Monday, June 18, 2012

Bankster cultural magic at work

Over at Zerohedge, Tyler Durden has calculated that J.P. Morgan gave members of the Senate Banking Committee a total of $877,798 in campaign contributions / bribes.  Folks, that isn't even a million bucks.  In J.P. Morgan's world, that isn't even a rounding error.  After all, the hearing had been called to ask Jamie Dimon what happened to the $2-20 billion that a London-based trader lost during the performance of his job.  For the purposes of this example, let's say Morgan lost $10 billion.  If we are to assume Durden's info is correct, that means Morgan bought the Senate Banking Committee for considerably less that 1 / 10,000th of the trading losses.  And Dimon was using the hearing to reassure everyone that $10 billion was nothing to worry about.

My contention is that this example of money in politics really is as trivial as Dimon (and the math) suggests.  Dimon was accorded this ridiculous amount of respect because he is one of money's popes and the guys on the committee are just lowly acolytes who were in the presence of the presence of their God substitute.  The power of money most certainly IS manifest by a sheriff's sale—but the REAL power is cultural.

Senators Grovel, Embarrass Themselves at Dimon Hearing

By Matt Taibbi, Rolling Stone
16 June 12

I was unable to watch J.P. Morgan Chase CEO Jamie Dimon’s Senate testimony live the other day, so I had to get up yesterday morning and check it out on the Banking Committee’s web site. I had an inkling, from the generally slavish news reports about the hearing that started to come out Wednesday night, that it would be a hard thing to watch.

But I wasn’t prepared for just how bad it was. If not for Oregon’s Jeff Merkley, who was the only senator who understood the importance of taking the right tone with Dimon, the hearing would have been a total fiasco. Most of the rest of the senators not only supplicated before the blowdried banker like love-struck schoolgirls or hotel bellhops, they also almost all revealed themselves to be total ignoramuses with no grasp of the material they were supposed to be investigating.

That most of them had absolutely no conception of even the basics of the derivatives market was obvious. But what was even more amazing was that several of them had serious trouble even reading aloud the questions their more learned staffers prepared for them. Many seemed to be reading their own questions for the first time.

It would be one thing if this had been a bunch of hick congressmen from the plains asking a panel of MIT professors about, say, ozone depletion, or the potential dangers of nuclear fallout. But these were members of the Senate Banking Committee, asking Dimon questions as though he were an alien from another world: "Tell us, Mr. CEO, what is this ‘derivative trading’ to which you refer? How long has it been in use on your planet?" The whole tenor of the proceeding was incredibly embarrassing, and showed just how unlikely it is that you’ll ever get anything like real questioning in a Senate hearing when a) the level of general expertise among the members is so shamefully low, and b) the witness is a man who controls millions of dollars of campaign contributions.

The senators could have used the hearing as an opportunity to grill Dimon in detail about the entire history of the Chief Investment Office, the unit of Chase that recently copped to unexpected multibillion-dollar derivative trading losses. This was an opportunity to show Americans how a too-big-to-fail commercial bank like Chase – supported by vast amounts of public treasure, from Fed loans to bailouts to less obvious subsidies like GSE purchases of mortgages and implicit guarantees of bank debt – uses the crutch of government support to gamble recklessly in search of huge profits, with the public on the hook for any potential downside.

The senators should have interrogated Dimon about his role in moving toward that reckless gambling strategy. Instead, they mostly cowered and cringed and sat mute with thumbs in their mouths, while Dimon evaded, patted himself on the back, and blew the whole derivative losses episode off as an irrelevant accident caused by moron subordinates. more

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