Davos 2011: JP Morgan boss hits out at 'banker bashing'
An angry Jamie Dimon tells World Economic Forum that blanket criticism of banking industry is unfair
Andrew Clark in Davos
guardian.co.uk, Thursday 27 January 2011 11.02 GMT
The head of JP Morgan has delivered a furious tirade against "banker bashing", complaining that the entire industry is being tarred with the same brush and implying that bankers have become political whipping boys.
Jamie Dimon, one of Wall Street's best known and most respected chief executives, told an audience at the World Economic Forum in Davos that there was a "huge misconception" that all banks ran into trouble during the financial crisis. In fact, he said, JP Morgan and its stronger rivals were "stabilising" influences and he insisted that banks would not "bend down and accept" abuse.
"Not all banks needed the Tarp [US government bailout money]. Not all banks would have failed," said Dimon. "That one assumption drives a lot of arguments."
Dimon, who was once characterised as Barack Obama's favourite Wall Street banker but who fell out with the administration over financial reform, made clear his fury at the tone of public, political and media attacks on banks. moreAt least there are some at Davos who have some tiny inkling of the rage out there. Not enough, of course, but at least the WEF organizers say they tried. Actually, I am quite certain the overwhelming majority of those attending Davos agree with Dimon.
Rich corporations "must share wealth" to avoid unrest
By Michael Stott
DAVOS, Switzerland | Thu Jan 27, 2011 2:05pm EST
(Reuters) - Poverty and unemployment reared their heads at the World Economic Forum on Thursday, with speakers urging the elite audience to bridge a growing gap between booming multinationals and the jobless poor.
Greek Prime Minister George Papandreou, who also chairs the Socialist International group of center-left parties, said the global crisis had led to an "unsustainable" race to the bottom in labor standards and social protection in developed nations.
"Politically, I believe we are at a turning point where... there are signs in Europe of more nationalism, more racism, anti-Muslim, anti-Semitism, fundamentalisms of all types," he said. "We need to look to a different model."
Maurice Levy, chairman and chief executive of French advertising giant Publicis, said there was "a huge suspicion about CEOs, bankers, corporations."
"People do not understand that these large corporations are doing extremely well, while their lives have not improved and without the support of the people, there is no way we will be able to grow," he told a panel discussion.
"We have been led by greed. We have been led by only the bottom line, the profit and we have sacrificed the workers in order to please the stockholders."
The increasing division between fast-growing emerging market economies and stagnating, jobless nations in the developed world has been a theme at the talks in Davos this year, which some corporations pay tens of thousands of dollars to attend.
Corporate chieftains have preferred to focus on their optimism that roaring growth in countries such as China and India will outweigh flat or declining sales in Europe or Japan, allowing them to keep growing profits. moreBut just in case you believe that casino banking has been replaced by the more sober kind, do the math.
"Less Than A 3 Percent Drop In Asset Values Could Wipe Out Wall Street" - Crisis Panel Says In Final Report
It's all about leverage. I've been waiting for this public quote for 2 1/2 years. It's very simple math. And it's also the key to understanding the crisis and why all of the banks are insolvent. You've heard it several times here before. Henry Paulson, when he was still CEO of Goldman in 2004, successfully lobbied the SEC to change the rules on capital ratios. Leverage exploded from a previous limit of 12:1 to beyond 40:1 for all 5 firms, and when you consider that a substantial portion of the assets were synthetics then the real leverage numbers were much higher.
By the way, reinstating the pre-2004 rules of 12:1 would go a long way toward a financial fix and yet it was left undone by Dodd-Frank, which only required that the Federal Reserve undertake a study of capital ratios and report findings to Congress. That will certainly solve the problem.
Back to the math. In a world of 40:1, assets don't have much downside. Consider what this means in a simple example.
If your collective assets drop in value from 100 to 97, you're done. Toast. Game over. At least that's how it's supposed to work. moreAt least they are throwing some of the crooks who ruined Iceland in jail.
More Icelandic bankers arrested
20 January 2011
Iceland’s special prosecutor into the banking crisis has confirmed that raids have taken place today and that arrests have been made. The Central Bank of Iceland is among the institutions under investigation.
Special Prosecutor, Olafur Thor Hauksson told Visir.is that house searches are taking place in at least three places today as part of investigations into the central bank, MP Bank and Straumur Bank.
Stefan Johann Stefansson at the central bank confirmed that agents were in the building conducting searches; and it has also been confirmed that searches are underway at MP Bank and ALMC (formerly Straumur).
An ALMC spokesman said that the premises are indeed being searched and that the bank’s staff members are doing their best to help.
In other news, four people have so far been arrested today in connection with the special prosecutor’s investigation into Landsbanki.
One of the arrested parties is Jon Thorsteinn Oddleifsson, former Landsbanki treasury boss; and it is not yet known who the other three are.
According to Visir.is sources, the arrests concern a brand new section of the wider case against the bank and are not directly connected to searches and arrests made last week. moreBut not in good old USA.
Our Brooks Bros. Sopranos
by Stephen Pizzo | January 21, 2011
It was a dark day yesterday for the Tony Soprano-types in New York and New Jersey. The Dept. of Justice rounded up 120 wiseguys in one giant swoop. I suppose we should all be happy about that, but I just shook my head.
Let me explain.
First, despite my Sicilian heritage, I have no illusions about the mob or mobsters. I got to know enough of those guys during my years of covering them as reporter to know they are the scum of the earth. They are the sociopath's sociopaths. They would cheat their own mothers out of milk money given the chance. So, no tears here for yesterday's Mafia round up.
The reason I shook my head was because we I see this kind of time and energy by the DOJ when it comes to the Brooks Bros Mob that took down hundreds of banks and/or Wall Streeters who looted pension funds coast-to-coast, sparked a devastating wave of foreclosures, caused who knows how many suicides, gutted government coffers as property and business tax revenues plummeted, and nearly took down the entire world economy.
I know what the DOJ would say; "The Mafia is a cancer. It bleeds honest businesses of revenue. It robs workers of their union benefits. It corrupts public officials. It costs government, and ultimately taxpayers, hundreds of millions of dollars a year."
I could not agree more. What I don't understand is that same list of grief and mayhem also applies to Goldman Sachs, Bank of America, UBS et al.
And - here's the real boner - those guys, the Wall Streeters and Banksters - did all that and more.. a helluva a lot more.. billions of dollars more, maybe a trillion -- or more. more
Letting the Wall St. Banksters Walk
by Danny Schechter | January 25, 2011 - 9:14am
All over Europe and in much of the rest of the world, a new fictional hero has engaged the fascination of millions of readers. His name is Mikael Blomkvist, and he’s the protagonist of the late Stieg Larsson’s Millennium trilogy.
These thrillers, set against the background of high financial crimes and misdemeanors, have become global best-sellers, doubtless in part owing to their gripping plots, elaborate mysteries and engaging characters. But their success is also indisputably a by-product of the macroeconomic chicaneries of our era and the human catastrophes they have wrought.
Larsson understood that financial crimes are far from victimless. They have upended millions of people’s lives, even if most of the victims don’t understand how they’ve been shortchanged and who is responsible.
Although the financial crisis that swept the world may have started on Wall Street, it has brought down governments and shredded economic security worldwide, resulting in the loss of millions of jobs and homes as businesses collapse, foreclosures grow, credit tightens and communities are devastated.
One estimate of the damage: $197 trillion.
The Pew Economic Policy Group reports the average U.S. household lost $66,000 in stock holdings and $30,000 in real estate values from June 2008 through March 2009 due to the upheaval in world markets. This brings us close to $100,000 per family.
Against that backdrop, it’s not hard to see the appeal of Larsson’s hero Blomkvist, whose “contempt for his fellow financial journalists” the author encapsulates with stinging clarity:
“A bank director who blows millions on foolhardy speculations should not keep his job. A managing director who plays shell company games should do time…. The job of the financial journalist was to examine the sharks who created interest crises and speculated away the savings of small investors, to scrutinize company boards with the same merciless zeal with which political reporters pursue the tiniest steps out of line of ministers and members of Parliament.”
This is why I identified with Blomkvists’s fictional mission; in some ways it captured my own frustrations in a media world for which “the c-word” — as in financial crime— seems must never be spoken. moreWhat is worse, the banksters are trying to shift the blame for their crimes onto their victims--and largely succeeding.
Blame The Victims And Enrich The Perpetrators
Janet Tavakoli, Tavakoli Structured Finance | Jan. 13, 2011, 1:23 PM
It's outrageous the way subprime borrowers swarmed and solicited unsuspecting lenders and camped out in the offices of investment banks to push them to find ways to finance their insatiable need for capital to purchase homes.
It's a scandal the way they got in bed with appraisers to get the home values stated at three to five times market value.
It's criminal the way they falsified income to push through the mortgage loans. Oh wait... they didn't. [Hat tip to Nomi Prins, author of It Takes a Pillage.]
While there were instances of fraud by borrowers, the key drivers of our housing crisis were fraud perpetrated by mortgage lenders and securities fraud -- by some of our most revered financial institutions -- that provided money to fuel fraudulent mortgage lending.
After the largest bank bailout in world history, we have a national epidemic of foreclosure fraud. In cases where foreclosures are being delayed, banks are walking away from abandoned homes and sticking local taxpayers with the bill to clean up the mess they left behind.
Yet, as Arianna Huffington points out in her latest book, banks continue to find ways to get Americans to subsidize problems that the banks themselves were chiefly responsible for creating. Consumers struggle to keep up with payments as the unemployment rate rises along with food and energy prices, and loan resets kick in:
When they don't, banks, trying to offset losses in other areas, turn around, hike interest rates, and impose all manner of fees and penalties--all of which makes it less likely consumers will be able to pay off mounting debts. more