RSN Fundraising Banner
FB Share
Email This Page
add comment
Print

Moyers writes: "That sound of shattered glass you've been hearing is the iconic portrait of Jamie Dimon splintering as it hits the floor of JPMorgan Chase."

Bill Moyers. (photo: PBS)
Bill Moyers. (photo: PBS)



JPMorgan's Losses a Canary in a Coal Mine?

By Bill Moyers, BillMoyers.com

17 May 12

 

hat sound of shattered glass you’ve been hearing is the iconic portrait of Jamie Dimon splintering as it hits the floor of JPMorgan Chase. As the Good Book says, "Pride goeth before a fall," and the sleek silver-haired, too-smart-for-his-own-good CEO of America’s largest bank has been turning every television show within reach into a confessional booth. Barack Obama’s favorite banker faces losses of $2 billion and possibly more – all because of the complex, now-you-see-it-now-you-don’t trading in exotic financial instruments that he has so ardently lobbied Congress not to regulate.

Once again, doing God’s work - that is, betting huge sums of money with depositor funds knowing that you are too big to fail and can count on taxpayers riding to your rescue if your avarice threatens to take the country down - has lost some of its luster. The jewels in Dimon’s crown sparkle with a little less grandiosity than a few days ago, when he ridiculed Paul Volcker’s ideas for keeping Wall Street honest as "infantile."

To find out more about what this all means, I turned to Simon Johnson, once chief economist of the International Monetary Fund and now a professor at MIT’s Sloan School of Management and senior fellow at the Peterson Institute for International Economics. He and his colleague James Kwak founded the now-indispensable website baselinescenario.com. They co-authored the bestselling book 13 Bankers and the most recent book, White House Burning, an account every citizen should read to understand how the national deficit affects our future.

Bill Moyers: If Chase began to collapse because of risky betting, would the government be forced to step in again?

Simon Johnson: Absolutely, Bill. JPMorgan Chase is too big to fail. Hopefully in the future we can move away from this system, but right now it is too big. It’s about a $2.5 trillion dollar bank in terms of total assets. That’s roughly 20 percent of the U.S. economy, comparing their assets to our GDP. That’s huge. If that bank were to collapse - I’m not saying it will - but if it were to collapse, it would be a shock to the economy bigger than that of the collapse of Lehman Brothers, and as a result, they would be protected by the Federal Reserve. They are exactly what’s known as too big to fail.

Moyers: I was just looking at an interview I did with you in February of 2009, soon after the collapse of 2008 and you said, and I’m quoting, "The signs that I see, the body language, the words, the op-eds, the testimony, the way these bankers are treated by certain congressional committees, it makes me feel very worried. I have a feeling in my stomach that is what I had in other countries, much poorer countries, countries that were headed into really difficult economic situations. When there’s a small group of people who got you into a disaster and who are still powerful, you know you need to come in and break that power and you can’t. You’re stuck." How do you feel about that insight now?

Johnson: I’m still nervous, and I think that the losses that JPMorgan reported - the CEO Jamie Dimon reported - and the way in which they’re presented, the fact that they’re surprised by it and the fact that they didn’t know they were taking these kinds of risks, the fact that they lost so much money in a relatively benign moment compared to what we’ve seen in the past and what we’re likely to see in the future - all of this suggests that we are absolutely on the path towards another financial crisis of the same order of magnitude as the last one.

Moyers: Should Jamie Dimon resign? I ask that because as you know and as we’ve discussed, Chase and other huge banks have been using their enormous wealth for years to in effect buy off our politicians and regulators. Chase just had to pay up almost three quarters of a billion dollars in settlements and surrendered fees to settle one case alone, that of bribery and corruption in Jefferson County, Alabama. It’s also paid out billions of dollars to settle other cases of perjury, forgery, fraud and sale of unregistered securities. And these charges were for actions that took place while Mr. Dimon was the CEO. Should he resign?

Johnson: I think, Bill, there should be an independent investigation into how JPMorgan operates both with regard to these losses and with regard to all of the problems that you just identified. This investigation should be conducted separate from the board of directors. Remember that the shareholders and the board of directors absolutely have an incentive to keep JPMorgan Chase as a too-big-to-fail bank. But because it is that kind of bank, its downside risk is taken by the Federal Reserve, by the taxpayer, by the broader economy and all citizens. We need to have an independent, detailed, specific investigation to establish who knew what when and what kind of wrongdoing management was engaged in. On the basis of that, we’ll see what we’ll see and who should have to resign.

Moyers: Dimon is also on the board of the Federal Reserve Bank of New York, which, as everyone knows is supposed to regulate JPMorgan. What in the world are bankers doing on the Fed board, regulating themselves?

Johnson: This is a terrible situation, Bill. It goes back to the origins, the political compromise at the very beginning of the Federal Reserve system about a hundred years ago. The bankers were very powerful back then, also, and they got a Federal Reserve system in which they had a lot of representation. Some of that has eroded over time because of previous abuses, but you’re absolutely right, the prominent bankers, including most notably, Jamie Dimon, are members of the board of the New York Federal Reserve, a key element in the Federal Reserve system. And he should, under these circumstances, absolutely step down from that role. It’s completely inappropriate to have such a big bank represented in this fashion. The New York Fed claims there’s no impropriety, there’s no wrong doing and he doesn’t involve himself in supervision and so on and so forth. Perhaps, but why does Mr. Dimon, a very busy man, take time out of his day to be on the board of the New York fed? He is getting something from this. It’s a trade, just like everything else on Wall Street.

Moyers: He dismissed criticism of his dual role yesterday by downplaying the role of the Fed board. He said it’s more like an "advisory group than anything else." I had to check my hearing aid to see if I’d heard that correctly.

Johnson: Well, I think he is advising them on lots of things. He also of course meets with some regularity with top Treasury officials, and some reports say that he meets with President Obama with some regularity. The political access and connections of Mr. Dimon are second to none. One of his senior executives was until recently chief of staff in the White House, if you can believe that. I really think this has gone far enough. Under these kinds of circumstances with this amount of loss of control over risk management, what we need to have is Mr. Dimon step down from the New York Federal Reserve Board.

Moyers: He told shareholders at their annual meeting Tuesday - they were meeting in Tampa, Florida - that these were "self-inflicted mistakes" that "should never have happened." Does that seem reasonable to you?

Johnson: Well, it’s all very odd, Bill, and I’ve talked to as many experts as I can find who are at all informed about what JPMorgan was doing and how they were doing it and nobody really understands the true picture. That’s why we need an independent investigation to establish - was this an isolated incident or, more likely, the breakdown of a system of controlling and managing risks. Keep in mind that JPMorgan is widely regarded to be the best in the business at risk management, as it is called on Wall Street. And if they can’t do this in a relatively benign moment when things are not so very bad around the world, what is going to happen to them and to other banks when something really dramatic happens, for example, in Europe in the eurozone?

Moyers: Some of his supporters are claiming that only the bank has lost on this and that there’s absolutely no chance that the loss could have threatened the stability of the banking system as happened in 2008. What do you say again to that?

Johnson: I say this is the canary in the coal mine. This tells you that something is fundamentally wrong with the way banks measure, manage and control their risks. They don’t have enough equity funding in their business. They like to have a little bit of equity and a lot of debt. They get paid based on return on equity, unadjusted for risk. If things go well, they get the upside. If things go badly, the downside is someone else’s problem. And that someone else is you and me, Bill. It goes to the Federal Reserve, but not only, it goes to the Treasury, it goes to the debt.

The Congressional Budget Office estimates that the increase in debt relative to GDP due to the last crisis will end up being 50 percent of GDP, call that $7 trillion dollars, $7.5 trillion dollars in today’s money. That extraordinary. It’s an enormous shock to our fiscal accounts and to our ability to pay pensions and keep the healthcare system running in the future. For what? What did we get from that? Absolutely nothing. The bankers got some billions in extra pay, we get trillions in extra debt. It’s unfair, it’s inefficient, it’s unconscionable, and it needs to stop.

Moyers: Wasn’t part of the risk that Dimon took with taxpayer guaranteed deposits? I mean, if I had money at JPMorgan Chase, wouldn’t some of my money have been used to take this risk?

Johnson: Again, we don’t know the exact details, but news reports do suggest that yes, they were gambling with federally insured deposits, which just really puts the icing on the cake here.

Moyers: Do we know yet what is Dimon’s culpability? Is it conceivable to you that a risk this big would have been incurred without his approval?

Johnson: It seems very strange and quite a stretch. And he did tell investors, when he reported on first quarter earnings in April, that he was aware of the situation, aware of the trade - he called it a “tempest in a teacup,” and therefore, not something to worry about.

Moyers: He’s been Wall Street’s point man in their campaign against tighter regulation of derivatives and proprietary trading. Were derivatives at the heart of this gamble?

Johnson: Yes, according to reliable reports, this was a so-called "hedging" strategy that turned out to be no more than a gamble, but the people involved perhaps didn’t understand that or maybe they understood it and covered it up. It was absolutely about a bet on extremely complex derivatives and the interesting question is who failed to understand exactly what they were getting into. And how did Jamie Dimon, who has a reputation that he burnishes more than anybody else for being the number one expert risk manager in the world - how did he miss this one?

Moyers: I’ve been reading a lot of stories today about members of the house, Republicans in particular, saying this doesn’t change their opinion at all that we’ve got to still kill Dodd-Frank and diminish regulation. What do you think about that?

Johnson: I think that it is a recipe for disaster. Look, deregulating or not regulating during the boom is exactly how you get into bailouts in the bust. The goal should be to make all the banks small enough and simple enough to fail. End the government subsidies here. And when I talk to people on the intellectual right, Bill, they get this, as do people on the intellectual left. The problem is, the political right largely doesn’t want to go there because of the donations. I’m afraid some people, not all, but some people on the political left don’t want to go there either.

Moyers: The Washington Post reported that the Justice Department has launched a criminal investigation into JPMorgan’s trading loss. Have you spotted - and I know this is sensitive - but have you spotted anything in the story so far that suggests the possibility of criminality? Dodd-Frank is not in existence yet, so where would any possibility of criminality come from?

Johnson: Well Dodd-Frank is in existence but the rules have not been written and therefore not implemented. So yes, it is hard to violate those rules in their current state. And many of those rules, by the way, violation would be a civil penalty, not a criminal penalty. If you violate a securities law - if you’ve mislead investors, if there was material adverse information that was not disclosed in an appropriate and timely manner - that’s a very serious offence traditionally.

I have to say that the Department of Justice and the Securities and Exchange Commission have not been very good at enforcing securities law in recent years including and specifically since the financial crisis. I am skeptical that this will change. But if they have an investigation that reveals all of the details of what happened and how it happened, that would be extremely informative and show us, I believe, that the risk management approach and attitudes on Wall Street are deeply flawed and leading us towards a big crisis.

Moyers: So what are people to do, Simon? What can people do now in response to this?

Johnson: Well, I think you have to look for politicians who are proposing solutions, and look on the right and on the left. I see Elizabeth Warren, running for the Senate in Massachusetts, who is saying we should bring back Glass-Steagall to separate commercial banking from investment banking. I see Tom Hoenig, who is not a politician, he’s a regulator, he’s the former president of the Kansas City Fed, and he’s now one of the top two people at the Federal Deposit Insurance Corporation, the FDIC. He is saying that big banks should no longer have trading desks. That’s the same sort of idea that Elizabeth Warren is expressing. We need a lot more people to focus on this and to make this an issue for the elections.

And I would say in this context, Bill, it’s very important not to be distracted. I understand for example, Speaker Boehner, the Republican Speaker of the House of Representatives, is proposing to have another conflict over the debt ceiling in the near future. This is the politics of distraction. This is refusing to recognize that a huge part of our fiscal problems today and in the future are due to these risks within the financial system that are allowed because the people running the biggest banks hand out massive campaign contributions across the political spectrum.

Moyers: Are you saying that this financial crisis, so-called, is at heart a political crisis?

Johnson: Yes, exactly. I think that a few people, particularly in and around the financial system, have become too powerful. They were allowed to take a lot of risk, and they did massive damage to the economy - more than eight million jobs lost. We’re still struggling to get back anywhere close to employment levels where we were before 2008. And they’ve done massive damage to the budget. This damage to the budget is long lasting; it undermines the budget when we need it to be stronger because the society is aging. We need to support Social Security and support Medicare on a fair basis. We need to restore and rebuild revenue, revenue that was absolutely devastated by the financial crisis. People need to understand the link between what the banks did and the budget. And too many people fail to do that. "Oh, it’s too complicated. I don’t want to understand the details, I don’t want to spend time with it." That’s a mistake, a very big mistake. You’re playing into the hands of a few powerful people in the society who want private benefit and social loss.

e-max.it: your social media marketing partner
 

Comments   

We are concerned about a recent drift towards vitriol in the RSN Reader comments section. There is a fine line between moderation and censorship. No one likes a harsh or confrontational forum atmosphere. At the same time everyone wants to be able to express themselves freely. We'll start by encouraging good judgment. If that doesn't work we'll have to ramp up the moderation.

General guidelines: Avoid personal attacks on other forum members; Avoid remarks that are ethnically derogatory; Do not advocate violence, or any illegal activity.

Remember that making the world better begins with responsible action.

- The RSN Team

 
-61 # gcavener 2012-05-17 21:43
Bill,
Did you know that LBJ was involved in murdering JFK? Did it seem wierd to you that LBJ's folks told you to remove the bullet proof shields from JFK's car? Have you ever taken any responsibility for the crime your boss committed?
 
 
-7 # robbeygay 2012-05-18 18:02
Yess Bill and Gcavener, LBJ did it all, JFK should have let him have gay union and to dice Ladybird, then the shield could stay and JFK lived. But not God;s wish and who would Onassis have otherwise?
 
 
+2 # Merschrod 2012-05-20 11:57
gee cave, with minus 50+ you are the community's "off the subject" winner of the day. Focus man focus.
 
 
-12 # railroadmike 2012-05-17 21:53
I like Romneys take on this subject. Oh the tax payers cab back up the banks.
 
 
+6 # John Steinsvold 2012-05-17 21:59
An Alternative to Capitalism (if the people knew about it, they would demand it)

Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.

I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:

http://evans-experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

“Insanity is doing the same thing over and over and expecting a different result."~ Albert Einstein
 
 
-20 # slimslider 2012-05-18 09:39
I'm sorry, Steinsvold but the theory of Communism, (and what you have written is essentially straight out of the Marxist theory of capital-free society according to need) has failed much more miserably than our weak Capitalism efforts. Capitalism would probably work fine if it were ever allowed to function as intended. We have never had a true free-market system, our legislators are bought and paid for before they begin to take office, and the system has totally evolved to this sick system of corrupt dysfunction. Capitalism's strength is that it blends so well with man's strongest basic drive, ...greed (which is the need to maximize fitness). And it is true that greed can be good. It creates the entrepreneur, it makes people work hard to achieve, it creates competition, it drives the societal engine. Too bad that after a couple of hundred years the wealthy have found a way to totally do away with the checks & balances necessary for the whole thing to work. Pity indeed.
 
 
+31 # pbbrodie 2012-05-18 10:32
All of the reasons you just expressed are the exact same ones that prevented communism from working. Greed isn't good, it is the driving force behind all of the problems you just outlined and the basic reason capitalism can't and hasn't worked.
You wrote:
"Capitalism would probably work fine if it were ever allowed to function as intended. We have never had a true free-market system,..."
Then, farther along you wrote:
"Too bad that after a couple of hundred years the wealthy have found a way to totally do away with the checks & balances necessary for the whole thing to work."

Well, you can't have it both ways. You either have your "true free-market system" of unfettered capitalism or a modified capitalism with checks and balances, what we are supposed to have today. But, we don't have it because of the greed that you believe is a good thing but is actually what is responsible for the wealthy successfully doing away with the checks and balances, as you so accurately pointed out.
Greed is always bad regardless of what system you use and you are absolutely wrong in your assertion that greed is man's strongest basic drive.
The true pity is that you don't have to be greedy to want to be successful and live a good, free, and happy life, all things that should be the driving force for everyone working hard to achieve. Greed is wanting more than others and wanting too much. Greed is always bad, always.
 
 
+12 # PGreen 2012-05-18 14:35
Why should we stop with an economic system (capitalism) that worships greed? Why not one that venerates, gluttony, sloth, wrath, envy, pride, and lust as well? Though now that I write it, it seems that we do. These six other "deadly sins" seems to be well represented, even celebrated, in our culture. Is this also a strength of capitalism?
Pride: America, love it or leave it
Wrath: How about the assassination of Bin Laden?
Envy: The campaigns behind most consumer marketing.
Lust: The porn industry, perhaps?
Gluttony: US most obese nation on earth.
Sloth: Television anyone?
Greed: Wall Street.
 
 
+2 # John Steinsvold 2012-05-18 20:39
slimslider,

As I envision a way of of life without money, we will gain economic freedom in addition to and without infringement on our present freedoms. The ONLY common denominator between a way of life without money and socialism/commu nism/Marxism is economic equality which, in my opinion, we desperately need here in the USA. Economic equality will eliminate poverty. It will also eliminate materialism which warps our sense of value and corrupts our system. It will also reduce crime dramatically. Otherwise, our government will remain the same. The Democrats will still do battle with the Republicans. Our free enterprise system will still exist as it does today.

John Steinsvold
 
 
+2 # John Steinsvold 2012-05-19 12:22
slimslider,

As I envision a way of of life without money, we will gain economic freedom in addition to and without infringement on our present freedoms. The ONLY common denominator between a way of life without money and socialism/commu nism/Marxism is economic equality which, in my opinion, we desperately need here in the USA. Economic equality will eliminate poverty. It will also eliminate materialism which warps our sense of value and corrupts our system. It will also dramatically reduce crime.

John Steinsvold

"The free market is indeed free. Its free of responsibility and accountability. Owners are free to ignore the future, free to act in ways that generate short term gains for themselves and push long term costs onto other people, the environment and the future."
-Lloyd Ireland
 
 
0 # robbeygay 2012-05-18 17:58
You're dreaming John Utopia never was and never will be. QED.
I just thank God each day as many RSN readers should. We missed WWi the Great Depression and WWII and despite some small skirmishes like Korea & Vietnam and 60 other Yankee doodles. We will likely miss this next Great depression and WW III. What a lucky generation I'm leaving soon Thanks God again.
 
 
-1 # John Steinsvold 2012-05-20 20:42
Quoting robbeygay:
You're dreaming John Utopia never was and never will be. QED.


Robbeygay,

I would like to define "Utopia" as the best possible way of life man can achieve.


Perhaps for the first time in history, we, as a nation and as a people, have the ability to conduct our internal economic affairs without the need to use money. We have the necessary democratic government, we have the abundant resources, we have the educational facilities and also the technical knowledge to do so. In light of what is happening in our economy today, should we not, at least, explore this possibility?

John Steinsvold

The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.
--Elizabeth Barlow
 
 
+4 # Granny Weatherwax 2012-05-18 21:30
"Home of the Brave" ?

In any case not Land of the Free: with 5% of the World population, the US represent 25% of the World prison population.
 
 
+43 # namewon 2012-05-17 22:11
Thank you once again, Bill Moyers.
 
 
+35 # Lennie 2012-05-17 22:57
Why all the talk? Usually, when a company, big or small, loses a fortune, heads start to roll, immediately. Why is this guy any different? $2 Billion is more than a fortune, in my book. Where did it go? Vanish into thin air? I just like to look at things simply. This is not right. It is a BIG problem and a lot of people are being hurt. The "big guys" don't give a hoot. Arrogant. They must be held accountable as people. Maybe a corporation can't go to the slammer, but the people running the show, can. And should. If I am wrong, please tell me.
 
 
+12 # pbbrodie 2012-05-18 10:18
You are definitely NOT wrong!!!
 
 
0 # robbeygay 2012-05-18 17:37
Lenny you cant make retrospective laws to catch them. He was so cunning he gambled for his employer shareholders and lost nothing as he first insured the $3+BN loss with public fool insurers. The guy managed as uis his appointed task, and did it so well the shareholders have nothing to complain of and a bonus for their well chosen CEO who achieved such a cunning move for them.
 
 
0 # Texas Aggie 2012-05-21 08:38
I suspect that if you really wanted to change their behavior, they would have to come up with the money out of their own pockets. Losing money, aka points, would scorch their little souls a lot more than going to jail would.
 
 
+25 # MindDoc 2012-05-17 23:25
Wow. Thank you once more, Bill Moyers, for making a complex situation crystal clear. And Mr. Johnson certainly knows the 'real deal', and explains it generously and fairly.

2 main take-aways for me:

1) Dimon's view, consistent with some history, is that the the Fed is more like an "advisory group than anything else." : and 2) "it’s very important not to be distracted" (Johnson's conclusion) - as in political sideshows or partisanship and name-calling trumping the real needs and wants of "We the People".

Thanks RSN for presenting the most lucid and definitive explanation of the JPM Chase event, and it's "canary in the coal mine" warning about losing focus on containing the corruption and greed, and focusing on regulation on OUR behalf, we the tax-paying, living breathing people.
 
 
-6 # robbeygay 2012-05-18 17:32
Right MindDoc, keep in mind this derivative financing is exactly what your Government is doing to finance USA trillions of new debt at your overspending and you the people's vote demands. You want them to do even more to save foreclosures by creating even more Government hedges and derivatives, just no bankers in China want USA default housing debt derivatives right no, when they are buying the whole country cheper?
 
 
+15 # rosejma 2012-05-17 23:31
How in the world can we not change the way banks are being run. We, the people, must have a say since we will have to pay for them getting rich.
 
 
+24 # stuartbramhall 2012-05-18 00:34
Forget bailouts. If JP Morgan wants more money, they need to be nationalized and Dimon's salary reduced.
 
 
0 # robbeygay 2012-05-18 17:21
You are right Dimion sure earned his salary and a bonus he conned the insurer and saved the shareholders from loosing their investment, as youu say Sturat, he is worth his weight in gold to his employer shareholders.
 
 
0 # robbeygay 2012-05-18 17:26
You do have a say Stuart, you sack the insurance employee you employ, the shareholders have the say in their JPOM investment, not you with no shares in that company. Your shares are in that crazy Insurance Company that insures a casino bet.
Can I get them to insure my racing punts? Likely not,I haven't got the fantastic gaul that Dimon pulloed for his employers on his punt.
 
 
-7 # robbeygay 2012-05-18 03:47
Silly they won't sack him they just gave him extra duties, and he keeps his $23mn remuneration start package, bonuis comes later. So they should he wasn't gambling with their money it's treasury and insurance insured loss and it ain't $2bn it's over $3bn already probably more.

He's on the control bodies and so influentioal, shareholders couldn't find a more cunning CEO to sucker stupoid treasurers and know who to bribe and when for the shareholders best deals and protections. He deserves a bonus for such swiftiness. Bill get the facts right and uotodate before publishing?
 
 
+13 # Organizer 2012-05-18 04:50
How clearly written and heartfelt! Even a financial ignoramus like me can understand it. The message is clear: There is no substitute for the political and personal courage to confront this madness. I hope those in Washington can summon it.
 
 
+22 # 666 2012-05-18 05:27
If it's federally insured money, then the FDIC has a legal and ethical obligation to step in and seize JPM's assets... of course that's never going to happen. throw it onto the US debt and since we're charging it, let's add several 100s of billions in bonuses for everyone. "drinks are on the house". the system has failed and will continue to fail until we end it.
 
 
+5 # paulrevere 2012-05-18 11:35
Privatize profits...socia lize losses.
 
 
+1 # robbeygay 2012-05-18 17:16
And so say all of us. Have another bourbon and join the bread lines later.
 
 
+8 # stonecutter 2012-05-18 05:39
What this proves once again, notwithstanding the galactic hubris of Dimon and his bank, is that the government is fundamentally inert where any reasonable Wall Street regulation is concerned; it's paralyzed to act responsibly toward these banks in general, and JP Morgan in particular. Eric Holder might as well be selling overcooked hot dogs from a stand at Wall and Broad.

Probably 95% of the members of Congress don't even understand these trades, and 100% have been beaten into submission and silence by political fear, underscored by utter dependence on Wall Street largess. Sanders and Reich and Krugman are pissing into a hurricane. Better order Rosetta Stone and start learning some Greek.
 
 
+3 # robbeygay 2012-05-18 17:13
Stonecutter is right of course and if you think it couldn't get any worse, elect Romney with a friendly House and complient Senate and see what you get. Probably 5 years propped up hiding debt then crash 1929 revisited.
 
 
+17 # MidwestTom 2012-05-18 06:35
Remember John Corzine, former Goldman Sacks executive who while running MFGlobal lost $1.2 Billion of investor assets, that they were simply supposed to be holding, and then admitted in emails that he took $200 million out of the country for personal use----not charged with anything by the Obama Justice Department. The main Wall Street game---how much can I steal.
 
 
0 # robbeygay 2012-05-18 17:09
That's as bad as it can get I thought but then JPM bettered the loss in a few days at that. Derivatives and all the funnymoney creative financing will be the death of USA & EU I fear.

Its a pitty RSN isn't a vernacular press the voters might know whats happening.

Good comment MidwestTom.
 
 
+23 # John Locke 2012-05-18 07:48
When a bank becomes too big to fail, it should be taken over and operated by the government. If the taxpayers are going to foot the bill for their mistakes then we should also receive some benefit from its operation...The way it is now These big banks own the US Government (and That included Obama and Romney)the Banks actually tax us! After all isn't that what a bail out is?

Their have already been two bank bailouts in recent history, and we are primed and ready to do it again...

No politician will dare cross them, the banks provide their life source, $$$$

The only solution is as I have often said...A real TAX Revolt! The system is geared to take from us and give to them...if we do not reverse this scheme we will all end up as serfs, or indentured slaves
 
 
0 # robbeygay 2012-05-18 16:42
I agree but like any shareholders Company receivership sells to best bidder or breack up and sells assets so creditors and costs first then shareholders get whats left in cash.
As for JPM check facts first if Government has insured, government had a fee and pays the insured risk. Check ion the double dealing the Government did to get their fsavor. Chances are CEO was A1 conned your politicians. He earned his bonus, you earned your loss by not governing your Politicians well. Perhaps you elect and let be with low public governance. Were it noit for the likes of RSN the case could be worse than the $3bn loss casinoplay in funny money derivatives.
 
 
+16 # fredboy 2012-05-18 08:28
All the canaries died in October 2008.

a few noticed, but no one had the wisdom to take action.

Next time it will be much more horrendous. That's when the world will rise in response.
 
 
+4 # pbbrodie 2012-05-18 10:40
After witnessing all that has occurred since 2008, I am afraid that the people will NEVER rise in response. Too many have been completely cowed or so apathetic that absolutely nothing will ever cause them to rise.
The only thing that leaves me with any hope at all is that history shows us that it doesn't require a majority of the people to rise up and resist. The American revolution was carried off with about 30% of the population supporting it. The rest were either opposed to the revolution or simply sat back and observed.
 
 
+8 # paulrevere 2012-05-18 11:39
I think that 70 plus million on prescription psychotropics, addled well with sports mania, beer worship, kill games, consumerism and celebrity stalking makes for superbly dizzy and out of touch 'little people'.
 
 
+16 # Cdesignpdx 2012-05-18 11:12
Break up the banks organically. Simply remove FDIC protection from banks that trade. Customers can then choose not to deposit in banks where their funds are't protected.
 
 
+3 # Third_stone 2012-05-18 11:50
We have had a degree of socialism in this nation and it is being systematically dismantled.
We really need to split these banks, and let those who understand the risks, which apparently would not even include the management of the bank, can deposit their money in an uninsured division of the bank which is on its own if there is an error. The other side of the bank, separate and money may not cross the line, would be insured and take public deposits. They would make their money as banks do, loaning the deposited money to local businesses and home buyers.
I think the canary died years ago. This is no canary.
 
 
+5 # Bill Bunch 2012-05-18 16:42
Mr. Johnson says we paid $7 trillion to cover the debts of the big banks. He does not say who we paid this money to. Who got the money?

Iceland refused to pay the bad debts of its banks. If we are going to cover our banks, at minimum we should know who we are paying it to and it should only be paid in part, as Greece and Iceland have done. Ultimately the "too big to fail" delivers dollars to the trading partners of the banks.

We need the rest of the story.
 
 
0 # John Steinsvold 2012-05-18 20:35
slimslider,

As I envision a way of of life without money, we will gain economic freedom in addition to and without infringement on our present freedoms. The ONLY common denominator between a way of life without money and socialism/commu nism/Marxism is economic equality which, in my opinion, we desperately need here in the USA. Economic equality will eliminate poverty. It will also eliminate materialism which warps our sense of value and corrupts our system. It will also reduce crime dramatically. Otherwise, our government will remain the same. The Democrats will still do battle with the Republicans. Our free enterprise system will still exist as it does today..

John Steinsvod
 
 
0 # leavemealone 2012-05-18 23:47
Simon Johnson: JPMorgan Chase is too big to fail. Hopefully in the future we can move away from this system, but right now it is too big. It’s about a $2.5 trillion dollar bank in terms of total assets. That’s roughly 20 percent of the U.S. economy, comparing their assets to our GDP. That’s huge. If that bank were to collapse - I’m not saying it will - but if it were to collapse, it would be a shock to the economy bigger than that of the collapse of Lehman Brothers, and as a result, they would be protected by the Federal Reserve. They are exactly what’s known as too big to fail.

Now wait a minute! This is BS. JPMorgan Chase is one of the OWNERS of THE FED. How can they be protected by the Fed when they ARE The Fed? Why should US Taxpayers bail them out when we are in DEBT to the Fed?

The FED is not broke. They should be bailing out the US Government or just write off our debt, right Mr. Dimon?

Does anyone else find this whole thing absurd?
 
 
+3 # ghostperson 2012-05-19 11:57
Just how did we get into a situation in which our malfeasors get government largesse (bail outs with our tax dollars), then, are able to borrow from their private bank (The Fed) at zero interest becoming our debtors and, finally, turn around using the tax payer money they borrowed for nothing becoming our creditors earning 2.25% of clear profit off of taypayers which they, of course, will write off through one tax loop hole or another?

That's like bailing out Bernie Maddoff, then lending him money so that he can buy government paper earning passive profits that he gets to write off because he has 10 lobbyists per member of Congress.

I came from a small Kansas town in which all our municipal facilities were the product of the WPA and CCC, depression era programs created the last time the wolves of Wall St. took the nation and globe down.

If we have tax money to pay greedy, uncontrolled gamblers who snow the universe with trickle down B.S., how come we don't have money to build badly needed public infrastructure projects to provide employment for ordinary schmucks who pick up the tab for the ruling class?

Presumably, income taxes are needed to support the addictions and compulsions of the ruling elite, if jobs don't come soon who is going to bailout the 1% when they blow up the economy again?

They are still on Easy St. Joe and Josephine Sixpack remain in dire straights.
 
 
-4 # ATN 2012-05-19 13:14
JAMIE DIMON IS THE FOX THAT WATCHING THE CHICKEN HOUSE FROM INSIDE OF THE COOP, ALONG WITH THE FEDERAL RESERVE AND HE REPORTS TO THE WHITE HOUSE, NOW ALL OF THEM HAVE SMASHED EGGS ON THEIR FACE, ONE WORD TO DESCRIBE ALL THIS CHICKEND SHIT !!!! " CONSPIRACY ".

JFK WANTED TO AN END TO ALL THIS SHIT !!, THAT IS WAY HE GOT ASSASSINATED AND LBJ WAS PART OF THAT CONSPIRACY
 
 
-8 # muggs 2012-05-19 20:52
If you would like to see the results of communism/socia lism, just go to some of the parts of Russia that are still "light years" behind our economy. We just need to re-introduce God and integrity into our business lives.
There is no other answer for greed and selfishness. Liberals, get ready - pretty soon you won't have a Land of the Free any longer. Bill Moyers has a brain, but so many in "leadership" positions in this country are just a mirage - they do not have ANY QUALITY OF LEADERSHIP. Kick out Congress - totally. Let's get some truth here. M
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN