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Reich writes: "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."

Economist, professor, author and political commentator Robert Reich. (photo: Richard Morgenstein)
Economist, professor, author and political commentator Robert Reich. (photo: Richard Morgenstein)

JP Morgan Chase and the Corruption of America

By Robert Reich, Robert Reich's Blog

10 December 13


he 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.

Even before the Supreme Court's shameful 2010 "Citizens United" decision - equating corporations with human beings under the First Amendment, and thereby shielding much corporate political spending – Republican appointees to the Court had done everything they could to blunt anti-bribery laws in the United States. In 1999, in "United States v. Sun-Diamond Growers," Justice Scalia, writing for the Court, interpreted an anti-bribery law so loosely as to allow corporations to give gifts to public officials unless the gifts are linked to specific policies.

We don't even require that American corporations disclose to their own shareholders the largesse they bestow on our politicians. Last year around this time, when the Securities and Exchange Commission released its 2013 to-do list, it signaled it might formally propose a rule to require corporations to disclose their political spending. The idea had attracted more than 600,000 mostly favorable comments from the public, a record response for the agency.

But the idea mysteriously slipped off the 2014 agenda released last week, without explanation. Could it have anything to do with the fact that, soon after becoming SEC chair last April, Mary Jo White was pressed by Republican lawmakers to abandon the idea, which was fiercely opposed by business groups.

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.

Robert B. Reich, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage." He is also a founding editor of the American Prospect magazine and chairman of Common Cause. your social media marketing partner


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-6 # 4merlib 2013-12-10 10:13
Shucks, all this proves is that Communism really does work!
+16 # ligonlaw 2013-12-10 11:21
As long as the multinationals pour billions of investment dollars into this nation of workers who have no rights or benefits and who work for $1.00 an hour, China will continue to avoid the graveyard of failed Communist nations.
-36 # Walter J Smith 2013-12-10 10:40
Finally, whimperingly, Charles Reich comes around to acknowleging the Democrats are just as corrupt as the GOP.

Finally. It only took him twenty years after starting his tenure as Secretary of Labor in one of the very most corrupt Democratic administrations in US history: Bill Clinton's.

With intellectuals like this, who knows? Maybe another Democrat will discover some of that corruption by 2035.
+16 # tabonsell 2013-12-10 18:03
I was going to ask how did the Clinton administration become "one of the very most corrupt Democratic administrations in US history"? But then I researched and found that his administration had one low-level administration official convicted of a crime. That turned out to be one more than all other Demo administrations , so Clinton's was most corrupt by one.

That still pales compared with the 27 Reagan administration officials, both low level and higher-up muckymucks, who went to jail.

So your statement that "Democrats are just as corrupt as the GOP" may be just a tad off base.
+30 # barkingcarpet 2013-12-10 10:49
The too big failures which we call banks, especially J.P./Chase are worse than the scum of the earth. They are perpetuating the destruction of most anything worthwhile and worth living in, as if dollar money were more important than ecosystem function and diverse life.

However, ultimately, it is WE the consumer and WE the investor, which support and allow it all, with OUR money.

MOVE to community banks and credit unions. Spread the word.

Here is me last week, standing up to Chase B.S. when they refused to even give me a receipt to document the $6 extortion fee to cash THEIR check, at THEIR branch.
+7 # HowardMH 2013-12-10 11:33
Bankingcarpet I sure wish I could join you. American Express offers .85% interest on saving accounts and you can get 1% or more on some CDs. Make sure you tie the account to your current checking account so you can electrically transfer money with just ONE phone call to AE. I now refuse to have more than the minimum necessary in my checking account because Wells Fargo pays about 0.005% (or something like that - it is basically nothing) and their excuse it "that is all anyone is paying now".
+20 # thekidde 2013-12-10 11:00
Hang Jamie Dimon - the old time punishment for thieves.
+11 # dick 2013-12-10 11:47
Bob's a great guy, but he saves 95% of his jabs for GOPers, when Dems trashed Glass-Stiegall, protected & enabled the worst banksters, & continue to do so. Then there's Obama's TPP,
+21 # angelfish 2013-12-10 12:57
We really have nothing to fear from the Middle East. It is our Banking System that will, ultimately, destroy us. So sad.
+15 # Rita Walpole Ague 2013-12-10 13:05
My ex-husband, a pioneer in the software industry, held his first job, following getting his masters degree in elec. engineering from the Univ. of Illinois, as a computer nav. specialist, creating software and teaching astronauts how to navigate via computer. Then, get hired by Booz Allen he did, and bop about the country (keeping a home and base in Overland Park, KS), until, in Boston, when attending a near to us Catholic church that encouraged war resistance and gave sanctuary to draft dodgers, my ex lost his 'top security clearance'. He began, via Booz Allen, supervising software in other areas, including banks.

In the 80's, I incorporated us. Soon thereafter, my ex was consulting for J.P. Morgan, CitiGroup, etc.. I was the corp.'s V.P., worked with our CPA. I became aghast at all the greed of the biggest of the big bank's CEO's, and all the endless shelters/loopho les given to corps., in what I have to now call the U.S. of (greed and power) A.(ddiction).
Penalizing of the biggie banks and their CEO's, et. al., for blatant theft, defrauding, etc. etc. etc.? Hell no. Instead, no enforcement of regs, and bailouts by this bought off and/or scared off pres., Oh Bomb Ah.

Then came this pres.'s putting into and keeping in place endless minions of our true villainaire rulers. (And, I say this as a former longtime Dem., with a Dem. pres., Andrew Jackson, hanging in my family tree).
+9 # moby doug 2013-12-10 16:50
In case anyone's wondering, the Friends of the Reptilian Angelo Mozilo included: Senate Budget Committee chairman Kent Conrad, a North Dakota Democrat, and House Armed Services Committee chairman Buck McKeon, a California Republican — who obtained mortgages through the Countrywide VIP program. Countrywide’s most famous client was Democratic senator Chris Dodd, chair of the Financial Services Committee from 2006 to 2010. Btw, Mozilo, a billionaire, was punished with no more than a slap on the wrist $50 million fine, partly paid for by his company, for his financial mega-crimes....
+7 # dkonstruction 2013-12-11 13:50
Since this is by definition a criminal conspiracy why isn't Reich proposing that JP Morgan Chase be prosecuted under the RICO statutes and that the gov't seize their assets (as they do when they go after the other "mob" in other criminal conspiracy cases)?

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