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More than just a tawdry tale, Dimon’s demise is a critique of the American Dream.
Now the truth is out, and Wall Street’s golden boy, Jamie Dimon, has fallen to earth with a thud.
Why did it take so long? Why did the American media treat him with kid gloves? In a populist moment, how did he manage to escape the scorn heaped on his colleagues?
To understand this, you have to follow the yellow brick rode all the way back to the beginning, back to when the gold-plated American Dream was forged in the smithy of the Puritan soul.
Dimon was one of the country’s highest-paid bank CEOs, with a fat package of $23 million, and nobody really seemed to mind. JPM was the largest and most profitable U.S. bank. Life was good. Dimon’s three daughters were among “Wall Street's Hottest Offspring,” including Laura, a Barnard student who called in the fall of 2007 to ask, “Dad, what’s a financial crisis?”
How the Mighty Have Fallen
Fast-forward to summer 2012, when it seemed that the Great Gatsby ran into Moby Dick while taking his yacht for a spin. A nasty, behemoth of a trading #-up dubbed the “London Whale” sent billions of dollars up in smoke when a hedging strategy – at least that’s what the bank claimed – went wrong. At first, Dimon pooh-poohed the disaster as a "tempest in a teapot.” Then he tried to spin it as an isolated risk management problem that had been fully addressed.
Criminal investigators weren’t buying it, and they began to probe into the bank’s activities. By January 2013, Dimon’s pay was cut by more than half, down to $11.5 million. Even so, the bank’s board of directors praised Dimon for “forcefully responding” to the trading loss.
Then came the Big Reveal. Last Thursday, a 300-page Senate report delving into the details of the $6.2 billion London Whale loss pointed the finger of blame directly at Jamie Dimon. An email containing the words “I approve” made it clear that the guy known for micromanagement and checking out data knew exactly what was going on at JPM. He had specifically told his people to take on riskier business and he approved new ways of hiding it.
The New York Times is no longer singing Dimon’s praises. Gretchen Morgenson and others have been filling the business pages for the last two weeks with tales of Dimon’s follies and the reckless behavior of JPM. Morgenson had two words when she read the Senate report: “Be afraid.” For all the Dodd-Franking and the tough talk of reining in big banks, JPM, she concluded, is a ticking time-bomb rife with stupid risk-taking, bad management and a penchant for misleading investors and the public.
In the original article, you can click on all these other reports to read the related stuff, and I urge you to do so!!
Dayen’s piece told the tale: “New Report Exposes JPMorgan Chase as Mostly a Criminal Enterprise.” Dayen, a veteran reporter of dastardly Wall Street deeds, was aghast at the list of frauds and malfeasance covered in Rosner’s report, including everything from illegal flood insurance claims to auto-finance rip-offs to shifting trading losses to customer accounts. (If you can stomach it, read the full report here.)
Maybe Jamie Dimon was a cut above his fellow bankers. Given the looks of that crowd, that’s pretty lousy praise. Or maybe he wasn’t. Maybe he’s just a run-of-the-mill hustler, no better than the rest of them. He pretended to be in control of a too-big-to-manage bank and when things went awry – which they always do – he tried to fake his way out of trouble. This Golden Boy just got away with it longer than some.
“It isn’t just about the money for shareholders,” writes Martin, “or even the dubious CEO behavior that our theories encourage. It’s much bigger than that. Our theories of shareholder value maximization and stock-based compensation have the ability to destroy our economy and rot out the core of American capitalism. These theories underpin regulatory fixes instituted after each market bubble and crash. Because the fixes begin from the wrong premise, they will be ineffectual; until we change the theories, future crashes are inevitable.”
Originally posted by wildtimes
No house arrest with videos and popcorn and catered meals in a swank "safe house" somewhere. No. To the gutter.