fresh voices from the front lines of change







What do you give a Wall Street CEO who has presided over a decade of fraud and criminality, who directly supervised a unit which lost $6 billion through incompetent and illegal trading, and whose reign of crime and mismanagement has cost his institution $20 billion in the last year alone – a figure which undoubtedly would’ve been much larger in a less morally compromised regulatory environment?

If you are the Board of Directors of JPMorgan Chase, you give him a raise.

Let’s not mince words: Jamie Dimon’s bank is, as we said last May, the scandal of our time. The crimes committed during Dimon’s time in senior management include bribery, mortgage fraud, investor fraud, consumer fraud, credit card fraud, forgery, perjury, violation of sanctions against Iran and Syria, violation of laws prohibiting the bilking of active-duty service members … shall we continue?

The Captain and Tennile are getting divorced. But when it comes to the Board and Jamie, love will keep them together.

It’s true that Dimon is no longer publicly described as “the President’s favorite banker,” presumably as a result of these scandals.  Nevertheless, the Chase capo continues to be flattered and defended by a number of embarrassingly sycophantic journalists in the major media. The New York Times is a particular hotbed of Dimon-submissiveness; see, for example, Andrew Ross Sorkin’s acquiescent, tummy-revealing and altogether kitten-like desperation to please the higher-order alpha mammal Dimon in this piece.

Regulator William K. Black Jr. played an integral role in the prosecution and conviction of more than 1,000 bankers over the savings-and-loan scandal of the 1980s. Black, who is now a top economics professor, is understandably disturbed by the fact that there has not been a single prosecution of the major Wall Street executive over the much larger scandals which led to the 2008 financial crisis.

Black observed this week that the bank’s fraud proceeds “went largely to the senior officers and directors of JPM, Bear, and WaMu in the form of bonuses.” The Board’s behavior can therefore be seen as a divvying up of criminal booty, whatever the personal involvement of the Board members themselves.

Black also pithily notes that “the greater JPM’s frauds under Dimon’s leadership … the greater Dimon’s value as a negotiator in getting the government to settle cheap.” The directors confirmed that, if unwittingly, by noting that JPMorgan Chase’s stock price has risen over the last 12 months.

Stock prices are based on expectation. As Dimon made it clear he could negotiate cheaper settlements with the government than expected – that is, settlements that were less fair toward the banks victims – the stock market rewarded him for his ability to manipulate the political and regulatory system on behalf of his own fraudulent bank.

Fraud isn’t the sum total of JPMorgan Chase’s business plan. But with this move, the bank’s directors have made it clear that fraud is inseparable from its business plan.

Bank executives haven’t been held liable for Wall Street crime. They haven’t been prosecuted, which means they haven't been held criminally liable. They haven’t been personally fined, which means they haven’t been held financially liable. They’ve all been allowed to keep criminally-obtained wealth. And, outside of grassroots outrage like the Occupy movement, they haven’t even been held morally or socially responsible for their misdeeds. Public rebukes or shaming have been rare.

To be sure, Dimon is one of those executives who is hyper-sensitive to even the slightest criticism.  Like the Jimmy Cagney character in some old mobster movie, he is both rapacious and vain. That’s why we described him as the “emo executive” more than three years ago. It’s also why he has invested large sums of his shareholders’ money, and large chunks of his own time, to a relentless PR campaign designed to make him look like the victim of unfair criticism.

Unfair? The most generous interpretation of Dimon’s tenure – one which becomes harder and harder to defend as time passes – is that he is an incompetent manager who is incapable of ending the crime spree within his own organization, no matter how much he may yearn to do so.

He’s also apparently incapable of returning the money that crime spree deposited in his bank accounts.

“After losing billions,” reads the headline in TIME, “JPMorgan Chase Gives CEO Jamie Dimon a Raise.”

Well, of course. The billions that the bank lost through Dimon’s blunders pale beside the billions it collected from his … what shall we call it? His oversight. The law has not asked Jamie Dimon or any other bank CEO to return his personal share of the loot. Despite the principles of governance which are supposed to drive public corporations in this country, is now clear that their boards will not ask them to do it either.

We’ve always been told that “crime doesn’t pay.” Jamie Dimon and the Board of Directors of JPMorgan Chase beg to differ.

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