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Gamblers Unanimous

Jamie Dimon, CEO of JP Morgan-Chase is supposed to be a savvy leader of the financial world. He is nothing more than the latest of a long line of con men pushing Ponzi schemes, with the advantage that he has conned the US government into backing his bets.

Mike Konczal at the Next New Deal looks at What Five Hours From Last Thursday Can Tell Us About Dodd-Frank and JP Morgan. All I could think of is that the House GOP leadership was erasing the memory of John Ashcroft cutting the FBI’s request for counter-terrorism on September 10th, 2001. Less than 3 hours before Jamie Dimon admits that JP Morgan-Chase has a problem that is somewhat larger than the ‘tempest in a teapot’ he had called it earlier, the GOP voted to eliminate even the weaken version of bank regulation that was being instituted.

Michael Crimmins at Naked Capitalism notes Jamie’s problems aren’t over, because the losses from the failed trade are still coming in, and have increased to over $3 billion. Of course, there is a secondary loss approaching $20 billion in capitalization as the stock market reacted negatively to the news and the stock price tanked.

David Dayen has an interview with Elizabeth Warren on this mess, and she wants Dimon off the board of the New York Federal Reserve Bank, as well as a return to the original Glass-Steagall Act, that prevented banks from gambling with Federally insured depositors’ money.

From the vague comments about what the ‘Whale trade’ was, and a comment that it should have made money no matter what, I get the feeling that Dimon et al. thought they could put up enough money to effectively become ‘the house’ in the financial casino. The one sure thing in gambling is that ‘the house’ never loses. While a true statement, it is only true over the long term, and these guys have no concept of any period longer than a quarter. While other people at JP Morgan-Chase have resigned, the trader is still on the payroll. I have a definite feeling that he is the only one at the bank who knows what he did, and the bank is afraid to cut him loose.

You have to wonder when corporations are going to include provisions in their executive employment contracts that make the contracts null and void if the executive oversees losses of … say, a billion dollars. In a sane world, the board should have met and fired Dimon when the loss became apparent. The concept is called ‘accountability’, and it was once very popular.

May 17, 2012   6 Comments