King of the Hill

Though we need to wait until November to find out who the next president will be, we already know who the king is.

That would be JPMorgan Chase CEO Jamie Dimon, who got the regal treatment from the Senate Finance Committee this week when he was called to testify about the disastrous trades that has cost his firm more than $3 billion so far and reduced the firm's market value by $27 billion.

You know, the trades that Dimon originally dismissed as a “tempest in a teapot.”

Which gives you some idea of the teapots that President Obama’s favorite banker can afford. President Obama has particularly close ties to the bank: JPMorgan’s PAC was one of the top donors to his 2008 campaign, offering more than $800,000, and the president’s former chief of staff, William Daley, was a top executive there.

Dimon is equally popular on Capitol Hill. Instead of a grilling him about his failure to take action for months after questions were raised about the strategy surrounding the failed trades, most of the senators treaded lightly.

Instead of scrutinizing the foreclosure fraud and failure that led to JPMorgan’s $5.3 billion share of a $26 billion settlement with state attorneys generals, several senators took the opportunity to offer Dimon a platform to continue his campaign against regulation of Wall Street, including modest reforms like the Volcker rule which many say could have prevented the JPMorgan loss – had it been in place.

For his part, Dimon denied that he knew anything, took some vague responsibility and minimized the losses as an isolated event.

The route to traditional royalty is through birth or marriage. Dimon won his political crown through another time-honored path – he bought it. Most of the senators he faced had benefited from the generosity of his bank’s campaign contributions. As the Nation’s George Zornick reported, the senators had received more than $522,000 from JPMorgan, about evenly split between Republicans and Democrats.

The staff of the Finance Committee and JPMorgan are connected through a web of revolving door contacts. The banking committee’s staff director is a former JPMorgan lobbyist, Dwight Fettig. One of the banks’ top lobbyists is a former staffer for banking committee member Sen. Chuck Schumer, while three of its outside lobbyists used to work for the committee or one of its members.

J.P. Morgan has pummeled Congress and regulators with more than $7.6 million worth of lobbying in an effort to get banking rules written to favor the bank.

The king’s appearance before his subjects on the Senate Finance Committee was a powerful demonstration, for those who still need it, of just how little of the spirit and the practice of real democracy remains in an institution that is supposed to embody it.

If our representatives were truly beholden to us, rather than to Dimon and others with large supplies of cash to dole out, his testimony would have had a starkly different tone.

He has a lot to answer for. So do those who let him off so easy.

And it’s not just Dimon that the senators have failed to oversee. While bankers’ profits are back, the banking system is still broke.

If those senators were serving us, rather than serving as lapdogs to bankers, Dimon and other Wall Street monarchs might be looking at prison cells, not red carpets.

 

Martin Column / Too Big To Fail / Uncategorized - 06/14/2012

Biggest Loser, Too Big to Fail Edition

Welcome to this week’s episode of the Biggest Loser, Too Big to Fail Bank edition!

Each week we tally up the bad behavior of a banker who took taxpayers’ money in the bailout, only to engage in more obnoxious antics calculated to hurt the very taxpayers whose generosity has guaranteed the bankers’ gazillion dollar annual compensation.

This week we’re featuring a surprise guest, a banker who, in the past, the press fawned over as one of the savviest Wall Street titans, who managed to actually enhance his reputation during and after the 2008 financial collapse.

Please welcome JPMorgan Chase CEO Jamie Dimon, whose bank is the biggest in the nation, with total assets of $2.3 trillion.

He’s not one of those CEOs who presides over a big bank that everybody assumes is a zombie, like Bank of America and Citibank.

No, Dimon and his bank actually made money. He was presumed to know what he was doing. Especially by President Obama, who welcomed him to the White House on numerous occasions.

And Dimon has distinguished himself as the most vocal opponent of bank regulation, which Dimon says could be bad, not just for him, but for America.

Dimon is tops in the public relations game – his reputation wasn’t tarnished even after federal authorities found that his bank was improperly foreclosing on the nation’s veterans and JPMorgan Chase had to pay $45 million two months ago to settle a lawsuit.

Dimon was still invited to the White House and fancy seminars where the attendees hung on his every word.

That was before Dimon admitted last week that one of his top traders had lost $2 billion on trades that were supposed to hedge against other risky bets that the banks’ traders were taking.

These were bets that were supposed to reduce the bank’s risks, not cost it $2 billion.

It’s just the latest evidence that not even the smartest banker, not even Jamie Dimon, who just a couple of weeks ago had dismissed warnings about the bets as a “tempest in a teapot,” has a clue as to how their own firm’s complicated financial engineering works.

Admittedly, the competition for too big to fail biggest loser is tough because the bailed-out bankers’ behavior has been so bad.

Determining the biggest winners is easy, however: the politicians and lobbyists who have collected millions in campaign contributions and lobbying fees from bankers who have successfully crippled efforts at real reform. JP Morgan Chase’s latest losses will no doubt reinvigorate the debate over financial reform, causing the banks to shovel yet more money to the politicians and lobbyists in their effort to make sure that the only true reform – breaking up the big banks, so they’re not too big to fail  – never happens.

Beyond the reality TV theatrics of the political debate, we know who the real losers are – the taxpayers who foot the bill and citizens who are shut out of political debate by the corporations who dominate it with their money.

President Obama and his administration like to brag that taxpayers are making a profit from big chunks of the bailout. But that PR covers up the real story on the bailout: the federal government spent trillions to make the too big to fail banks like JP Morgan Chase bigger and more powerful, not to rein them in.

As Charlie Geist, a Wall Street historian and professor at Manhattan College told Politico, “The guy in the street in 2008 and 2009 was worried about his or her deposits, and now it’s clear they should still be worried.”

 

 

 

 

 

 

 

Derivatives / Martin Column / Too Big To Fail - 05/16/2012

Your tax dollars at work fighting unemployment – in the Philippines

If you’re among the millions in the U.S. who are unemployed and need retraining for new work, you are, increasingly, out of luck.

But if you’re a major financial institution that wants to outsource jobs to the Philippines, until a couple of days ago, the Obama administration was spending about $36 million a year to improve the English language skills of your future workers.

Among those taking advantage of outsourced labor in the Philippines, in call centers and IT, are  a couple too-big-to-fail, bailed-out financial institutions, Citibank and JPMorgan Chase.

Last week, after a couple of congressmen got riled up about the outsourcing training, the U.S. Agency for International Development said it would “suspend” the program “pending further review of the facts.”

The program was set to expire at the end of the year in any case.

But the fact is that USAID has been offering training for future outsourcing workers for several years, from South Asia to Armenia, Information Week reported. In the Philippines, the U.S. contended it wasn’t just spending the money to subsidize Citibank and other would-be outsourcers; the government said it was actually using your tax dollars as part of an antiterrorism effort in a section of the country with a Muslim minority unhappy with its treatment by the central government.

According to the USAID scheme,  the would-be terrorists would be a lot happier once they learned a little English and were able to land a job in a Citibank call center.

Meanwhile the U.S. has been suffering through a staggering economic downturn and the highest unemployment since the Great Depression, as President Obama and other politicians promise to stem outsourcing and bring jobs back to this country.

Since 2007, 500,000 call center jobs have been outsourced from the United States, according to Rep. Tim Bishop, a New York Democrat, and Rep. Walter Jones, a North Carolina Republican, the congressmen who demanded a halt to the program. In 2010, USAID had suspended a similar $10 million initiative to train Sri Lankan workers after Bishop and Jones complained about it.

Despite high unemployment, job training programs and community colleges in the U.S., which also offer the opportunity for workers to learn new skills, have had to go begging. As the New York Times reported last week, “work force centers that assist the unemployed are being asked to do more with less as federal funds dwindle for job training and related services.”

Federal money available for retraining workers is 18 percent lower, in today’s dollars, than it was in 2006, even though there are 6 million more people unemployed, the Times reported.

While the debate over cuts to unemployment benefits has received wide attention, the cuts to the retraining programs have gone largely unnoticed.

While the president has proposed a $2.8 billion increase for job training over the next 10 years, Republicans’ budget proposals have suggested that federal funds for job training should be cut even further.

The USAID program is obviously at odds with the Obama administration’s stated intent to discourage outsourcing. Given all the other benefits  and bailouts that this administration has already showered on Citibank and AIG, would it be too much to demand that the administration stop using our tax dollars to pay for these companies’ job training when they want to move more employment from the U.S.?

 

AIG / Citibank / Jobs crisis / Martin Column / Outsourcing - 04/25/2012

"Wall Street Is Our Main Street" NOT

New York's Attorney General is under pressure from banks and, sadly, the federal government, to agree to a sweetheart settlement that will let the financial industry off the hook for its mishandling of mortgages and foreclosures, today's New York Times reports.

As my colleague Marty Berg has reported, the settlement, negotiated by other state Attorney Generals, is a disaster for consumers who got screwed by the financial industry that taxpayers had to spend hundreds of billions to bail out three years ago. Most of the banks are doing great now, while many Americans are barely hanging on by their fingernails.

The  Obama Administration - from the Justice Department to the Department of Housing and Urban Development – is pushing NY AG Eric Schneiderman to agree to an $20 billion settlement that would actually prevent people from further litigation against Bank of America, Citigroup, JPMorgan Chase and Wells Fargo. It's been widely criticized as a sell-out. Schneiderman's also pissed off Wall Street for trying to scuttle another settlement that would have shortchanged investors.

A member of the Federal Reserve Bank of New York told the Times "Wall Street is our Main Street... we have to make sure we are doing everything we can to support them," that is, of course, "unless they are doing something indefensible." Yeah, right.

There haven't been many heroes over the last few years willing to take on Wall Street on behalf of the silent majority of Americans who can't make campaign contributions. The New York AG is one, and he deserves to know we appreciate his efforts. If you agree, email his people: NYAG.Pressoffice@oag.state.ny.us – or tweet him @AGSchneiderman.

 

 

 

Action / Foreclosures / Harvey Column - 08/22/2011

Big Bank Launches Attack on Military Families

America’s least-hated banker hasn’t had much to say about how his institution, JPMorgan Chase, wrongfully foreclosed on 14 military families and overcharged thousands of others.

That banker would be Jaime Dimon, the subject of a flattering profile in the New York Times magazine last month, in which he was portrayed as an astute and careful risk manager and staunch defender of the benefits of large banks. Dimon admitted that he wasn’t careful enough before the financial collapse – he missed the problems posed by the securitized pools of investments stocked with bad mortgages that nearly sank the economy.

In the wake of disclosures last year about massive problems in the foreclosure process, Dimon led the charge in dismissing them. He appeared to be less concerned with evidence of bankers’ extreme carelessness than he was that the efforts of 50 states' attorneys general to investigate might slow down the housing recovery.

As Fortune reported, “He (Dimon) strode into the foreclosure fiasco last fall with guns blazing, as usual, claiming Chase wouldn't be tarnished by the banking industry's mortgage misbehavior.”

Dimon has repeatedly insisted his bank hadn’t wrongly foreclosed on anyone.

Whoops.

Over the last several weeks, the news media has reported that JPMorgan Chase had wrongfully foreclosed on 14 active-duty military families and overcharged thousands more on their mortgages.

Bank officials said they discovered mistakes and were in the process of reversing the foreclosures and about $2 million in fees to 4,000 families that the bank overcharged.

The bank may have discovered those ‘mistakes’ in the process of preparing their response to a lawsuit filed by a South Carolina Marine captain whose house they foreclosed on, in violation of the protections provided by the Servicemembers Civil Relief Act.

Under that law, banks aren’t supposed to charge active-duty members of the military more than 6 percent interest on the mortgages.  In addition, members of the military are supposed to be exempt from the delinquency process – including foreclosure.

The Marine captain, Jonathan Rowles, is serving in South Korea. His wife, Julia Rowles, told National Public Radio that she and her husband have been fighting with Chase ever since Rowles was commissioned as an officer five years ago.

They got harassing collection calls, sometimes in the middle of the night, Julia Rowles said. "They would say, 'we will take your house. We will report you to the credit agency. This is a bad situation that you don't want to be getting into. Pay us today.' ”

The bank was charging them 9 to 10 percent interest and nearly $2,000 a month, when they should have been paying $1,400."

JPMorgan’s Dimon has sent his PR spokesmen to deal with the mess. Back in November, Dimon has insisted that his bank is especially friendly toward those who serve their country. On Veterans’ Day, he was touting JPMorgan’s increased efforts to recruit veterans because “it is, quite simply, the right thing to do.”

In the wake of JPMorgan’s disclosures, other big banks, including Citibank, Ally Bank and Goldman Sach’s Litton Loans are reviewing their policies concerning home lending to military families.

Unfortunately, the JPMorgan fiasco is only the latest in a long, tawdry history of financial institutions targeting members of the military for predatory lending. During the recent fight over financial reform, the nation’s military leaders had fought to have the nation’s car dealers covered by the new financial consumer protection agency. But they were no match for the clout of the car dealers, who won the exemption they lobbied for.

According to Army Times, Chase has advertised itself as a military-friendly bank since at least 2005, when it began touting its Home Finance Military Mortgage program, which offers a discount on closing costs in home purchases or refinancing for military members and retirees. Mobilized National Guard and reserve members who had a Chase mortgage in good standing could defer entire mortgage payments for up to 18 months during call-ups. Both those initiatives go beyond the requirements of the SCRA. A bank spokesman couldn’t say if any of the 4,000 service members receiving checks, or Rowles, for that matter, participated in those initiatives.

In November, Dimon celebrated Veterans’ Day by touting his banks’ efforts to recruit those who served their country to work at JPMorgan because “it’s the right thing to do.”

This week Dimon is off to the meeting of the global elite at Davos, Switzerland, where he was complaining about the unjustified hostility toward his profession. “I just think this constant refrain [of] ‘bankers, bankers, bankers,’ - it’s just a really unproductive and unfair way of treating people,” Dimon said. “People should just stop doing that.”

Foreclosures / Martin Column / Outrage - 01/27/2011

Night on Fantasy Island

As a snapshot of the wildly dysfunctional state of our political union, last night’s festivities were a smashing success. All sides were serving up plenty of mom, apple pie and platitudes while ignoring what’s actually left on plates of millions of Americans –nothing.

I did find at least something to agree with in what each of the speakers said. Who can quarrel with President Obama when he calls on us to “win the future?” And I want my government as lean and mean as Paul Ryan and the Republicans do, without any wasteful subsidies that boost corporate tycoons and their overseas expansion rather than creating decent-paying jobs here at home.

It’s true that the tea party’s spokeswoman, Rep. Michele Bachman of Minnesota, looked like aliens had captured her brain and were speaking through her. Maybe we would have been better off if the aliens had captured Obama and Ryan too. At least Bachman briefly took note of the high unemployment rate before she went off to into her own rhetorical fantasyland.

That’s more than you can say for President Obama, who was pitching us his hallucination that his new pals from the Chamber of Commerce are going to beat their corporate profits into ploughshares in partnership with government, in an effort to foster new technologies and growth that we all share. Forgive me if I can’t get too worked up about this. Didn’t we try this government-corporate partnership recently? Wasn’t that what the bailout was?

Back here on Planet Earth, that didn’t work out so well for a lot of us, though it does seem to have worked well for the president’s friends at General Electric and JPMorgan Chase.

Both Ryan and Bachman aren’t interested in any partnerships; they want to dismantle government altogether so that GE, JPMorgan and the rest of the corporatariat can run the show without any interference at all. The only difference is that Bachman would like to do it faster, with less nice talk, than Ryan.

Neither the president, Ryan, or Bachman could focus on reality long enough to mention the long, steep decline of the middle class or the on-going foreclosure crisis, or offer any specific ideas on addressing those very real issues.

Back here on Planet Earth, we’re going to have to harness all of our ingenuity, strength and diversity just to wrestle our political system back from these leaders and their corporate backers before they plunder what’s left of it.

Congress / Financial Crisis / Foreclosures / Martin Column / Outrage / President Barack Obama - 01/26/2011