Big Banks are famously too big to fail, too big to manage, and too big to prosecute. Now a recent report by the OCC details that they fail to meet even minimal standards of sound management. Even after blowing up the economy, getting a multi-trillion dollar bailout, pocketing a get out of jail free pass for pervasive fraud and illegality, they remain ticking time bombs of mass financial destruction.
Jamie Dimon, the CEO of JPMorgan Chase, defined a financial crisis as something we have “every five to 10 years,” so we shouldn’t be surprised. The irresponsibility of big bankers – and the irresponsibility of regulators allowing TBTF banks to exist – confirms the accuracy of his effrontery.
Take a look below, from the invaluable Yves Smith’s Naked Capitalism. The Office of the Comptroller of the Currency, generally one of the more toothless of regulators, just graded the 19 largest banks of “five factors designed to guage how well they are being run.
Not a single bank met the OCC’s requirements for internal auditing, risk management or succession planning. Only two of the 19 banks met the regulator’s requirements for defining the company’s appetite for risk-taking and communicating it across the company. Only two banks were judged to have boards of directors willing to stand up to their CEOs.
All the posturing on deficits and fiscal cliffs should be put in perspective. Despite unfunded wars, top end tax cuts, a prescription drug benefit written by the drug company lobby, our publicly held debt was less than 40% of GDP when Wall Street excesses blew up the economy, and essentially doubled the debt burden. Now we’re told we all must sacrifice to get our books in order. Meanwhile, the very Wall Street firms that caused the mess and were bailed out have emerged bigger and more concentrated than ever. Still unmanageable and unmanaged. It’s five years since they blew us up. Inflicting misery on the vulnerable won’t solve our fiscal problem. You can’t “fix the debt” unless you fix the economy — starting with breaking up the big banks and shutting down Wall Street’s casino.