Climate of Fraud, Negligence, Incompetence and JP Morgan

By Greg Hunter’s USAWatchdog.com 

I was thinking about titling this post “Fire Jamie Dimon.”  I changed my mind because this article is much, much bigger than Mr. Dimon.  This is really an article about the current climate of fraud, negligence and incompetence that is accepted as the new normal.  Dimon and JP Morgan Chase are just the larger-than-life faces of the profound problems that are not getting fixed.  JP Morgan is the nation’s biggest bank; so, for the sake of simplicity, I just want to use JP Morgan and its CEO, Jamie Dimon, to illustrate what is really stopping the economy from getting better.  This is the 8,000 pound elephant in the room that nobody wants to even acknowledge.

Look no further than this past year.  There are big examples that come to mind that should have brought some criminal charges against bank personnel, or at least been grounds to fire Mr. Dimon.  Most recently, JP Morgan and Credit Suisse paid nearly $417 million (combined) to settle civil fraud charges by the Securities and Exchange Commission (SEC).  Reuters recently reported, “JPMorgan will pay $296.9 million, while Credit Suisse will pay $120 million in a separate case, with the money going to harmed investors, the U.S. Securities and Exchange Commission said.  Both settlements addressed alleged negligence or other wrongdoing in the packaging and sale of risky residential mortgage-backed securities . . .” Of course, both JP Morgan and Credit Suisse didn’t admit guilt, and no individuals were charged criminally.  The Reuters story went on to say, “On a conference call with reporters, Robert Khuzami (SEC enforcement chief) said it is hard to bring cases against individuals over ‘structured’ financial transactions because different people work on different aspects, making it hard to pin blame.”  (Click here for the complete Reuters story.)  It was the same story in 2011.  According to Reuters, “JPMorgan had in June 2011 agreed to pay $153.6 million to settle a separate SEC fraud case over its sale of mortgage securities to investors, also without admitting wrongdoing.”  Anybody see a pattern here for JP Morgan or government prosecutors?

Hey, you know what else makes it “hard to pin blame”?  Lots of cash donated to both parties by banks like JP Morgan.  So much cash that the boss will come down hard on prosecutors who bring charges.  One thousand financial elites were successfully prosecuted in the wake of the S&L crisis 20 years ago.  It was 70 times smaller than the 2008 financial meltdown that was caused by greedy bankers.  The “$296.9 million” paid by JP Morgan didn’t even come with an apology, let alone criminal charges for individuals.  This certainly didn’t fix anything, but it did let bankers and Jamie Dimon off the hook–once again.  Is this the business plan that Jamie Dimon condones?

Remember the $2 billion “London Whale” trading loss Mr. Dimon apologized for back in May just before shareholders approved a $23 million pay package for him?  That $2 billion loss turned into more than $6 billion.  That’s triple the original amount Dimon himself announced!   He missed by more than $4 billion!  Did he mean to mislead or is he just incompetent?  Was Dimon negligent as a CEO for allowing these kinds of losses?  Now, JP Morgan is suing its own former employees involved in the scandal, and JP Morgan will not comment on the lawsuit.  A recent New York Times story reported, “Since announcing the problem in May, JPMorgan has worked to reassure skittish investors. The bank has broadly reshuffled its management ranks and united some of its business operations.”  (Click here for the complete NYT story.)  Shouldn’t Mr. Dimon be “reshuffled”?  I mean, just before a big payday, he told shareholders the loss would be $2 billion when, months later, it turned into more than $6 billion.  Why didn’t Dimon know about this?  Where was his supervision? This is one of the nation’s top bankers, and he doesn’t know if a loss is $2 billion or $6 billion?

What about the LIBOR (London Inter-bank Offered Rate) interest rate rigging scandal that erupted earlier this year?  Once again, JP Morgan is involved.  I wrote about this back in July and said, “The Libor interest rate rigging scandal is being called the biggest financial fraud in history.  Libor is a key interest rate that is used globally to set as much as $800 trillion in transactions.  It is used to set interest rates for things such as credit cards, student loans, mortgages, corporate bonds and hundreds of trillions of dollars in derivatives.”  (Click here for the complete post.)  In August, the Huffington Post reported, “Pretty much everybody in the world with subpoena power has hit JPMorgan Chase with requests for information in the Libor-rigging scandal. . . . JPMorgan also said it was the subject of a large and growing number of lawsuits coming out of the Libor mess. State and local governments, for example, are suing banks for keeping Libor too low, hurting the value of interest-rate swaps they bought to protect against rising rates.”  (Click here for the complete Huffington Post story.)  Again, Dimon does not know what is going on in his own bank, or is this part of the business model that he condones?

All the above mentioned stories happened in just the last year or so.  The thing they all have in common is that Jamie Dimon was and still is–in charge.  When the captain of a ship keeps running aground and the ship owners keep patching the hull, when is it more practical to replace the captain?  Hasn’t Dimon run the bank aground on several occasions?  Aren’t the other banking executives crashing their boats into the rocks?  Don’t get me wrong, I think Mr. Dimon should be fired, but that’s not going to happen.  The mainstream media will not criticize Dimon or any the CEO of a big bank despite their dismal track records.  If any reporter did, I think they would be fired.   The public accepts this behavior, and our own government officials enable the fraud, negligence and incompetence to go unprosecuted and unpunished in the banking industry.  The economy will never truly recover against this kind of financial backdrop.

Comments
  1. Charles H. Francis

    Thanks Greg – this is a well stated and summarized article. The fruits of Liberalism as employed in government: graft and corruption for the insiders and cronies; the rest get the kool-aid or are thrown under the bus. Chummy.

    • Greg

      Happy you liked the post Charles H. Francis.
      Greg

  2. chris t

    my mother allways said “the fish rots from the head down”

    • Greg

      Chris T,
      You have a wise mother. Thank you.
      Greg

  3. Mitch Bupp

    Well said Greg, I would also add that this probably why the founding fathers of this country limited corporations and government. The American Revolution was more about personal freedom from intrusions of government and government sanctioned businesses. The East India Trading company, then the worlds largest corporation, worked in concert with the British government limiting competition and making the American market a monopoly for the chosen corporation …

    We need to put the limits back on corporations as the founding fathers had them …. limited in life and only for the public good…

    • Greg

      Thank you Mitch, Art and JC for weighing in here!!
      Greg

  4. Art Barnes

    Damion and others like him are not only “in charge” but in my mind they are “at large” with, as your most astute article suggested, with no reins. Law enforcement to the average Joe is well, alive, and striving. Just do a rolling stop around here and you will get a $500 fine for running a stop or anything other minute infraction of the law calls for a stop, warrant check, ticket issuance, etc. The problem lies that the American people have come to expect big boys to “get away with it”, and that our leaders are the best that can be bought. Just ask any ordinary Joe at the local cafe and he will tell you the cards are stacked in favor of the big guy, its simply accepted now, even a smart guy can figure there’s no chance of change within the system. Self policing has never worked and never will especially when oversight has been bought. That is why America is destined to go as the Romans did because the “big guys” are acting just like they did with greed, corruption, favors, back room deals, fall guys, and so on and so on.

  5. jc davis

    Greg you asked..Did he mean to mislead or is he just incompetent? There are two sets of laws. one for those at the top, and one for the rest of us.If any of us take a 50$ bill to a store, and ask for a 100$ dollar bill in exchange,when given a hundred for a fifty we get arrested, and convicted.Names all over the media.

  6. AndyB

    Faster than an Obama Executive Order,
    More powerful than Turbo Timmy.
    Able to intimidate Congress with a withering stare.

    Look up at the sky!
    It’s God, a Master of the Universe. It’s Supercriminal Dimon.

    Yes. It’s Supercriminal Dimon

    • Greg

      Thank you Andy,Ace and Chuck.
      Greg

  7. Ace of Diamonds

    We have all enjoyed the fruits of capitalism. The problem with capitalism is it requires a sucker. Banks know as investors become more savvy thanks to web sites like yourself, they need a new sucker. The Govt. has now assumed this roll. When banks analyze new business models the government fines are now considered a cost of doing business. For example Mozzilo from Countrywide was fined about 10 percent of his compensation from countrywide through the years. basically the SEC’s fines are no different then leaving aside money to tip your waiter after a nice steak dinner. The tricky part here is we all love the plus side of capitalism in America, but now that the sucker has been exposed…well thats just say… no one wants to be a sucker.

  8. Chuck Allen

    Happy Monday Greg!

    The BIG BOAT of banking has and does continue to amass so much wealth, please notice I did not say money, that less than $2 billon dollars in punitive payouts is paultry in comparison.

    Deceit and greed are rewarded while any semblance of honor is chastised, albeit only to the tune of a couple billion dollars.

  9. Don Johnson

    Hello Greg
    I really appreciate your comments and hope that more will listen and take note.
    Do You see any hope that such a climate of greed and corruption will change before bringing the system down?
    If we rely on history to answer some of these questions then the answer is great turmoil will reign first. What will replace it? What will arise from the ashes? Can you find answers in a box of ashes? Then we have to look outside the box. That will be different. When we do we will have an excellent future.
    Have a good day!
    Don

  10. Sylvia Sterling

    Thanks for capsulizing this sickening situation. It seems almost impossible that there could be so much fraud and corruption within the financial and governmental institutions. Thanks for
    keeping us informed. It’s a cinch the mainstream media never will. Guess I’ll keep storing food
    and watch the signs of coming collapse.

    • Greg

      Sylvia Sterling,
      Don’t see how you can go wrong with that plan. Thank you for your comment and support.
      Greg

  11. john duffy

    Greg this crap has been going on for a long time and we all know about it. The question is, when is anybody going to do something about it?

    • Greg

      John,
      Nothing will be done because they are afraid of crashing the system along with protecting their buddies. The syatem is going to crash, the powers are just pretending and extending.
      Greg

  12. Don Johnson

    Hi Greg: Here is something that I wanted to send to you personally.
    When in past history dire economic troubles started we can go back to about 1800 years before Christ. Here a new economic system was installed by Joseph. Not just the system is noteworthy but notice the peoples reaction and how far they were willing to go to have some semblance of normalcy in their lives. You can read the account in Genesis 47: 13-26. Now I am not in any way promoting religion. Just history. There are parallels in our modern history.

    • Greg

      Thank you Don for the comment and reading material.
      Greg

  13. John

    I thought it would be neat for someone to put together all the scandals & scams that they have run on us in one article Greg. Maybe you can work with that with some of the great guests you have on.

    After all this have been going on for at least a couple of decades, as our politicians & management went along with Deregulation Greenspan, the maestro, for 20 years, which caused the 08 collapse due to fraud & corruption.

    They want the middle class to go thru austerity measures, but not one word about our politicians or management taking any pay or benefit cuts.

    Let alone that a good portion of them should be staying with Bernie Madoff for 150 years.

    • Greg

      Thank you John for the idea and comment.
      Greg

      • jc davis

        Greg: John is on to something. most sites that have tried this have a lot of false info produced as truth.With you guiding the ship of truth it would go over big. Seperating fact from fiction is your specialty.

        • Greg

          Thank you JC. I try hard to get it right but sometimes even I miss.
          Greg

  14. Larry W. Bryant

    == Can the Citizen-Petitioned Grand Jury Process Become the Silver Bullet in the Heart of Banksters’ Mischief? ==

    Some residents of the six U. S. states (Kansas, New Mexico, North Dakota, Nebraska, Nevada, and Oklahoma) that offer what’s known as citizen-petitioned grand juries (at the county level) might wish to avail themselves of this democratic means for formally INVESTIGATING and REPORTING UPON any wrongdoing on the scale of the banksterism that has affected (and infected) our nation’s financial security and welfare.

    The process consists, simply enough, of circulating a signature petition amongst the designated county electorate so as to garner the small percentage of registered-voter signatures required to impanel the grand jury.

    Once so impaneled, the grand jury could solicit/subpoena testimony and other evidence from prospective WHISTLEBLOWERS within the fraud-ridden mega-banking industry. For example, the petitioners in Muskogee, Okla., could focus their probe on the county branch of J. P. Morgan to determine the extent of any fraudulent activity in that branch.

    If all politics is local (and we know it is), then why shouldn’t the politics of fraudulent banking (including coverups and intimidation of potential whistleblowers) be equally as local, and accountable? — Larry W. Bryant (26 Nov 12)
    http://ballotpedia.org/wiki/index.php/Petitions_to_impanel_grand_juries

    • Greg

      Thank you Larry for the comment and link.
      Greg

  15. Terrill Goldman

    Thanks for the report, Greg. To some, the U.S. Treasury is basically a counterfeit operation for the Federal Reserve, which is not “federal” or under government control. What is your take on the Bilderberg Group and purported private bankers who control the Fed and the world’s money markets?

    • Greg

      Terrill,
      I can’t argue with that argument about the Fed. I don’t know much about the Bilderberg Group but I don’t think they care much about the public good. I think the Fed is related or part of that group. I also think the world’s rich know how bad the economic situation really is with the hundred’s of trillions in derivatives that are near worthless in the system. I think they are playing for time to put together a new system that will benefit them a screw the masses.
      Greg

  16. George Too

    What a neat for profit model. Silly me, I thought fraud was illegal. I keep forgetting the golden rule. “He who has the gold, rules” Oh well, maybe next time we get freedom and liberty, we will safe gaurd it better.

    • Greg

      George Too and Edward.
      Fraud as a business model with government approval in the form of just little fines. (Little in comparison to the enormous fraud.) Thank you for weighing in.
      Greg

  17. Edward Ulysses Cate

    Paying fines as JP Morgan and others do have been figured in as the cost of doing business. It’s like payments of absolution to The Church in earlier times, so they wouldn’t be excommunicated; yet they’d continue to do the same thing. Good for the Church, good for business, bad for ordinary folks. The only way to fight financial sociopaths (bullies with means) is to have a majority in the House that are NOT sociopathic. We’ll always be on the menu until we’re represented at the table. Governing is too important to be left to parties.

  18. James Paradise

    We have lost this country to the bankers. Very sad, yet we knew it was comming. People of USA wake up and take it back! Take your money out of the big banks and put in to the solid local banks. Do it now!

  19. debbie monte

    Hi greg, great and thorough article. It is frustrating when I read Americans just accept this as what can we do? I call/write my reps all the time, but a waste of time it seems. Congress is irrelevant. On a good note, I really enjoy your site and interviews! You are enjoyable to watch and very informative, thanks so much!

    • Greg

      Thank you Debbie for the kind words and support.
      Greg

  20. Henry

    I’ve read that F.D.R. made derivatives illegal in 1936, and, Reagan legalized them in 1983.

    This radical switch back to unfettered/free-market/laissez-faire economics directs all boring, uncompetitive, outdated, things such as laws, rules and regulations directly to the rubbish…along with their cousin, accountability.

    As long as the systemically destructive, unregulated, private profit corporate interest has the UPPER HAND over OUR government, WE DESERVE WHAT WE GET!

    “Virtue is persecuted more by the wicked than it is loved by the good.” — Buddha

    • Greg

      Thank you Henry for the comment and the quote.
      Greg

  21. kc

    Greg-

    Great site and great content as always. Uncle Warren Buffett would disagree though. An article on Bloomberg made me laugh:

    http://www.bloomberg.com/news/2012-11-27/dimon-would-be-best-treasury-secretary-in-crisis-buffett-says.html

    Cheers!

    -KC

    • Greg

      Thank you KC,
      Greg

  22. David Ceiler

    I think what we are seeing is an admission that big banks, or other big corporations, are getting too big to manage, and should be broken down into smaller components. I am not defending Dimon at all, just looking at the problems of running such a large corporation as JPM. Dimon is an arrogant prick who should be sitting in Guantanamo, but that is a discussion for another time. All of the tbtf’s should be broken up, sold off, and prohibited from ever rising again through the reinstatement of Glass-Stegal.

    • Greg

      Thank you David.
      Greg

  23. frosty

    Greg,

    The issue is about justice, which is the expression of a sovereign will, and about the law which attempts to secure this justice.

    If a culture holds that justice is established by a higher authority than the State, its laws will reflect this. For example, in the well known expression of sovereign will “..an eye for an eye, a tooth for a tooth..” we see one principle of divine justice requires that the punishment must involve compensation for the victim and be and be neither excessive or inadequate. Men then establish laws in order to secure divine justice and provide for the security of their societies. The order of authority goes from the divine sovereign to created man and then to the State. Liberty and freedom are secured internally through mans faith and his relation to his sovereign creator.

    When the State becomes sovereign and is allowed to define morality and justice for men, then man becomes a creature of the State and the order of authority is completely reversed. The source of man’s salvation now rests in the hands of political candidates who campaign as would-be messiahs and the laws become transitory expression of the social values of the day. The State, being sovereign, reigns above the law and it can do no wrong for what is right or wrong is determined solely by what the State does. Rogue bankers must be bailed out and not punished; the murder of innocents whether in the womb or in foreign lands is acceptable if the State deems it to be so. Man is no longer willingly faithful to the will of his creator but must be compelled by external means to submit and conform to the dictates of the supposedly omnipotent and infallible law maker. A police state develops and tyranny grows…etc.

    If bankers and politicians can economically rape and pillage a society and not suffer any penalty as required by divine justice, it is simply because that culture has found a different the source for the and power and meaning of its laws.

    Americans, who pay for the cost for government and are not willing to be its slavish dependents, must somehow reestablish their rightful position as its masters under God. With strong effort and persistence and with divine justice on our side we can win our country back.

    • Greg

      Thank you frosty,
      You are always thought provoking my friend!
      Greg

  24. Jay Bouris

    Greg, This must be why Warren Buffet say’s Jamie Dimon would make a great Secretary of the Treasury!!! You could not make up a more unbelievable story. My Brother is thinking about moving to Ecuador, where there is more honesty and integrity!! I may be right behind him! Thanks for keeping us informed! Jay

    • Greg

      Thank you Jay.
      It is sad that our own elected officials ignore this massive fraud and incompetence just to keep the game going. We have no statesmen just bag-men in Washington D.C.
      Greg

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