Just days after JP Morgan agreed to pay a $13 Billion fine for massive mortgage fraud, Jamie Dimon, CEO of JP Morgan, celebrated in the manner of royalty.
Only days after he finally agreed to a $13 billion settlement with US mortgage regulators, the boss of JPMorgan – and dozens of his corporate clients – were sitting back amid the splendour of Buckingham Palace, enjoying a fine dinner and performances by the Royal Philharmonic and the English National Ballet.
Tony Blair, former Prime Minister and presently employed by JP Morgan, was in attendence.
It leaves one to wonder who the sovereign is?
How the fine plays out is a good example of the appearance of justice being served.
Jamie Dimon will pay the fines with other people’s money — that of his shareholders. Neither he nor his officers who made out like bandits from their fraudulent practices are asked to chip in a dime. In fact, the $13 billion is itself something of a put-on. Only $9 billion is in cash, and much of that may well be tax-deductible, meaning taxpayers will get part of the bill. Four billion dollars is in “mortgage relief,” which the banks have been notoriously successful in gaming, providing “relief” by discarding underwater mortgages, “allowing” homeowners to do a short-sale that costs them their homes.
Let's forget for a moment about Dimon. After all, he can't be involved in all of the banks dirty deals.
Let's look at the
second tier.
But what about the investment bankers who were involved in underwriting and selling the dubious mortgage deals that led to the massive penalty? They appear to be doing just fine as well. Indeed, until last month, three of the top bankers responsible for the deals still worked at JPMorgan (JPM). One appears to have received a promotion.
JP Morgan likes to point out that 80% of the fraudulant mortgages were done by Bear Stearns and Washington Mutual, banks that JP Morgan purchased after they went under.
What does it say about the ethical climate of Wall Street when a bankers
defense is that they were "only" involved in 20% of the crimes?
The $13 billion settlement is merely the latest in a long string of fines for criminal actions for JP Morgan Chase.
Manipulated market during London Whale scandal
Rigged energy prices in California and midwest
Wrongful foreclosures on military members, and overcharging on military home loans
$100 million to settle charges of bilking credit card holders with improper fees and interest rates
$1.2 Billion to settle charges of conspiring with Visa and MasterCard to rig swipe fees
$228 million to settle charges of rigging the municipal bond market
Involvement in manipulating the EURIBOR interest rates
Involvement in manipulating WM/Reuter interest rates
Involvement in manipulating he LIBOR interest rates, as well as a seperate lawsuit involving the LIBOR
And that is just from this year.
In recent years JP Morgan:
aided Madoff's ponzi scheme
Been involved in MF Global's missing money
Been involved in PFG's missing money
Keep in mind that almost all of these crimes have been committed after Dodd-Frank passed Congress.
Passing a law that requires captured regulators to design and implement is simply not enough. Not even close.
Of course, JP Morgan is far from being alone with all this criminal activity.
HSBC recently paid $1.9 Billion for laundering money for drug cartels and terrorist groups.
This past week it was revealed that RBS was intentionally driving companies into bankruptcy.
City regulators have been handed a dossier of evidence compiled by an adviser to Vince Cable which claims that Royal Bank of Scotland was deliberately wrecking viable small businesses to make profits for the bailed out bank.
I can't think of a better example of how flawed is the myth that bankers want to grow and develop the economy of a country. Or the myth that bankers actually want to help their clients.
Bankers really are nothing but parasites on the economy in general.
But the real kicker of the RBS story is that the bank is 81% owned by the government. It was nationalized years ago.
So if nationalizing a bank doesn't stop, or even slow down, the pillaging of the economy, then regulators are simply not up to the challenge. Global banking reform that addresses the problem of corrupted incentives in the banking industry needs to be pushed through or the global economy will be crushed.