Whale-Sized Gambles, Lies, and Empty Apologies

Wall Street is the apex of legal gambling. It always has been.

It’s not called gambling, of course, but we should understand that that’s precisely what it is.

Perhaps the question for those of us living in a free market economy ruled by this astronomically lucrative gambling is, “Should we trust the gamblers to do anything except what benefits them the most?”

The answer seems clear to me. We cannot.

Gretchen Morgenson of the New York Times has hit the nail squarely yet again in The Problem With Wiggle Room in Securities.

“…the case against Javier Martin-Artajo and Julien Grout, two of the bank’s traders, has larger lessons for investors and regulators. One has to do with the risks inherent in opaque, over-the-counter markets, where securities’ prices can’t be seen and so can be easily manipulated. Another involves the fairly significant leeway that financial firms have in valuing the securities they trade and hold.”

Personally, I have a hard time feeling any empathy with or sympathy for either the speculative bankers or their large clients. If two parties agree to place bets on something, I’m ok with that. And while I have only contempt for people who obfuscate the truth in “the real world”, I’ve played enough poker to know before the cards are dealt that that’s part of the game.

But, we’re not playing poker here. The gambling on Wall Street affects all of us, especially when loses mount. It just seems that Wall Street continues to prove that they cannot be trusted, and our elected leaders seem to refuse to fight them on our behalf. 

It’s stunning to realize the bankers’ defense in the London Whale case actually seems to be that they lied within the law. Officials at JP Morgan Chase – including Jamie Dimon – are apologetic and say, “…the bank has significantly ratcheted up its risk management.”

Does anyone else feel like the only reason this case is even being brought against these traders is because of who got hurt? Does it seem like it’s only when the rich and powerful get taken advantage of that it’s a sufficient enough crisis and scandal that people like Bernie Madoff get prosecuted and go to jail? Can anyone name another tycoon of Wall Street behind bars? (Hint: His name is among the tags on this post.)

For their part, JP Morgan “…and its executives have been deeply embarrassed by the trading fiasco and the internal failures of judgment it exposed. They have learned their lesson, they say.”

So, we’re to accept their apology and their proposed solution to basically go on trusting them to police themselves?

FILE-In this June 13, 2012, file photo,  JPMorgan Chase CEO Jamie Dimon, head of the largest bank in the United States, testifies on Capitol Hill in Washington, before the Senate Banking Committee about how his company recently lost more than $2 billion on risky trades. Morgan Stanley, the storied investment bank, reported Thursday, July 19, 2012, that its revenue was down sharply for April through June and its profit missed Wall Street expectations. The report capped a dismal season for the banking industry. This spring was marked by choppy financial markets, concern across the global economy, awkward adjustments to new regulations and one scandal after another.   (AP Photo/J. Scott Applewhite, File )
FILE-In this June 13, 2012, file photo, JPMorgan Chase CEO Jamie Dimon, head of the largest bank in the United States, testifies on Capitol Hill in Washington, before the Senate Banking Committee about how his company recently lost more than $2 billion on risky trades. Morgan Stanley, the storied investment bank, reported Thursday, July 19, 2012, that its revenue was down sharply for April through June and its profit missed Wall Street expectations. The report capped a dismal season for the banking industry. This spring was marked by choppy financial markets, concern across the global economy, awkward adjustments to new regulations and one scandal after another. (AP Photo/J. Scott Applewhite, File )

With all due respect, Mr. Dimon, I think you know what you can do with your apology. That goes for the rest of Wall Street, too.

People like Mr. Dimon and those operating in and controlling the financial services industry are out of control. They are maddeningly under-regulated, and we’re going to keep paying for their losses until radical and severe regulatory pressure is put on them and their industry. And, until more of them are investigated, prosecuted, stripped of their wealth, and sent to prison for a long, long, long time, nothing is likely to change all that much. (Let’s be real. It’s the wealth-stripping that will serve to really change their behavior.)

If all of this were only about bankers and their rich clients losing money, I dare say most of us wouldn’t take much notice. There’s a reason they’re referred to as the 1%.

The problem is that their bad bets get paid off with things like federal bailouts and tax policies that favor the wealthy and which serve to perpetrate the lie that is trickle-down economics. What’s needed is much stronger leadership in Washington; leadership who will actually stand up for us and against those on Wall Street who would privatize all the gains and socialize all the loses.

The way to do that starts with reforming how campaigns are financed. We need to stop the flood of big and dark money coming from the uber-wealthy and Wall Street. Our elected leaders are beholden to that money, and we have to change how they get elected if we want to change how they represent us.

How can we do this?

http://anticorruptionact.org/
http://anticorruptionact.org/

First, take 30 seconds to become a citizen co-sponsor of the American Anti-Corruption Act. You can get more details and sign on here.

 

 

 

 

Second, make your voice heard by your elected officials. Tell them you want to know what they’re going to do about Citizens United. Do that by joining and supporting Coffee Party USA and their 535 Campaign for fixing Citizens United here.

Coffee Party
http://www.coffeepartyusa.com/ask_your_representative_to_be_a_leader
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‘Whale-sized’ Proof That Wall Street Can’t Be Trusted

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Michael /Cavanagh and Douglas Braunstein swear into a Senate Permanent Subcommittee on Investigations hearing in Washington, D.C., on March 15th, 2013. -Andrew Harrer/Bloomberg via Getty Images

Wall Street is proving once again that they simply cannot be trusted. What is required is even greater and stronger regulation, not less. We also need laws that expeditiously put bankers in jail for the kinds of willfully unethical actions undertaken by JP Morgan senior managers in the London Whale escapade.

Few of us are likely to read a 307-page Senate report. Instead, read Gretchen Morgenson’s New York Times article, “JP Morgan’s Follies, for All to See” from March 16.

Wall Street remains out of control. In fact, they are now a greater threat to stability in the global economy than before the crash they caused just five short years ago.

It’s also important to understand and admit that Dodd-Frank is not strong enough despite any accusations over its supposedly onerous overreach.

What other conclusions can anyone come to when the government seems powerless to foresee and forestall the world’s largest derivatives trader, a firm described as “the bank that enjoys the best reputation among its peers,” from acting with this kind of hubris, impunity, and disregard for ethical conduct?

The Senate report disproves this premise <that Dodd-Frank would make the banking system safer> with vigor.

Its pages of e-mails, testimony, telephone transcripts and analysis show that traders in the bank’s chief investment office hid money-losing derivatives positions, if only temporarily; that risk limits created by the bank to protect itself were exceeded routinely; that risk models were changed to minimize losses; that bank executives misled investors and the public; and that regulations are only as good as the regulators enforcing them.

What can we do about it? For starters, we can make our voices heard.

The people in DC are supposed to work for us. A few like Bernie Sanders and Elizabeth Warren are demonstrating through word and deed that they do represent citizens first.

What’s corrupting the vast majority of politicians and our government is money. Big Money. Money that was, to be sure, always there, but money that is now exponentially larger and more dangerous because of the sheer amounts, the lack of transparency about its sources, and the influence it is having on lawmakers as a result of the Citizens United ruling by the Supreme Court.

As citizens, we are well within our rights – in fact, we have a duty – to call or write to your elected leaders to ask – and to demand, if we must – to know what their positions are on Citizens United. You can find your Senator here and your Representative here.

Here’s an even easier way.

Get involved in the movement to overturn Citizens United.

Help spread the word and throw your support behind groups of like-minded citizens like BeTheWave, Represent.Us, MAYDAY.US, Wolf-PAC.com, and Coffee Party USA.  Join forces and pressure our elected officials to take a stand on Citizens United one way or the other. Every Senator and every Representative needs to be on record so voters will know if the candidate represents our concerns as citizens or the concerns of Big Money.

We need to vote for and support Senators and Representatives who want to break up the banks, not defend and deregulate them further. We can see where that leads. What we need are elected officials who will build up and build upon Dodd-Frank so that we have some sort of 21st century version of Glass-Steagall.

History really does repeat itself, doesn’t it? It happens exclusively because we refuse to study it and learn from it. Among the many excellent posts by John Cashon, the one titled “Franklin Roosevelt, an advocate for the people” is highly recommended as one that will help the reader to understand the similarities between the early 20th century and the early 21st century.

Unless and until our laws change, the people most responsible for tanking our economy five years ago and who are putting our economy at risk again are not going to change their behavior. And so long as politicians care more about raising incredible amounts of money – and feathering their nests for a post-electorate career in the private sector – than they do about representing us, the necessary laws have only a small chance of getting sponsored and passed.

Still, we cannot and should not give up or stay silent. As citizens, we must demand that government take a stronger and more active stance to protect us from a financial system whereby gains are privatized and losses are socialized.

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Dorothea Lange’s Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, age 32, a mother of seven children, in Nipomo, California, March 1936. – from http://en.wikipedia.org/wiki/Great_Depression

The concerns about today’s financial services sector are not hyperbole conjured out of thin air. Wall Street and the free market have proven once again that they cannot be trusted to regulate themselves. The “invisible hand” really does require a strong and very visible counter-balancing force that comes only from government and only through regulation, oversight, legislation, and when necessary, significant punishment under the law.

The unregulated and unfettered capitalists who caused the financial collapse of 80 years ago knew no limits to their hubris. Their progeny seems not to have any today.

In borrowing the words of FDR, we should welcome their hatred for our desire to want to stop them from wrecking the economy over and over and over again. We should throw our full support behind those candidates who would equally embrace the “hatred” of Wall Street while they work to increase regulation and overturn Citizens United.

(Updated 9/12/2015)