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

The Real "Entitlements"

For most of us, the Wall Street housing bubble popped in 2008, with painful consequences.

But for those at the top of the nation’s too big to fail banks, the party keeps rocking, even though their institutions are still in trouble and wouldn’t even exist without taxpayers’ generosity.

Take for example that wild and crazy region known as Bank of Americaland, where dwells one of the country’s biggest and sickest banks.

It’s basically never recovered from the financial collapse, which, in Bank of America’s case included a nasty hangover induced by swallowing up the king of sleazy subprime lending, Countrywide, as well as fallen investment banking titan Merrill Lynch (labeled in 2009 by the Wall Street Journal the “$50 billion deal from Hell – no link).

Here’s how Bank of America has squandered its share of the bailout: engaging in a pattern of improper foreclosures on military families and spending millions in campaign contributions and lobbying to fight regulation of its business. Most recently, the bank imposed a new $60 annual debit card on its customers.

After all, the bank’s president, Brian Moynihan, insisted, Bank of America “has a right make a profit,” which occasionally will have to be guaranteed by U.S. taxpayers.

The company is doing so poorly that it’s going to have lay off 30,000 of its employees, some of whom will spend their waning days training their lower paid, outsourced replacements. But the company isn't doing so poorly that it didn’t manage to tuck away $11 million to the ease of parting for two of its top executives.

After all, they’re executives of a floundering bank that’s made a series of poor business decisions. So they’re “entitled” to get even more money on top of their fat salaries.

Across the political spectrum, it’s become fashionable to belittle programs like Social Security and Medicaid as “entitlements,” turning that into a dirty word. But like so much about our current, out of touch with reality political debate, it’s completely upside down.

The way the debate has been framed by our political leaders and media, they’re only “entitlements” if they’re claimed by the 99 percent of Americans who have suffered in the collapse of the middle-class and economic meltdown.

We need a crackdown on “entitlements” all right, but on the real  entitlements, the ones claimed by the top 1 percent, like those Bank of America lays claim to, scooping up millions for its executives while gouging its customers and buying our political system through lobbying and campaign contributions.

But Bank of America won’t give up these entitlements without a fight, because the bankers believe that these are the benefits they’ have a right to, along with their profits.

Bank of America (BoA) / Martin Column - 10/13/2011

SEC TO Mozilo: Fraud Pays

The SEC is at it again. They’re bragging that the agency nailed the largest penalty of its kind in history against the king of the subprime lenders for defrauding his shareholders.

And no doubt, $65 million dollars sounds like a lot of money.

But when you remember how much money Angelo Mozilo raked in during his reign, and when you break down the details of the SEC fine, it doesn’t add up.

It certainly doesn’t add up to much in the way of punishing Mozilo.

As usual when the SEC settles the civil charges it files, Mozilo and his two former colleagues admitted no wrongdoing as part of their settlement.

The SEC accused Mozilo, the butcher’s son who rose to be the president of Countrywide, of keeping from shareholders his fears that his collection of subprime loans was trash while reassuring his stockholders that everything was hunky-dory.

Federal prosecutors are still poking around in the ashes of Countrywide, and maybe they will come up with something.

But so far here’s the scorecard on Mozilo: the SEC said he received $141.7 million as a result of fraud and insider trading. They fined him $22.5 million.

As the Center for Public Integrity points out, that means he has give back just 16 cents of every ill-gotten dollar he got.

In addition, the SEC touts the $45 million that Mozilo will have to turn over to Bank of America shareholders, though that money won’t come out of Mozilo’s very deep pockets. That will come from his insurer and the company that bought Countrywide, Bank of America.

The fines seem even slighter when you contemplate what Mozilo was paid in his days as master of the universe.

In his time as executive chairman of Countrywide between 1999 and 2008, he was paid a total of $410 million in salary, bonuses and stock options.

In 2007, when the company’s stock tanked, dropping from $40 to under $10, Mozilo had an off-year too. He was only paid $10.8 million.

In perspective, this doesn’t seem like much for the SEC to brag about. Sixteen cents on the dollar certainly isn’t going to strike fear into the heart of any business titan.

Martin Column / Securities and Exchange Commission (SEC) - 10/19/2010