The commercial begins with the male voice asking the audience.
The voice is trustworthy, warm
and worldly. You have heard his voice in
the past for companies like Bear Stearns, Countrywide, Merrill Lynch and Lehman
Brother. The voice can think for you.
 |
| My bad |
The voice continues “If your CEO isn’t apologizing or manufacturing
some dimly understood falsely embraced grieving yet somehow injured response
maybe you’re not getting all you can from your bank.”
Chase’s CEO – he’s sorry. JPMorgan Chase and Co, the US’ biggest bank, racked up losses that could total 5 billion dollars in risky
trading.
“We made a terrible, egregious
mistake and there’s almost no excuse for it,” Chase CEO Mr. Dimon said, adding
that the bank was “sloppy” and “stupid.”
 |
| Sloppy and stupid yes just don't rub my nose in it |
Barclay’s CEO – he’s sorry too. Barclays
Bank a British multinational banking and financial services company
was fined a total of $450 million for attempting to manipulate the daily
settings of key short-term interest rates.
Barclay’s CEO Robert Diamond has
since apologized for the interest-rate manipulation scandal that has engulfed
the U.K. bank.
Mr. Diamond, Barclays CEO said
he was "sorry" and "I am disappointed because many of these behaviors
happened on my watch. It is my responsibility to make sure that it cannot
happen again.”
There you go – for 5 billion
dollars you get a sorry.
Now are you getting that from your bank?
Commercial ends - Fade to Black
 |
| "Sorry, wrong finger" |
Chase’s Jamie Dimon told the Senate Banking Committee on Wednesday that he had been “dead wrong” to dismiss early news reports of his bank’s reckless trading and that he was “sorry” for the resulting losses, variously estimated at $2 billion to $5 billion, and counting. He even ventured that too-big-to-fail banks have “negatives,” including “you know, greed, arrogance, hubris, lack of attention to detail.”
You know……..
In another story Barclay's Dimon was admitting that the bank felt
"terrible" for having lost some of its shareholders' money.
Barclay’s Diamond resigned soon afterwards and said he
"loved" Barclays and had resigned to protect its reputation. "I'm
sorry, disappointed and angry."
Phew….now we can add terrible, disappointed and angry to the
list.
 |
| I am sorry, disappointed and angry but I am also unemployed and filthy rich |
All while in the same breath the injured CEO’s cry out they do not need any financial regulation. Trust us! We know what we are doing they say.
Jamie Dimon of Chase had the hubris to point out that the timing of the loss was a gift for advocates of more stringent regulation. How can someone refer to a 5 billion dollar loss as a gift?
There are those who point out that only stockholders lost money or argue in a free-market system, banks are free to take risks, which result in successes or failures, profits or losses.
Except for the fact that old bailout thing.
Here’s a take from Paul Krugman of the NY Times
Here’s what the presumptive Republican presidential nominee said about JPMorgan’s $2 billion loss (which may actually have been $3 billion, or $5 billion, or more, but who’s counting?): “This was a loss to shareholders and owners of JPMorgan and that’s the way America works. Some people experienced a loss in this case because of a bad decision. By the way, there was someone who made a gain.”
What’s wrong with this statement? Well, suppose that someone — say, Jimmy Stewart in the movie “It’s a Wonderful Life” — runs a bank that takes in deposits and invests the money in various ways. And suppose that one of those investments is a risky bet on some complex financial instrument, with Mr. Potter, the evil plutocrat, on the other side.
If Jimmy Stewart’s bet pays off, we’re in Romneyworld: he’s made money, Mr. Potter has lost money, and that’s that. But suppose Jimmy Stewart loses his bet. If the bet was big enough, he no longer has enough assets to pay off his depositors. His bank collapses, probably in a chaotic bank run that takes down the whole town’s economy as collateral damage. Mr. Potter makes money on the deal, but so what?
The point is that it’s not O.K. for banks to take the kinds of risks that are acceptable for individuals, because when banks take on too much risk they put the whole economy in jeopardy — unless they can count on being bailed out. And the prospect of such bailouts, of course, only strengthens the case that banks shouldn’t be allowed to run wild, since they are in effect gambling with taxpayers’ money.
http://www.nytimes.com/2012/05/21/opinion/dimons-deja-vu-debacle.html
In January of 2010 I cut a story out of the financial section
of our daily paper and placed in a picture frame. It hangs on my wall.
The story headline was “Bankers say they are sorry”.
The bankers were from companies who collectively received more than $100 billion in taxpayer assistance to weather the crisis and they offered no regrets for executive pay that is now likely to increase as a result of their survival.
Like most of you in 2008 my retirement fund, which I had nurtured through a lot a crap in my life, lost half of its value
It has never really recovered but that is a story for another day and at least….
My CEO is sorry.
Steal a little and
they throw you in jail
Steal a lot and they
make you king – Bob Dylan
Good to have you back off vacation. I've been thinking a lot about the same issues lately, specifically Romney's statement. Darwin got the idea for evolution partly from Malthus' treatise on population growth,limited resources, and what happens when growth exceeds resource support. Lately, the GOP has been promoting this as the way things ought to be, in other words we should allow economics to function like evolution. The issue I have with that is that species go extinct because conditions beyond their control change and they are no longer able to survive. That may also happen to some companies, but more likely it is stupid actions by the company itself that causes the problem. Furthermore, when a species goes extinct, every member of that species disappears. When a company goes extinct (or a part of it goes extinct) the big boys usually walk away with a bundle and the people at the bottom are screwed. As an example, the group in the defense company where I used to work has been run by a set of good old boys for the last ten years. In a booming defense market, over bitter internal resistance, they shrunk revenue by over 50% and laid off hundreds of people, many of whom never adequately recovered. Two months ago, the last good old boy in charge was finally laid off - his penalty, had to sell one of the houses he owned in the Virgin Islands.
ReplyDeleteSo, in my opinion, rather that wanting economics to function like evolution we should recognize that, because we are selfish beings, it does and then take measures (pass laws) to minimize the damage and help those who get caught in the shit storm.
M64 - business as an evolutionary function has a money bias that it self-destructive. Very few people make the necessary FU money to survive. If the process is left unchecked society will break down and no social structure will not survive. There will anarchy and the FU's. Good luck with that.
DeleteIf passing laws is the answer, why haven't the laws already passed prevented this situation. The Frank Dodd bill is 2,300 pages. How many pages of new laws are required? Will 4,600 pages do it? How much regulatory cost can you pump into the system before it breaks? So here would be my rules for the game. Rule #1 you have to enforce the laws on the books before you go adding more, or take one off for every two you pass. Rule #2 you can't quote a known partisan to back up your theory. I was so shocked that Paul Krugman said negative things about Romney that I dropped my copy of the Frank Dodd bill on my foot. Expect to hear from my lawyers about damages.
ReplyDeleteYou make a very good point on rule #1 - regulations can be cumbersome and counterproductive. I would support simplifying or even bringing back an oldie but goodie - the Glass-Steagall act. Given a choice between no regulations and pain in the ass regulations - I will take PIA. How about you? (remember who will bail them out).
DeleteNow on rule#2 - what if I used that quote anonymously? What about the content? I am a fan of Paul Krugman's thinking and positions. I would prefer less rhetoric but so be it. There is no free market - they play for egregious profits and the taxpayer assumes all the risk.
Anon, I believe I understand your point. But I don't think that all regulations are created equal. Did you see Jack Abramoff on 60 Minutes the other night talking about how his company literally spent millions to put loopholes into regulations to allow all sorts of crap to go on? I honestly believe that many laws are like that, public complaining about the burden of regulation while privately inserting a loophole that basically invalidates the whole thing. Here is an example with which I am personally familiar. After the Bhopal disaster "strict" regulations were passed to make sure a similar event didn't happen in the US. However, the regulations did not apply to chemicals in transit. The rules for chemicals in transit by train required that they move at least 100 ft/month (yes, 100 ft per month). So many companies had train tracks built to their facilities and essentially began storing their regulated chemicals in train cars and moving them the minimum distance every month. There were long lines of train tank cars containing chlorine that had graffiti all over them. The DHS (I'm not supporting them, just reporting what they said) highlighted this as a potential issue for domestic terror attacks. So, were the lawmakers just too dumb to understand this, or did the ACS (one of the most powerful industrial lobbying groups) do their job? I bet it was the latter.
DeleteSo, while I have some sympathy with the "too much regulation" argument I have enough personal experience with loopholing to fret too much about over regulation. A major strategy of government contractors is to get "to the right" of an upcoming contract or set of regulations - meaning that you get your ass in with the people issuing the proposal or enforcing the regulations and get your tilt put into it. Look at the MMS and regulation of drilling in the Gulf - with which I'm also familiar. The oil companies were bitching up a storm for years while they were buying up the whole MMS.
We need regulations to prevent retired legislators from becoming lobbyists and rules to prevent the hoping back and forth between companies and government jobs. Go look at the boards of directors for big defense companies, you'll see a ton of DoD people - they are there to pull strings and make it rain. That needs to stop.
I guess my question is how long will it take for an accountability to enter the world of CEO's. How many failed CEO - defined as those who lose their jobs then become consultants or lobbyists. -Stu Buisch
ReplyDeleteStu - perfectly good question. Somehow we have been convinced that this CEOs are rock stars whose every word is gospel. Think of how few have faced any legal ramifications for the 2008 market meltdown.
DeleteMedina64, sounds like a liberal and a conservative just might be agreeing here and we've solved the age old question as to whether size matters!! I don't think I was arguing there is too much regulation although I do think 2,300 page is just a tad silly. I was saying the public sleeps at night thinking regulations protect them and that Frank Dodd is protecting them from evil bankers. I am not an expert on many regulations and no one in their right mind would claim to be an expert of Frank Dodd but I work with it enough to know that so far about 90% of it is silly. redundant and wildly expensive to comply with for little to no benefit. Those costs will be passed on. If there is an honest benefit, great. If there is not, it's a sin. Have you checked out the cost of getting a mortgage lately? Rates are very low right now and that is off setting the pain. Let me give you an example of one dumb part of the regulation. Let's say you go to a nice friendly mortgage broker and that broker feels bad because your closing got delayed and wants to waive $100 in fees to make it up to you. They now can't do that under Frank Dodd. When some Senators are asked about this, they basically respond with "whoops" we didn't mean to say that in the regulation, or more often, is that really in the regulation? It is there and it has to be complied with. I'm sure this was all just an innocent "over sight" but the big banks don't have to comply with many of the regulations in Frank Dodd. I'm sure that has nothing to do with their ability to pay for a big lobbist. So I'm not against regulation. I'm against stupidity and there is no shortage of it in Washington. If you pass a regulation, don't fill it with loop holes and exceptions, and if it's not asking too much, read the damn bill before you pass it and... oh I know I'm on a limb here, but understand the ramifications both positive and negative. Last but not least don't make sweetheart deals ala the corn huskers kick back to sign bills. Dont' say you are going to put something on C span and then don't. That's why I get just a little nervous about taking something that is 18% of GDP (health care) and putting it in the hands of these fools. We have to find politicians that put the people first. Does such a beast exist? I haven't seen one yet. Maybe Buddy Rommer, but since he's not running we will have to chose between the two candidates we've got. Sorry to remain anon but many of my clients do not share my political views and I'm just paranoid enough to worry about the wrath of a regulator that doesn't like my criticism of the lovely Frank Dodd bill. L.
DeleteAnon, I basically agree with a lot of what you say. To be honest, I think this is the way our system has worked since day 1. We put in civil service in the 1870's to try to stamp out patronage. We passed the 17th amendment to elect senators because of the corruption in state legislatures that allowed the railroads to basically own the Senate. There have been zillions of reform and populist movements aimed at throwing the bums out. So, I think we do need to be careful about the power that we give them and how we let the exercise it. But, probably where you and I differ, is that I think it is now clear that the deregulation movement started under Reagan has not had the desired consequences. We are moving back into the boom and bust cycles that marred the 19th and early 20th centuries. I also think that health care is almost a perfect example of what powerful interests can do at the expense of the general community. From the AMA limiting the number of med schools in the early to mid 20th century to Big Pharma pushing their goals to doctors over-treating and making it next to impossible to determine how good they are (what is your doc's post op infection rate?) we have a system that is the most expensive in the world and very uneven in quality. How do we fix it? I'm not sure but I'm not comfortable with trying to let the market do it - that is what got us into this mess. Like you, I'm worried that money will talk through the ACA and things won't get better. But, at least with the ACA we have a chance, if we as citizens fight for a good law, to make things better. Part of the Republican platform in Texas is to "oppose any laws regarding the production, distribution, or consumption of food". I don't think that eliminating FDA will make our food safer. I guess, in short, I feel safer working to fix laws that try to create opportunity and equality (even if they are loopholed by big money) than having the every man for himself environment of the 1800's.
DeleteDear Medina64: I think the major issue here is the evolution of our society and government. You want to place your faith in ACA. Basically that would be operating on hope. Hope is not and has never been a strategy and the last three years have proven that. I wanted to believe in Obama. I wanted to believe that he was going to be the most transparent president and go on C Span but the facts just don't bear it out and I can not for the life of me understand why the American people are not screaming from the rooftops with every broken promise. The elected officials of the 1800s are not of the same moral character as the bozos we have now and on both side of the aisle. The laws passed after the Great Depression differed in that you could actually understand them. Our elected officials actually read them before they passed them. They were written in fairly plain English and you could summarize them in 30 seconds or less Why can't we go back to simple law making? The world is more complex and financial instruments are as well, but that doesn't mean we can't pass a bill that doesn't have 500 kick backs and things that have nothing to do with the bill itself. Keep other junk out of bills. I just don't understand how any one can believe that corruption will not run amok with the health care bill given the amount of money we are talking. The same fine folks that brought you the corn husker kick back are to be trusted? That alone was a 45 million dollar forever commitment of our tax dollars. Didn't they lose their right to our trust with that alone? At least most Republicans support a line item veto that I think would make a much more simple, transparent and honest method of government. In Feb 2012
ReplyDeleteRepublicans gave Obama line item veto power, few Democrats supported it. John McCain lead the charge for it. Republicans gave same power to Clinton and to his credit he used it before that bill was found unconstitutional. So I'd give you ACA if there were some integrity to the system. But let the government run this big a piece of GDP after they have proven over and over again they can not be trusted-- I can't get there. I don't know anything about the Republican platform in Texas nor the Democratic platform in San Franciso. They tend be a tad extreme in some areas and I say God Bless the USA our diversity makes us great. This election will about what the national platforms are. I'd like some line item veto power on some of those things too as I am not in lock step with the Republicans, but I am definitely a small Federal government kind of person. The bigger and more corrupt the government becomes the more I feel the way I do. If there were someone we could trust I might feel different. I thought Obama was going to be that person. L.
Anon, I share some of your disappointment in Obama. Some of us were talking about that the other night with respect to drones and some of the "secret" military activities that are apparently going on. My take on a lot of this is that the special interest groups are so powerful that even a President has to back down - at least from direct confrontation. No place is this more clear than in the area of climate change. At first I was very disappointed in Obama, but lately, as EPA power plant rules have been upheld and there has been a bigger push for natural gas generated electricity (it remains to be seen if that is actually better) I'm giving him more credit for doing what he can, however he can.
DeleteI do have to argue with you over the statements that the 1800's weren't as corrupt as today. Read about the railroads, all the labor massacres, the politics of the second bank of the US, not to mention slavery, the Civil War (and its attendant corruption), and the genocide of the Indians. I don't bring this up to pee on the US, but simply to argue that there never was a shining time in America - the struggle for equality and opportunity and freedom has been ongoing since day one. I think it will be ongoing for as long as the country exists - there will always be weak and strong and those pushing for their own interests at the expense of the common good. This is neither good nor bad, it is reality. I think the question is how do we as people fight this struggle.
I spent a lot of time dealing with the Feds (and some staties) when I was employed. I saw good and bad, but what I came to realize is that they actually have a pretty tough job. They are not building cars or planting crops, they are trying to enforce laws, fight wars, and implement what the legislature has told them to implement - often mixed with pork, ear marks, and ignorance. So, I feel we need to control government or, as a human institution it will do stupid things. But I also feel that without a strong central government we are doomed. That is why the Founders got rid of the Articles of Confederation. The states were sovereign with a weak federal government and the newly liberated colonies were clearly in trouble. In "Dixie Betrayed", David Eicher presents a pretty convincing argument that a weak Confederate government (again, the states were sovereign) mixed with corrupt and fractious legislators and governors had a lot to do with the South losing the Civil War. I think it is up to us, as citizens, to make out wishes known and to hold our elected leaders accountable. I personally think things would be much better if 90% of the people were voting and it was clear that more than money was need to win an election.