30 January 2014

Matt Taibbi Asks Why Obama's Regulatory Strategy in Reforming the Banks Is Such a Joke

I was glad to see someone talk about this, because for whatever reason I did not see a strong reaction in the media to this arrogant defiance by the board of JPM. In fact, there were several 'stop picking on Jamie' sessions led by the pom pom spokesmodels on financial TV.

It is always hard, and often dangerous and unfair, to judge someone's motives.  But we can assess the effects.

The lack of actual reform led by the Obama Administration, and of course a corporate compliant Congress, is hard to understand except in terms of the corrupting power of campaign funding that is pretty much out of control, and undermining the character of the Republic.  

Yes, Mitt 'would have been worse.'  But that does not make Obama good, or effective. It makes him Brand Y to Mitt's Brand X.  But the hearts of both brands belong to the same Daddies.  And the same can be said of much of the governance of the developed nations, especially the English speaking peoples and their client states.

As outlined in This Town by Mark Leibovich, the primary occupation in Washington DC is now putting on the feedbag during and after your 'public service.'  This has always been a problem, but now it is widely accepted, and even fashionable.

Is Obama driven by ideology, bad advice, amoral ambivalence, or just plain old personal greed, a desire to 'get paid?' With Bush et al. there was no question about it. And pretty much the same goes for the Clintons, who accepted Wall Street's proposal of ongoing partnership.  

But Obama presented himself as something new to Washington, someone different, someone offering big changes from the past.

And then he proceeded to bring in the same old people, and the same old failed policies towards financial regulation, and even continued quite a few Bush Administration policies.   And despite promises of transparency, he doubled down against whistleblowers. 

As a 'socialist' he is a moderate Republican, ideologically driven to bad policy decisions like Herbert Hoover, with a tinge of Nixonian insularity. 

It is funny but in rereading some pieces about Herbert Hoover, a basically decent man of significant personal accomplishments, I came across denunciations of him as a 'socialist' by the extreme neo-liberal Austrio-whacky wing of the economic spectrum.   He did blame the Democrats in the House for distracting him, and impeding his policies of fostering confidence by persuading business and the Banks to do more for the public good.

Hoover was bound by a particular ideology with regard to government that was basically laissez-faire in its character.  He just did not have the heart to actually starve people and throw out the victims of the financial system into the cold when push came to shove.  But some of his advisors certainly did, and their ideological descendants still do, and will.

Too often Obama seems to be a well-positioned corporate brand, promoted like any other product.  And this is what makes him particularly disappointing.  Bush, Carter, and Clinton could not have been tragic, because they had no heights from which to fall.  A manager makes peace with his times and situation, seeking the best he can get; a leader changes them,  including the tone of the conversation and the assumptions and direction of the deal.   

As for Obama, like Herbert Hoover, his presidency verges on the tragic, but the ending has yet to be written. 

Rolling Stone
Jamie Dimon's Raise Proves U.S. Regulatory Strategy is a Joke
By Matt Taibbi
January 30, 2014

If you make a big show of punishing someone, and when you're done they still don't think they have a behavior problem, you probably picked the wrong punishment. Every parent on earth knows this implicitly – but does the Obama White House finally get it, too, now, after Jamie Dimon's raise?

When the board of JP Morgan Chase gave its blowdried, tirelessly self-regarding CEO a whopping 74 percent raise – after a year in which the Justice Department blasted the bank with $20 billion in sanctions – it was one of those rare instances where Main Street and Wall Street were mostly in agreement.

Everyone from the Financial Times to Forbes.com to the Huffington Post decried the move. The Wall Street pundits mostly thought it was a dumb play by the Chase board from a self-interest perspective, one guaranteed to inspire further investigations by the government. Meanwhile, the non-financial press generally denounced the raise as a moral obscenity, yet another example of the serial coddling of Wall Street's habitually overcompensated executive class.

Both groups were right. But to me the biggest news was how brutal an indictment Jamie's raise was of the Obama/Holder Justice Department, which continues to profoundly misunderstand the mindset of the finance villains they claim to be regulating.

Chase's responses to Holder's record penalties have been hilarious. Their first move was to make sure people outside the penthouse boardroom took on all the pain, laying off 7,500 employees and freezing salaries for the non-CEO class of line employees.

Next, Chase's board members sat down, put their misshapen heads together, considered the impact of this disastrous year of settlements, and decided to respond by more than doubling the take-home pay of the executive in charge, giving Dimon about $20 million in salary and equity.

In the end, the fines left the decision-making class of the company not just uninjured but triumphant. Dimon's raise was symbolic of a company-wide boost in compensation following the mass layoffs, as average per-employee expenses rose four percent overall, to $122,653, despite the $20 billion burden imposed upon the firm by the state...

People like Holder still don't understand that the leaders of these rogue firms have no problem blowing up their own companies and/or imperiling the world economy, so long as they continue to personally get paid.

Regulators have been blind to this for years, decades. It's why the Fed, the OCC, the OTS, the Justice Department and a host of other agencies missed incoming icebergs like the AIG and Lehman disasters, once upon a time.

In fact, since the days of Alan Greenspan and his halcyon dreams of a future of pure self-regulation, the notion that corporate leaders will always act in the interest of their own firms – that they'll behave according to the principled corporate egoism that was an article of faith both for Ayn Rand and acolytes like Greenspan – has been a core basis for broad policies of regulatory restraint...

Take some time to read the entire article by Matt Taibbi here.