By James Corbett
If you or I were in charge of a company that managed to lose $6 billion in six weeks and send shock waves through the global credit market, I imagine we'd be a bit sheepish about it. We might even blush and admit to being a bad manager. Or even resign.
Not so Jamie Dimon, CEO of JPMorgan Chase, one of the largest financial institutions in the world, which has so far had to write off nearly $6 billion in losses on a complex derivatives position that went sour over a six week period earlier this year. There is still the possibility that the DOJ, the SEC and other regulators could file civil fraud charges in the case if employees are found to have participated in reporting fudged financials. To make matters worse, JPMorgan Chase is now under investigation for its part in the LIBOR rate-fixing scandal, the largest scandal in financial history that we detailed in these pages a few weeks ago. Surely, these are dark days for the once mighty giant of the financial world.
But you wouldn't know that from the way Jamie Dimon is acting. Earlier this week New York Magazine published a head-scratching portrait of the Wall Street bigshot that paints him as a man almost clinically unhinged from the gravity of his position. So far his four-letter assertion that it's a “free f***ing country” has garnered the most attention, but there's plenty of crazy to go around in this profile. Like his evangelizing to a room full of student summer interns about the inherent goodness of the banks in general and JPMorgan in particular:
“I don’t buy this thing that our industry is responsible for all the ills of the world. We have great people at JPMorgan Chase. We operate with a lot of rigor. Our clients are happy with us. Sure, we make mistakes, like we have got this Whale thing. Businesses make mistakes. So we’ve got to clean them up, learn from them, and get better.”
Sure, Jamie. Tell that to the people your robo-signers foreclosed on. Or the new investigation into the robo-signing of credit card debt documents. But wait, it gets worse. Here's Jamie on the question of whether he ever considered resigning:
“No. People and companies make mistakes. I guarantee we’ll make a mistake next quarter. So what? Businesses make mistakes. Hopefully smaller, and fewer.”
Whether or not these are Dimon's sincere beliefs, it's almost impossible to comprehend how someone in his position doesn't have the ability to put these things in a more artful way. It's as if he doesn't understand that rhetoric like this will only further outrage a public that is already blaming the big banks for—as he himself puts it—“all the ills of the world.”
Perhaps this kind of crazy only makes sense as a type of bunker mentality. When people are under siege and have essentially the whole world against them, they have nothing to lose by fighting back and remaining defiant. Certainly Dimon must know something about feeling hated. As the New York Magazine article reveals, he can't do interviews outside of his own office due to security concerns and public appearances require bodyguard chaperones.
But Dimon was not always a household name, or even a particularly reviled figure. The New York Times once referred to him glowingly as “America's Least-Hated Banker” in a 2010 profile that again saw him testy and defensive about his chosen profession: “I am not embarrassed to be a banker,” the Times quoted him as saying. Perhaps there is something more to this defiance than mere bunker mentality. Perhaps he actually believes it.
Once again, you and I might have a hard time understanding this. As regular, decent, hard-working people who don't oversee transactions of $2 trillion per day, as Dimon's bank does, things seem pretty straightforward to us: the banks have failed, and they have failed spectacularly. They have brought the world to the brink of an economic collapse that threatens to plunge human civilization into the largest economic crisis in history, and their actions have already cost countless people their jobs, their homes, and their futures. They have leveraged mortgages and credit card debt and auto loans and who knows what else into a quadrillion dollar derivative bubble, conspired to fix credit rates that are tied to hundreds of trillions of dollars of financial instruments, defrauded people out of homes through fake documents, precipitated a crisis that resulted in trillions of dollars of bailouts that came from the wallets of the American taxpayers and went into the bank's own coffers, and continued to turn record profits and hand out obscene bonuses to their cronies and accomplices. Surely Dimon can appreciate that, even if he is not personally responsible for all of this, that the reputation of his industry and the very title of “banker” has been tarnished in the eyes of the general public?
In a weird reversal, however, it seems that the bigger the banks get, the more transactions they process, the more assets they list on their balance sheets, and the more derivatives they create, the more they take themselves to be inherently good. After all, think of the power they wield over the world economy. If the current banking crisis has taught the banking “elite” anything it is that they are “too big to fail.” And just like that, they are infallible.
How else to explain the increasingly bizarre comments of Dimon and his ilk? Like when Goldman CEO Lloyd Blankfein told the Sunday Times that he's just a banker “doing God's work.” Perhaps someone needs to teach Lloyd about Jesus and the money lenders.
One can perhaps forgive the banksters for believing their own press. After all, in this age of economic crisis the public has been suckered into a type of Stockholm syndrome whereby the people have learned to love and venerate their financial captors. Just look at the accolades that have been hurled at Alan Greenspan, a total incompetent who managed to preside over the Black Monday crash of 87, the dot-com bubble, and the record low interest rates that created the housing bubble that led to the current crisis. Over the past decade this “Wizard of Wall Street” has been awarded the French Legion of Honor, made a Freeman of the City of London, bestowed the Department of Defense Medal for Distinguished Public Service, decorated by George W. Bush with the Presidential Medal of Freedom, and made a Knight Commander of the British Empire. Not bad for a guy whose biggest claim to fame is setting the stage for one of the largest banking crises in history.
Unfortunately, Greenspan's case is not unique. Both Timothy Geithner and Ben Bernanke have been put forward as “heros” for having supposedly saved the world from the Lehman collapse. It's like so many other things in modern public life: the more spectacularly you fail at your job, the more you will be praised when the dust settles (assuming there's anything left behind). In Bernanke's case, he was just about the only one who failed to see the credit crunch coming. And when it did, he lived up to his “Helicopter” Ben moniker by dropping those bundles of money on Wall Street exactly as he had promised. With QE1 and QE2 and Operation Twist having been deployed, the economy has managed to limp along sideways for the last few years. But all the ammunition has been spent, and when QE3 comes and fizzles (having already been priced into the market), things could devolve quickly. Until then, we have to witness publications like The Atlantic featuring adoring cover shots of Ben Bernanke in an angelic halo-like glow insisting that he is in fact “The Hero.”
If these banksters really do believe themselves to be the “heros” doing “God's work” for the greater good of society, then we're really in trouble. Because that kind of detachment can only mean one thing: imperial hubris. That's the type of arrogance that, historically speaking, tends to descend on ruling cliques after they've wielded too much power for too long. Think Caligula trying to appoint his horse as Consul of Rome or Pope Alexander VI chasing prostitutes through the Vatican or Marie Antoinette's “Let them eat cake.” For a more modern example, think of North Korea, the only country in the world who's head of state has been dead for 20 years and whose population are taught that Kim Jong-il invented the hamburger. Power corrupts and absolute power makes people stark raving bonkers.
The only conceivable bright spot in all of this is that the current ruling clique of banksters can only think of themselves as “heros” doing “God's work” so long as there's a system left to rule over. But at the rate things are progressing, there may be nothing but smoldering rubble to preside over soon enough. Inflation expectations are soaring as QE3 becomes a question of when, not if. Timothy Geithner admitted this week that the Treasury has been engaged in a circular fraud with Fannie Mae and Freddie Mac, advancing them money to pay dividends back to the Treasury for years. U.S. governmental foreign debt has just spiked over $5 trillion. The lid has just been blown off a secret program in which regulators have been coordinating with America's biggest banks to plan how to dismantle the banks in the event of systemic failure. And now speculation is rife over major moves George Soros has made to unload investments in financial stocks and buy up gold shares. The signs continue to mount that we are hurtling toward collapse.
Unfortunately, the banksters' calamity has become our collective calamity. The gun that the banksters are holding to the world economy's head is threatening everyone, and if and when they pull the trigger we all descend into economic chaos. The only possible way forward is to dismantle the gun, to remove the Fed's stranglehold over interest rates and the creation of money, to split commercial and investment banking, to decouple the economy and the pension funds and the institutional investors from the derivative funny money that the banksters are creating out of nothing, and to allow competing alternative currencies in the marketplace, including sound money.
To be sure, the process of transferring from the economy we have to the one we want is going to be long, slow, and arduous at best. At worst, it can set off the collapse that will lead to mass unemployment, homelessness, starvation, and criminality. It is a delicate operation and one that will require the hard work and dedication of the best and the brightest our generation has to offer. For everyone's sake, let's not leave it to the likes of Dimon, Blankfein, or Bernanke.