By Tim Duncan, Chairman of American Business Leaders for Financial Reform
The Wall Street Journal tells us tonight that the banking industry has agreed to push for regulation after Monday’s White House meeting:
Chief executives of the largest U.S. banks acknowledged Monday the “disconnect” between their expressed support for re-regulating financial markets and the work of their lobbyists to weaken any new rules.
The executives pledged during a White House meeting with President Barack Obama that they would personally intervene on behalf of the legislation.
This is a novel and creative take on reality. For instance, in July, JP Morgan CEO Jamie Dimon pushed back aggressively against reform. It is preposterous to claim that highly-paid lobbyists went on auto pilot and took more aggressive positions than their clients wanted and endorsed.
Those on the receiving end did not buy it:
Some of the CEOs said their lobbyists had taken stronger stands than they would have wanted, an assertion met with raised eyebrows on Capitol Hill. House Financial Services Committee Chairman Barney Frank (D, Mass.), chief architect of financial-overhaul legislation in that chamber, said in an interview he was “highly skeptical.”
Once again, the banks are talking as if they support reform but doing everything they can behind the scenes to undermine it. Lest anyone buy into their new PR tactic – just take a look at what Jamie Dimon had posted on his bank’s web site Monday evening:
Supporting Financial Regulatory Reform:
As CEO and Chairman Jamie Dimon has written in the Wall Street Journal and the Washington Post, we agree with the need for better financial regulation, including regulatory consolidation, systemic risk regulation, ending too-big-to-fail, better consumer protection, and more transparency in the derivatives markets.
The details matter, and the stakes are simply too high and the consequences too far-reaching to do this hastily and poorly. While we agree with many of the proposals, we share concerns with others that some regulatory proposals could restrict lending by banks, which will hinder economic growth and job creation.
Clarity and consistency build confidence and are critical to companies that are looking to create jobs, invest and expand their businesses.
These are pretty much the talking points and message of the bank lobbyists – that the Consumer Financial Protection Agency will cause credit to be restricted and interest rates to rise. And then the same old “We’re all for reform; just not now and not any reform that is being proposed.” The others that Jamie Dimon “shares his concerns” with at this point are the American Bankers Association, Chamber of Commerce and the Republicans given that it is exactly the same talking points and message we hear from these folks.
This press release so quickly after the meeting at the White House today would seem to have no apparent purpose other than to make it clear to the other bankers and lobbyists that nothing has changed with regard to the industry’s passive-aggressive battle against the CFPA. It also appears to be a rather harsh metaphoric middle-finger to the White House given that it is posted less than 24 hours after the President personally asked for Mr. Dimon’s support.
The industry’s strategy so far is to say they are supportive of the CFPA in private (when speaking to the admin or people supporting the CFPA), avoid saying anything publicly or on the record and then have the ABA, Chamber and individual lobbyists oppose the legislation in every way possible behind the scenes. If today’s meeting at the White House was to get the industry to publicly support regulation – it would appear that just the opposite has taken place.
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Without laws all this talk is just that. We are so screwed. I can’t imagine that these guys think they can get away with this unless they know something we don’t know about the next horror they’re planning to visit upon the American people that will distract ‘the people’ from noticing who exactly is screwing them.
Something, they must be thinking, will intervene between them and the rage of the public they seem to be intentionally baiting.
I’m reminded of a story Brian Eno told after the fall of USSR. He knew the son of a major government official and asked, what was it like living in a system with all that propaganda? The Russian replied, Ah, but we knew it was propaganda.
So Jamie Dimon sitting atop the biggest holder of derivatives on the planet is against TBTF and for transparency in derivatives. How Orwellian can you get?
Rogue lobbyists. That’s a new one.
This is the way people talk when they possess perfect confidence that no one is able or willing to stop them from carrying on exactly as before, only more so. Their contempt for the public could not be more obvious if the middle finger they were flipping were literal, not metaphorical.
Glass one-quarter full take: this is classic hubris.
Glass three-quarters empty take: they are assessing their situation realistically.
Jamie Dimon said: “While we agree with many of the proposals, we share concerns with others that some regulatory proposals could restrict lending by banks, which will hinder economic growth and job creation.”
Practically every moral theory, whether utilitarian or intuitional, insists on the goodness of benevolence, justice, kindness and unselfishness. Even when economic self-seeking is approved, as in the political morality of Adam Smith, the criterion of judgment is the good of the whole…
Whenever men hold unequal power in society, they will strive to maintain it. They will use whatever means are most convenient to that end and will seek to justify them by the most plausible arguments they are able to devise…
The moral attitudes of dominant and privileged groups are characterized by universal self-deception and hypocrisy… Since inequalities of privilege are greater than could possibly be defended rationally, the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges they hold.
The most common form of hypocrisy among the privileged classes is to assume that their privileges are the just payments with which society rewards specially useful or meritorious functions.
–Reinhold Niebuhr, Moral Man & Immoral Society
Let’s see, banks aren’t lending now no matter how good credit rating if the collateral is underwater or they don’t get a Government guarantee (since the collateral is underwater). That is actually prudent banking. But when the good times come back, and asset values start to rise, banks want to make “liar” loans without interference. And yes Jaimie, we do want higher interest rates and restricted lending at that moment or else we will find ourselves in another bubble, the profits of which you will skim and the losses of which you will shift to the taxpayer.
Barry Rithholz notes that Paul Volker is stepping out saying that this will not do. Far more than Obama, this might move the reform movement forward.
The banker’s and their lobbyist’s nostrums will always be self-serving and economically counter-productive. That’s the history of banking. The only way the government can channel or allocate credit to the most productive areas of the economy is through a “command economy”. And that’s down the line regardless of how hard we try to avoid it. We the people will never instill regulations to prevent upcoming catastrophes. Nationalize the banks now.
The Banksters’ sincerity can be gauged by three of them— Government Sachs, CitiGroup and Morgan Stanley—all blowing off a meeting with the the President of the Untied States.
All in effect said, “Um, due to unforeseeable circumstances, fog, we regret being unable to attend. No one could have anticipated such a catastrophic transportation failure, and there were no contingency plans in place.”
“Oh, but we’ll have our people get right on that regulation thing. We’ve just been so busy, we had not given it much thought.” (Take that poke in the eye.)
Yves,
Have you seen this week’s Bill Moyer’s interview with organizers George Goehl and Heather Booth? It can be viewed online.
Perhaps we’ll see major riots after the new bonuses are handed out.
Vinny