JPMorgan Chase CEO Jamie Dimon recently said that he felt safer in Lebanon than he did when Occupy marched past his house. If nothing else, it proves that Wall Street bankers haven't gotten any better at risk management -- the art of knowing where danger lies and avoiding it -- than they were when their bad bets crashed the economy and caused the Great Recession.
But then we knew that already, didn't we? After all, Chase is one of five too-big-to-fail banks that could lose $80 billion or more from their poorly-thought-out risk-taking in Europe's most troubled countries. The risky behavior shouldn't surprise anyone, though. These banks know -- or at least believe -- that their too-big-to-fail status means we'll rescue them again when they make the next devastating set of blunders.
What's really striking about comments like these is the fact that executives at America's big banks never seem to worry when police cars approach their houses. Their biggest fear is that that they might glimpse a sign or hear the sound of a mic check reverberating faintly through well-aged brick walls.
Consider JPMorgan Chase, the institution run by Mr. Dimon. To call his bank "scandal-plagued" would be putting it mildly. Chase has settled six fraud cases with the SEC over the last 13 years, and is implicated in several ongoing investigations, including the two most notorious fraud cases of our time. At any other moment in history the headlines would be screaming with various combinations of the words "JPMorgan Chase," "fraud," "probe," "drop," mistakes," "disaster," "incompetence," and "scandal."
But these aren't normal times. The public has come to expect that bankers will commit fraud, and that the government will ignore it. They've come to expect that banks will make bad loans, and that the governments of the world will rescue them by making life more difficult for ordinary people.
Money for Nothing
The public has also come to expect that bankers' compensation won't even be tied to the most basic performance measurements. A case in point is Mr. Dimon himself. He earned -- excuse me, a more accurate word would be "received" - roughly $23 million in compensation in 2010. Presumably he was being rewarded for persuading the taxpayer to offer handouts to his bank and others, since that was the only reason any Wall Street bank was still in existence.
But in 2011 the value of JPMorgan's stock fell 17 percent and the bank's credit was downgraded. How much did Mr. Dimon receive? Roughly $23 million. Pay-for-performance? We report, you decide.
(A side comment: As a proud Occupy type, I'm not comfortable with actions that involve anybody's home. Occupy is a proudly peaceful movement, but that doesn't mean people aren't uncomfortable when the place where they live winds up in the spotlight. I've been as tough on him as anyone, but Jamie Dimon has as much of a right to privacy as anyone else. It might make a good proposal for your next General Assembly: Leave people's homes out of any future actions.)
They Stand Accused
Meanwhile back on Wall Street the scandal train rolls on, and JPMorgan Chase holds a first-class ticket. Here are the latest charges and accusations to cross the bank's scandal-plagued portal:
- The trustee for people who were ripped off by Bernie Madoff is seeking to overturn a judge's ruling and reinstate action against JPM, citing evidence that it knew of Madoff's fraud and concealed it from others;
- Chase was naive -- at best -- when it lent money to now-disgraced MF
Global, which illegally bet its investors' money and lost. Now it's jumping the line of creditors
-- most of them victims of massive fraudulent mismanagement it didn't
seem to notice -- by filing a lien which would give it preferential
treatment over MF Global's victims;
- JPM is part of an investigation into currency trade rigging in Canada. According to Bloomberg News,
"Canadian officials were informed that HSBC Holdings Plc (HSBA),
JPMorgan Chase & Co., Citigroup Inc., Deutsche Bank AG, Royal Bank
of Scotland Group Plc, ICAP Plc (IAP) and RP Martin Holdings Ltd. took
part in the scheme. Employees at the banks agreed to make artificially
high or low submissions for Yen Libor to improve the outcomes of trades
tied to the rate, the Canadian regulator said."
- A bond insurer is suing a JPMorgan Chase division for fraudulently misrepresenting the mortgage-backed securities it was insuring;