it up. It was absolutely about a
bet on extremely complex derivatives and the interesting question is who failed
to understand exactly what they were getting into. And how did Jamie Dimon, who
has a reputation that he burnishes more than anybody else for being the number
one expert risk manager in the world -- how did he miss this one?
Moyers:I've been reading a lot of
stories today about members of the House, Republicans in particular, saying
this doesn't change their opinion at all that we've got to still diminish
regulation. What do you think about that?
Johnson: I think that it is a recipe
for disaster. Look, deregulating or not regulating during the boom is exactly
how you get into bailouts in the bust. The goal should be to make all the banks
small enough and simple enough to fail. End the government subsidies here. And
when I talk to people on the intellectual right, Bill, they get this, as do
people on the intellectual left. The problem is, the political right largely
doesn't want to go there because of the donations. I'm afraid some people, not
all, but some people on the political left don't want to go there either.
Moyers: The Washington Post
reported that the Justice Department has launched a criminal investigation
into JPMorgan's trading loss. Have you spotted -- and I know this is sensitive
-- but have you spotted anything in the story so far that suggests the
possibility of criminality? Dodd-Frank is not in existence yet, so where would
any possibility of criminality come from?
Johnson: Well Dodd-Frank is in
existence but the rules have not been written and therefore not implemented. So
yes, it is hard to violate those rules in their current state. And many of
those rules, by the way, violation would be a civil penalty, not a criminal
penalty. If you violate a securities law -- if you've mislead investors, if
there was material adverse information that was not disclosed in an appropriate
and timely manner -- that's a very serious offence traditionally.
have to say that the Department of Justice and the Securities and Exchange
Commission have not been very good at enforcing securities law in recent years,
including and specifically since the financial crisis. I am skeptical that this
will change. But if they have an investigation that reveals all of the details
of what happened and how it happened, that would be extremely informative and
show us, I believe, that the risk management approach and attitudes on Wall
Street are deeply flawed and leading us towards a big crisis.
Moyers: So what are people to do,
Simon? What can people do now in response to this?
Johnson: Well, I think you have to
look for politicians who are proposing solutions, and look on the right and on
the left. I see Elizabeth Warren, running for the Senate in Massachusetts, who
is saying we should bring back Glass-Steagall to separate commercial banking
from investment banking. I see Tom Hoenig, who is not a politician, he's a
regulator, he's the former president of the Kansas City Fed, and he's now one
of the top two people at the Federal Deposit Insurance Corporation, the FDIC.
He is saying that big banks should no longer have trading desks. That's the
same sort of idea that Elizabeth Warren is expressing. We need a lot more
people to focus on this and to make this an issue for the elections.
I would say in this context, Bill, it's very important not to be distracted. I
understand for example, Speaker Boehner, the Republican Speaker of the House of
Representatives, is proposing to have another conflict over the debt ceiling in
the near future. This is the politics of distraction. This is refusing to
recognize that a huge part of our fiscal problems today and in the future are
due to these risks within the financial system that are allowed because the
people running the biggest banks hand out massive campaign contributions across
the political spectrum.
Moyers: Are you saying that this
financial crisis, so-called, is at heart a political crisis?
Johnson: Yes, exactly. I think that a
few people, particularly in and around the financial system, have become too
powerful. They were allowed to take a lot of risk, and they did massive damage
to the economy -- more than eight million jobs lost. We're still struggling to
get back anywhere close to employment levels where we were before 2008. And
they've done massive damage to the budget. This damage to the budget is long
lasting; it undermines the budget when we need it to be stronger because the
society is aging. We need to support Social Security and support Medicare on a
fair basis. We need to restore and rebuild revenue, revenue that was absolutely
devastated by the financial crisis. People need to understand the link between
what the banks did and the budget. And too many people fail to do that.
"Oh, it's too complicated. I don't want to understand the details, I don't
want to spend time with it." That's a mistake, a very big mistake. You're
playing into the hands of a few powerful people in the society who want private
benefit and social loss.
Why hasn’t Obama been impeached?
His violations of our borders laws, inducing illegals to vote, sabotage of jobs
for Americans, connections to criminal banksters…. WHAT DOES IT TAKE?
NO WORKS IN THE CORRUPT OBAMA WHITE HOUSE THAT IS NOT
CONNECTED TO THE BANKSTERS THAT OWN OBAMA, OR THE MEXICAN FASCIST PARTY of LA
THE REASON OBAMA BROUGHT IN DALEY WAS BECAUSE WAS FROM
JPMORGAN, AND AN ADVOCATE FOR OPEN BORDERS.
For much of
Obama’s tenure, Jamie Dimon was known as the White House’s “favorite banker.”
According to White House logs, Dimon visited the White House at least 18 times,
often to talk to his former subordinate at JPMorgan, William Daley, who had
been named White House chief of staff by Obama after the Democratic rout in the
PROMISED HIS CRIMINAL BANKSTER DONORS NO PRISON TIME AND NO REAL REGULATION.
DID HE DELIVER?
The JPMorgan scandal also
throws into relief the government’s failure to prosecute those responsible for
the 2008 financial meltdown. Despite overwhelming evidence of wrongdoing and
criminality uncovered by two federal investigations last year, those
responsible have been shielded from prosecution.
Records show that four out of Obama's
top five contributors are employees of financial industry giants - Goldman Sachs
($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207) and Citigroup