Jamie Dimon, Billionaire

Jamie Dimon, CEO of JPMorgan Chase.jpg

The ancient Athenian philosopher Anacharsis is said to have once noted that laws are no different than a spider’s web in that “They’ll restrain anyone weak and insignificant who gets caught in them, but they’ll be torn to shreds by people with power and wealth.” It would be difficult to provide a stronger example proving Anacharsis’ thesis regarding the dynamic between law and wealth than the example of JPMorgan and its CEO, Jamie Dimon. Such an example is particularly worth noting now that Mr. Dimon has reportedly breached the great elite wealth barrier of our time and become a billionaire. 

Under Dimon’s leadership – he was and is chairman, president and CEO – JPMorgan Chase went on one of the most successful corporate crime sprees in the history of American business raking in billions of revenue from clients and US taxpayers alike. The amount of wealth snatched by Dimon’s JPMorgan was almost as impressive as the firm’s ability to evade substantive legal recourse from the Department of Justice over and over again.

The litany of known offenses committed under the reign of Jamie Dimon is simply breathtaking. In many cases JPMorgan went so far as to pay large fines but did not outright admit wrongdoing:

  • JPMorgan paid out a $13 billion settlement for fraudulent activities in the mortgage securities market that led to the 2008 financial crisis. The crisis and resulting recession hollowed out the wealth of the American middle class and threw millions out of work.
  • $500 million settlement for role JPMorgan-acquired Bear Stearns played in the mortgage market.
  • The bank paid out over $600 million to settle charges of manipulating currency markets in collusion with other banks and made a mostly symbolic criminal guilty plea. 
  • Not only did JPMorgan cause the housing crisis, it fraudulently foreclosed on homeowners with faulty paperwork during the crisis and paid $50 million to settle those charges.
  • While JPMorgan lobbyists flooded Washington DC to stop regulations that would attempt to prevent reckless trading – a trader in JPMorgan’s London office known as the “London Whale” was busy recklessly trading and violating securities laws charges for which JPMorgan paid over $900 million to settle.
  • A cartel of banks including JPMorgan were involved in rigging an international interest rate known as the London Interbank Offered Rate (LIBOR) which has already led to JPMorgan paying over $100 million in fines.

It was a hell of a run and is far from over as JPMorgan could be facing charges related to political corruption in China where the megabank is suspected of hiring children of the Chinese Communist Party elite in order to curry favor with the Chinese government. Bribery almost seems quaint compared to the other crimes JPMorgan has been engaging in on Jamie Dimon’s watch.

The fines, settlements, and guilty plea have been mostly irrelevant to JPMorgan’s bottom line. In fact, once a settlement is announced JPMorgan’s stock has generally gone up as investors are usually pleased with how much loot JPMorgan was able to ultimately keep from its criminal activities.

Not surprisingly, Dimon’s JPMorgan had many enablers within the government including former lead officials at the Justice Department – Eric Holder and Lanny Breuer – that were knee-deep in conflicts of interest related to the housing crisis. Breuer, the head of the Department of Justice’s Criminal Division during part of JPMorgan’s crime spree, essentially admitted in an interview with Frontline that he was more concerned with the economic consequences of bringing criminal prosecutions against the Wall Street banks than trying to deter the banks from committing future crimes.

The light touch policy at the Justice Department corresponded with unprecedented subsidies and support going to JPMorgan and other banks from Congress in the form of bailout funds known as the Trouble Asset Relief Program (TARP) as well as loans – overt and secret – from the Federal Reserve. Dimon’s JPMorgan was apparently both Too Big To Fail and Too Big To Jail which makes his new status as a billionaire seem practically inevitable upon reflection. How could Jamie Dimon not become a billionaire under such conditions? Couldn’t anyone?

Anacharsis’ comparison of the law with spider webs reportedly came during a discussion with another Athenian philosopher and jurist, Solon. It was Solon who said “Wealth I desire to have; but wrongfully to get it, I do not wish. Justice, even if slow, is sure.” Decide which assessment of how law and wealth work you agree with after pondering the fortunes of Jamie Dimon, billionaire.

Image from Steve Jurveston under Creative Commons license.

Wall Street Trading ‘Cartel’ Warned Initiates ‘Mess This Up And Sleep With One Eye Open’

Yesterday the Department of Justice announced guilty pleas from Barclays, Citigroup, JPMorgan and the Royal Bank of Scotland for manipulating international currency markets. The banks also agreed to pay fines totaling $5.8 billion.

In order to rig the markets in their favor the banks formed a group known as “The Cartel” where traders from Citigroup, JPMorgan, UBS, RBS, and Barclays conspired to rig LIBOR and currency exchange rates. The Cartel’s reach was extensive and the group was able to shift global currency exchange and interest rates by acting in collusion through their respective financial institutions.

To join the group, which operated an exclusive chatroom to conspire on trades, a trader would go through a gang initiation process of sorts complete with a probationary period and a threat.

The trader, who was the main Euro trader for Barclays in 2011, made various arguments about how he “would add value” to the chatroom, according to the NYDFS. Ultimately, they let him join for a one-month trial, but allegedly with a pretty ominous warning:

[M]ess this up and sleep with one eye open at night.” Fortunately for that trader (but probably not so fortunately, in the end), he was allowed to stay in the group until it was dissolved in 2012.

Banksters truly play the part sometimes. The sleep with one eye open threat is just one of many quotes from traders rigging the market that display a criminal mindset.

The banks in question claim to have terminated all the traders involved in the Cartel though they offered little in the way of evidence to prove it. Of course, we could all just trust them to do the right thing. What could go wrong?

Latest Guilty Pleas Prove Big Bank Criminality ‘Rampant,’ But Jail Time Non-Existent

In announcing settlement, Attorney General Loretta Lynch calls the crimes ‘a brazen display of collusion’ that caused ‘pervasive harm’

By Deirdre Fulton

In the wake of Wednesday’s announcement that five global financial institutions have agreed to plead guilty to multiple crimes and pay about $5.6 billion in penalties for manipulating foreign currencies and interest rates, corporate watchdogs are reiterating the call to ‘break up the banks’ in light of their ongoing malfeasance.

As with other recent settlements, Wednesday’s news provides further evidence to those who say certain megabanks are still considered “too big to fail”—or criminal bankers to jail.

“There are two messages in today’s plea deal,” said Public Citizen president Robert Weissman in a statement on Wednesday. “First, criminality is rampant on Wall Street. Second, the era of too-big-to-jail is alive and well. Even as they beat their chests announcing how tough they are, government regulators refuse to apply to the giant banks the same rules that apply to everyone else.”

According to the Wall Street Journal:

Five global banks have agreed to pay more than $5 billion in combined penalties and will plead guilty to criminal charges to resolve a long running U.S. investigation into whether traders at the banks colluded to move foreign currency rates in directions to benefit their own positions.

Four of the banks, J.P. Morgan Chase & Co., Barclays PLC, Royal Bank of Scotland Group PLC, and Citigroup Inc., will plead guilty to conspiring to manipulate the price of U.S. dollars and euros, authorities said.

The fifth bank, UBS AG, received immunity in the antitrust case, but will plead guilty to manipulating the Libor benchmark after prosecutors said the bank violated an earlier accord meant to resolve those allegations of misconduct. UBS will also pay an additional Libor-related fine.

The New York Times adds:

The Justice Department forced four of the banks — Citigroup, JPMorgan Chase, Barclays and the Royal Bank of Scotland — to plead guilty to antitrust violations in the foreign exchange market as part of a scheme that padded the banks’ profits and enriched the traders who carried out the plot. The traders were supposed to be competitors, but much like companies that rigged the price of vitamins and automotive parts, they colluded to manipulate the largest and yet least regulated market in the financial world, where some $5 trillion changes hands every day, prosecutors said.

Underscoring the collusive nature of their contact, which often occurred in online chat rooms, one group of traders called themselves “the cartel,” an invitation-only club where stakes were so high that a newcomer was warned, “Mess this up and sleep with one eye open.”

In announcing the settlement, Attorney General Loretta Lynch called the megabanks’ crimes “a brazen display of collusion” that caused “pervasive harm.”

Lynch declared: “Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers.”

But as Weissman noted, “important questions remain about this plea deal,” including:

Will individual executives be prosecuted? And did the DOJ charge the parent companies in this case to avoid triggering potential sanctions with real and significant business consequences for the banks, including charter revocation hearings? The public deserves answers to these questions. In that information is some insight into whether the government continues to protect the megabanks—those colloquially labeled “too big to jail.”

“What becomes clear is that regulators genuinely are afraid of enforcing the law when it comes to the megabanks,” Weissman concludes. “As a result, and notwithstanding today’s announcement and others like it, these banks are not deterred from violating the law—indeed, they are literally not subject to the same standards as other banks and other companies. A democratic society cannot tolerate having banks above the law. There’s a solution to this problem: break them up.”

Earlier this month, Sen. Bernie Sanders (I-Vt.) introduced a bill to do just that—the Too Big to Fail, Too Big to Exist Act—under which regulators on the Financial Stability Oversight Council would compile a list of institutions which say they are so large that their collapse could trigger an economic crisis. The Treasury Secretary, in turn, would then have a year from the bill’s passing to break up such banks.

In a recent report, the Corporate Reform Coalition warned that regulators’ continued reluctance to crack down on megabanks leaves the U.S. vulnerable to another financial crisis.

“Avoiding another meltdown depends on the will of federal regulators to use the new powers they were granted in the Dodd-Frank Wall Street Reform and Consumer Protection Act,” said Jennifer Taub, author of the report and professor of law at Vermont Law School. “If they behave as if they are beholden to the banks, we will likely face a more severe crisis in the future.”

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