09 December 2013

Reich: JP Morgan, the Corruption of America, and the Age of Cynicism

“What is a cynic? A man who knows the price of everything and the value of nothing."

Oscar Wilde, Lady Windermere's Fan

I thought this article below was a striking, insightful and important set of observations from Robert Reich. 

Rather than merely link to it, I thought an extended excerpt was appropriate, since it strikes to the heart of a key theme of this Café, the credibility trap that diminishes the reforms essential for a sustainable recovery by co-opting transparency and equal justice under the law, making the governing process both complicit and co-dependent with even the worst abuses and frauds of the monied interests.

Pam Martens has an interesting take on the Fed's role in this shifting of power to the unelected power brokers on Wall Street which you can read here.

I listen carefully to what Robert Reich has to say, and often find it to be well founded and thoughtful.  But whenever I quote or link to something of his,  it seems as though I get some comment about why I like that liberal.   That comes, as so many others know, with the turf of managing a thought centered blog, but it helps to illustrate one of our key problems today.  We cannot even speak to one another long enough to identify the problems, without resort to slogans, labels, and shouting.

It is too bad that so many are distracted, if not ensnared, in the well-crafted emotionalism and stage play of the left vs. right puppet show which is put forward in the headlines, while the looting of the nation by its ruling class proceeds virtually unimpeded and to almost everyone's detriment, except for an obscenely fortunate few.  This is what the data shows, and the role of policy in this is almost unmistakable, except for those who are willfully blind.

Are there any remaining who would still, at this late date, consider Obama as a real progressive? By now he has been repeatedly shown as merely the less repugnant of two bad choices in which the 'liberal opposition' now resembles the corporate-friendly Republicans of only a couple decades ago.   But as Richard Cobden is said to have observed, 'For every credibility gap there is a gullibility gap.'

You may read the entire, original piece here.

JP Morgan Chase, the Foreign Corrupt Practice Act, and the Corruption of America
By Robert Reich
Sunday, December 8, 2013

The Justice Department has just obtained documents showing that JPMorgan Chase, Wall Street’s biggest bank, has been hiring the children of China’s ruling elite in order to secure “existing and potential business opportunities” from Chinese government-run companies.

“You all know I have always been a big believer of the Sons and Daughters program,” says one JP Morgan executive in an email, because “it almost has a linear relationship” to winning assignments to advise Chinese companies. The documents even include spreadsheets that list the bank’s “track record” for converting hires into business deals.

It’s a serious offense. But let’s get real. How different is bribing China’s “princelings,” as they’re called there, from Wall Street’s ongoing program of hiring departing U.S. Treasury officials, presumably in order to grease the wheels of official Washington? Timothy Geithner, Obama’s first Treasury Secretary, is now president of the private-equity firm Warburg Pincus; Obama’s budget director Peter Orszag is now a top executive at Citigroup.

Or, for that matter, how different is what JP Morgan did in China from Wall Street’s habit of hiring the children of powerful American politicians? (I don’t mean to suggest Chelsea Clinton got her hedge-fund job at Avenue Capital LLC, where she worked from 2006 to 2009, on the basis of anything other than her financial talents.)

And how much worse is JP Morgan’s putative offense in China than the torrent of money JP Morgan and every other major Wall Street bank is pouring into the campaign coffers of American politicians — making the Street one of the major backers of Democrats as well as Republicans?

The Foreign Corrupt Practices Act, under which JP Morgan could be indicted for the favors it has bestowed in China, is quite strict. It prohibits American companies from paying money or offering anything of value to foreign officials for the purpose of “securing any improper advantage.”  Hiring one of their children can certainly qualify as a gift, even without any direct benefit to the official.

JP Morgan couldn’t even defend itself by arguing it didn’t make any particular deal or get any specific advantage as a result of the hires. Under the Act, the gift doesn’t have to be linked to any particular benefit to the American firm as long as it’s intended to generate an advantage its competitors don’t enjoy.

Compared to this, corruption of American officials is a breeze. Consider, for example, Countrywide Financial’s generous “Friends of Angelo” lending program, named after its chief executive, Angelo R. Mozilo, that gave discounted mortgages to influential members of Congress and their staffs before the housing bubble burst. No criminal or civil charges have ever been filed related to these loans...

The Foreign Corrupt Practices Act is important, and JP Morgan should be nailed for bribing Chinese officials. But, if you’ll pardon me for asking, why isn’t there a Domestic Corrupt Practices Act?

Never before has so much U.S. corporate and Wall-Street money poured into our nation’s capital, as well as into our state capitals. Never before have so many Washington officials taken jobs in corporations, lobbying firms, trade associations, and on the Street immediately after leaving office. Our democracy is drowning in big money.

Corruption is corruption, and bribery is bribery, in whatever country or language it’s transacted in.