Yves here. This has been such a busy week that I’ve been remiss about commenting on how Dimon’s board rewarded him despite the London Whale fiasco and the revelation of pervasive regulatory abuses. Clearly, they thought he bought the bank’s way out of trouble on the cheap, disproving the wailing in the financial firm toadying media that the Morgan bank had been ill-treated by the Administration.
By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
Andrew Ross Sorkin (and his “Deal Book” team at the New York Times) seemed to have built an insurmountable lead in the race to be declared the most unctuous panderer to the financial plutocrats who grew wealthy by leading the frauds that blew up our economy. As I wrote recently, Politico became my instant dark horse candidate for the Street’s sycophant-in-chief with Ben White’s fantasy that “In 2009, Washington went to war against big Wall Street banks.” I noted that the “war” consisted of the Treasury and the Fed dumping trillions of dollars on the biggest Wall Street banks and evoked Tevye in Fiddler on the Roof: “May the Lord smite me with [such a “war”]. And may I never recover!”
Stewart has Fallen to the Bob Woodward Stage of His Career: Praising Faux Maestros
Sorkin has kicked off a race to the bottom at the NYT and James Stewart has just penned the most obsequious ode to Dimon yet recorded. In a further proof of our family rule that it is impossible to compete with unintentional self-parody, Stewart’s brand for his column is “Common Sense.” Stewart’s version of “Common Sense” when it comes to Dimon reads exactly like Thomas Paine’s famous “Common Sense” would have read had it been written by a City of London banker in 1776. If we had listened to people like Stewart defending privilege rather than Paine’s annihilation of the pretenses of the British plutocrats we would not have become an independent Nation for another century.
The Real “Common Sense” as Penned by Thomas Paine
In his introduction to his third edition, Paine warned about the Deal Bookers of his day who accepted the legitimacy of the powerful dominating and plundering the people because it had always been that way. Paine decried the fact that this lazy failure to question the domination of the powerful led inexorably to a defense of their exploitation in the form of an unthinking reflex in favor of “custom.”
“[A] long habit of not thinking a thing WRONG, gives it a superficial appearance of being RIGHT, and raises at first a formidable outcry in defense of custom.”
Paine championed the need for the American people to pierce through the “pretensions” of the elites and exercise the peoples’ right to “reject” the usurpations of power by the King and the English parliament.
“[T]he good people of this country are grievously oppressed by the combination, they have an undoubted privilege to inquire into the pretensions of both, and equally to reject the usurpation of either.”
Lord Acton made famous the phrase: power corrupts; and absolute power corrupts absolutely. Paine’s pamphlet, long before Acton’s birth, shared the same key understanding.
“First. — That the King it not to be trusted without being looked after; or in other words, that a thirst for absolute power is the natural disease of monarchy.”
In our day, we see that “thirst” in what scholars have dubbed our “Imperial CEOs.” In Paine’s era, the King was the most powerful, but Paine refused to fawn over the powerful. He advised that if we had the sense to strip away the pomp and the myths spread by sycophants we would find a “plunderer.”
“[C]ould we take off the dark covering of antiquity and trace them to their first rise, we should find the first of them nothing better than the principal ruffian of some restless gang, whose savage manners of pre-eminence in subtilty obtained him the title of chief among plunderers; and who by increasing in power and extending his depredations, overawed the quiet and defenseless to purchase their safety by frequent contributions.”
Paine predated more conservative writers who would later echo his warnings, though often in the service of financial elites. Frédéric Bastiat understood the role that the James Stewarts of the world play in “glorify[ing]” those who use their great power to plunder.
“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.”
Stewart Glorifies Dimon’s Plunder
Do not think for a moment that Stewart is so naïve as to believe that any JPMorgan board member with a nanogram of “common sense” or integrity would (a) not have demanded Dimon’s resignation years ago, (b) would give Dimon a raise for leading a bank that committed the most epic financial crime spree in world history, and (c) would regret only that he lacked the courage to give Dimon an even larger raise.
Stewart’s tale tells us what everyone knows – Dimon, like all dominant CEOs after his initial selections, picks his board. He picks them for loyalty and for their identification with his interests. That last point means that they love to ratchet up the income of fellow Plutocrats. Their executive compensation firm (and everyone knows what reputation gets an executive compensation firm selected by CEOs) will use Dimon’s raise to justify other CEOs’ raises in “the great circle of life” for plutocrats. Stewart admits that he knows about this disgusting “back scratching” compensation dynamic.
Modern executive compensation was a leading creator of the criminogenic environment that produced the epidemics of accounting control fraud that destroyed the global financial system (until it was resuscitated by trillions of dollars that the Fed and the Treasury “carpet bombed” Wall Street with in 1989). Stewart has direct knowledge of how accounting control frauds use modern executive compensation and friendly boards of directors to create fictional income and loot the firm. He now claims that the eagerness of JPM’s board to make Dimon even wealthier represents financial “sophistication” on the part of JPM’s board rather than one of the most depraved and destructive dynamics in finance.
Stewart’s final phase of his career has reduced him to the status of yet another writer that “glorifies” the plutocrats’ plundering of the public. He thinks that is a “common sense” approach to the world.
Stewart’s Spin
Let’s look at how Stewart tries to make his readers believe that Dimon has no influence over his compensation. Note the small but telling spin of Stewart referring to Dimon as “a board member” rather than “the Chairman of the Board of Directors.”
“And these people stressed that Mr. Dimon had scant influence on the committee and board regarding his pay, and did not even know what it was the night before the decision was announced. (Although a board member, he left the room when the topic came up.)”
Seriously, that’s the best you’ve got? He left the room? The CEO always leaves the room. The average reader could pick seven folks and be confident that a majority of them would do right by you in giving away someone else’s money to you as generous compensation? Would you have to be in the room to be made wealthy?
In May 2012, Deal Book repeated Dimon’s threat to the Board of Directors to resign if they even dared to take the most elementary step in good governance – not allowing him to be both the CEO and the Chairman of the Board of Directors: “investors are factoring in the possibility that Mr. Dimon may resign if they vote to split the roles.”
Stewart doesn’t tell the readers about Dimon leaking the same threat in the run up to the 2014 board meeting that gave him his massive raise. Deal Book reported that “cutting Mr. Dimon’s pay would, some board members feared, alienate the chief executive.” Dimon wasn’t in the room, but his threats were in the room.
Stewart cites a professor who implicitly explains the power of Dimon’s threat: “‘What if you punish him and he gets angry and leaves?” The obvious answer to that threat, if the board were not a bunch of Dimon’s cronies is: “thank God!” The “punish him” bit is a might kinky. There was never the slightest suggestion from the board in its January 2014 meeting (according to the Board’s many press leaks) that they would “punish” Dimon. As I explain below, the only choices they entertained were whether to make Dimon far wealthier or much wealthier.
Stewart tells us that the board was “independent” of Dimon because the most famously anti-social businessman in America, a man who believes CEOs are entitled to massive pay and is wealthy because of that pay, chaired the JPM board committee that gave Dimon his massive bonus as a reward for managing JPM during its epic financial crime spree.
“Mr. [Lee] Raymond, the committee chairman, is famously independent — some might say insensitive. While at Exxon Mobil, his stands on global warming, gay rights and doing business in countries with repressive regimes led The Wall Street Journal to describe him in a profile as ‘a strikingly politically incorrect character for a modern-day, big-company C.E.O.’ While he was at Exxon Mobil, his compensation was routinely criticized as excessive, as was his retirement package valued at nearly $400 million.”
We need to begin with the four obvious points that Stewart doesn’t make about Raymond. Even Deal Book, which fawns shamelessly over Dimon, reported on May 12, 2003 that Raymond was a sedentary ally of Dimon.
“‘My perception is this is an old-fashioned board, Jamie runs the show and we don’t mind,’ said Christopher C. Grisanti, whose firm owns 246,000 shares of JPMorgan Chase worth roughly $12 million. ‘We don’t think the lead director at JPMorgan exercises that much power, and that is a positive because Jamie is one of the best C.E.O.’s in our portfolio.’
At the bank’s investor day this year, for example, Mr. Dimon jokingly tossed aside a question from an analyst by remarking, ‘I’m richer than you.’ These investors, who spoke on the condition of anonymity, say the moves by Mr. Dimon only augment his reputation as arrogant at a time when the bank is fast losing credibility in Washington.”
The Deal Book article noted that Raymond was a lead board member when the decision was made to make Dimon JPM’s leader. The first point, to make is that Raymond would be admitting a grievous blunder if he conceded that he made a mistake in putting Dimon in charge. Virtually all the roughly 15 major frauds by JPM that various governmental investigations have documented occurred during Dimon’s tenure.
I am not counting among these 15 major frauds the Bear Stearns and WaMu frauds, but readers need to know that Dimon was eager to acquire WaMu before it collapsed even though it was notorious for the extent of its fraudulent lending and fraudulent sales of fraudulently originated mortgages. JPM was perfectly positioned to recognize how endemically fraudulent WaMu was at the time Dimon sought to acquire it. If WaMu had agreed to the acquisition there would be no issue but that JPM was fully liable for all of WaMu’s contributions to the fraud epidemics that crushed the economy. Dimon has an excuse for WaMu solely because he was lucky enough to be turned down by WaMu’s managers.
Second, Raymond should have resigned (if he had any integrity).
Third, Raymond and Diamond should have been “removed and prohibited” (along with Dimon) by an enforcement action by the Comptroller of the Currency years ago. As the “lead” director who was most responsible for providing oversight from Dimon it was his responsibility to identify and stop the rot and the epic frauds. Raymond should have led the board effort demanding that Dimon resign and if that effort failed he should have resigned in protest. The failure of the OCC to act – the dog that won’t bite and has forgotten even how to bark – reveals how total is the destruction wrought by desupervision and how flagrant is the grant of de facto immunity from prosecution for elite bankers due to the rot at DOJ.
Four, Raymond, having failed to rein in Dimon and instead having repeatedly vouched for him, would be admitting error and cowardice were he to now admit that Dimon should be held accountable for the epic frauds committed during his leadership of JPM. The best case for Dimon is that he “merely” set an unethical “tone at the top” that signaled JPM’s executives that they had the green light to commit their epic frauds that have become public at this juncture.
In my January 24, 2014 column (“Dimon does Davos”) I explained that it simple for Dimon to manipulate other business executives who hate “the government” in general and President Obama and the Justice Department in particular. Raymond epitomizes that type of executive.
JPM’s directors are primed to believe that Dimon and JPM are the “victims” of the government. Stewart claims that we can be confident that JPM’s board did the right thing because Raymond, the Koch Brothers’ soul mate, despises “the government,” believes that the Department of Justice (DOJ) and President Obama are evil incarnate, led a corporation that violated the law and morality routinely in order to increase its profits, and was notorious for his grotesquely excessive compensation. “Common sense” indicates that Stewart’s assertion that putting Raymond in charge of Dimon’s pay proves that Dimon is underpaid is nonsensical.
Dimon does Davos
In an additional bit of hysterical hypocrisy, Dimon was in Davos, Switzerland as an honored participant in the annual World Economic Forum (WEF) while his cronies on the JPM board made him even wealthier. WEF is a glitterati event that overlays a right-wing effort to stop progressive governmental programs. WEF gathers many of the world’s most corrupt CEOs so that those plutocrats can lecture developing nations on how awful their officials are for accepting the bribes from the massive first-world corporations that the CEOs run. In Davos, the hypocrisy of the CEO is as stunning and “in your face” as the views of the mountains.
Dimon is vastly past the point where his income has any effect on his consumption. Giving him raises is simply an exercise in inflating his arrogance and ego. It hurts the shareholders but it does nothing for Dimon except feed the worst demons of his nature.
Raymond could not turn on Dimon without admitting that (1) Raymond was wrong all along and had failed in his fiduciary duties, his integrity, and his cowardice by refusing to end the corrupt “tone at the top” set by Dimon and (2) the DOJ and Obama were right and Raymond and Dimon were wrong. Given Raymond’s personality, which Stewart provides, the chances that Raymond would make those admissions was nil. Raymond was an ideal ally for Dimon.
“Punishing” Dimon by Paying him $11.5 Million for 2012
Just as Ben White called carpet bombing Wall Street with trillions of dollars of America’s money in 2009 an act of “war” against “Wall Street,” Stewart calls the idea that JPM’s board might only reward Dimon’s leadership of the most destructive financial frauds in world history with $11.5 million in compensation “punishing” Dimon. Indeed, Stewart uses the root word “punish” four times in the article. Here is the funniest and most revealing variant.
“Further punishing Mr. Dimon might satisfy some quarters, but it could well damage shareholders. ‘If you’re on the board, you’ve got a guy in Jamie Dimon who’s considered the top commercial banker in the country, if not the world,’ Professor Larcker said. ‘What if you punish him and he gets angry and leaves? You’ve got a gigantic hole. Who do you plug in? How much value do you destroy if you have to replace him, which could easily take six months? These are serious issues.’”
Stewart had already introduced his readers to “David Larcker, an expert in executive compensation and director of the Corporate Governance Research Program at Stanford University’s Graduate School of Business” and Larcker has praised JPM’s board for giving Dimon a huge raise as a reward for running a criminal enterprise profitably because the use of stock grants means that his “incentives are aligned with shareholders.” Larcker knows better. He knows that it is a “sure thing” for CEOs to use accounting fraud to vastly inflate reported (albeit fictional) earnings in order to receive such stock bonuses. The bonuses designed by JPM’s board have further misaligned Dimon’s already misaligned incentives and made him an even graver threat to JPM’s shareholders.
Nevertheless, many economists still seem not to under-stand that a combination of circumstances in the 1980s made it very easy to loot a financial institution with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution? (Akerlof & Romer 1993: 4-5).
Step back and ask yourself why we have to pay plutocrats immense bonuses just to decrease the risk that they will screw the shareholders. Why wouldn’t a CEO making $400,000 annually act in the interests of shareholders? Why do the shareholders have to bribe the CEOs not to loot the shareholders – and why is the bribe required to get the CEO to act as if he were honest have to be so huge? What has become so despicable about elite CEOs’ character that they need massive bribes simply to do their jobs honestly?
“Further punishing” – Dimon was paid $11.5 million in 2012 despite being the guy in charge of JPM when it became public that the bank had committed the greatest financial crime spree in history. The issue, as framed by JPM’s board of directors, was not whether to demand his resignation and his repayment of all past bonuses. That would have been the ethical thing to do. JPM’s board never considered doing the right thing. The board framed the issue as whether to pay Dimon $11.5 million or over $20 million for 2013. To paraphrase Tevye again, “May the Lord smite me with [this ‘punishment’] – and may I never recover!”
We don’t need no stinkin’ Ethics! (or use of the “F” word)
Stewart, like Deal Book and Politico, manages to discuss a subject in which ethics and morality are the core considerations without every using or discussing those words. Stewart also manages to avoid the words “fraud,” “violation,” or “crime.” He says that Dimon clearly deserves to be paid a huge bonus because JPM’s fraud spree, net, has proved profitable. Sadly, Stewart is not writing a deliberate parody.
Dimon is “the One”
Assume for purposes of analysis that Larcker is correct – Dimon is “the top commercial banker in the country, if not the world.” I call this Larcker’s hypothesis (aka, “Dimon is ‘the One’”). What would the analytical implications of that “fact” be? The first implication is that we should put every systemically dangerous institution (SDI) in receivership immediately. If every CEO of the banks that are so large that the administration is telling us that when they fail it is likely to cause a systemic financial crisis is even more incompetent and/or even more unethical than Dimon then the financial system is in imminent danger of its next collapse.
(For the purpose of analyzing the implications of Larcker’s hypothesis, I am taking the most favorable possible view of Dimon’s abilities and character given JPM’s epic financial crime spree. I assume, arguendo, that he had no knowledge of the frauds and no involvement in creating the perverse financial incentives and the unethical tone at the top that led to the world’s most destructive series of financial crimes at a bank. I do not find those assumptions credible.)
The Implications of “Too Big to Manage”
An alternative hypothesis about Dimon’s abilities and character might initially seem more favorable to Larcker’s hypothesis – it is possible that Dimon is “the One” but that it is impossible for even the best bank CEO in the world to run an SDI in a manner that does not lead to endemic fraud by the SDI’s officers. JPM could be so “too big to manage” that it became a massive criminal enterprise despite the leadership of the best CEO in the world. But that situation would actually damn Dimon. As the best CEO in the world he would have realized years ago that JPM was vastly too large to manage and that his inability to manage it lead to endemic fraud. He would be legally and ethically culpable for failing to alert JPM’s board of directors and its regulators to that fact and dramatically shrinking JPM.
What Dimon actually did was to vastly expand JPM and use executive compensation systems for the officers and employees that created the perverse incentive systems that gave him “plausible deniability” while enriching him by inducing endemic accounting control fraud. Many of these frauds cost JPM billions of dollars rather than enriching them, but others do create very large profits. Larcker could not be more wrong that in his bland assurance that paying Dimon in a manner that “aligned” Dimon’s interests with those of the shareholders he was enriching through JPM’s frauds would be a good thing for the world. Indeed, the OCC should making placing any bank that creates that form of alignment in receivership a top priority.
Listen to Larcker’s Research
We know that Larcker knows better, for he and co-authors documented the key points in 1999 – and the research since then has greatly added to the strength of those points.
“CEOs earn greater compensation when governance structures are less effective. We also find that the predicted component of compensation arising from these characteristics of board and ownership structure has a statistically significant negative relation with subsequent firm operating and stock return performance. Overall, our results suggest that firms with weaker governance structures have greater agency problems; that CEOs at firms with greater agency problems receive greater compensation; and that firms with greater agency problems perform worse.”
John E. Core, Robert W. Holthausen, David F. Larcker, Journal of Financial Economics 51 (1999) 371-406, “Corporate governance, chief executive officer compensation, and firm performance.”
JPM is the classic example of the firm with “weak governance structures” that results in the CEO “receiv[ing] greater compensation” when he should be summarily fired for JPM’s epic fraud spree. Some forms of control fraud enrich the firm, but accounting control causes firms and shareholders, once the frauds are discovered, to suffer reduced profits and potentially catastrophic losses. Larcker and his co-authors’ euphemism for fraud is “agency problems.” The word “fraud” does not appear in their article and they do not cite Akerlof and Romer (1993).
Concluding Thoughts Addressed to the Media and the Public
The question I end with for Larcker, Stewart, Sorkin, and White is what would it take? How many frauds does JPM get? When I note that JPM has been engaged in 15 separate violations of the law according to investigators, I do not mean that they have committed 15 felonies. Each of the 15 violations is very large and about half of them are among the largest fraud schemes in history. We are discussing a bank whose leaders have created the perverse incentives and corrupt tone at the top that have produced hundreds of thousands of felonies by JPM’s officers and employees. Tens of trillions of dollars in transactions were affected by their frauds.
I can understand why you have to carefully strip these realities from your reportage in order to serve as Dimon’s sycophants, but I ask you to stop. When you tell your readers that Dimon is the best bank CEO in the world how do you overcome your gag reflex? You cannot continue to make the coverage of Dimon and JPM an ethics-free and fraud-free zon. You do too much damage to the truth, the reputation of your employers, and our Nation. We cannot afford your continued race to the bottom. You need to commit to a competition in integrity.
Common sense would be an excellent starting point. Larcker’s carpenter father, my (deceased) carpenter father-in-law, my (deceased) weekend-carpenter father, and a carpenter who emailed me a message while I was writing this blog would/were all be outraged by Dimon’s raise. The evidence from the crisis abounds that orthodox economists’ dogmas are the problem. Michael Jensen, the intellectual godfather of modern executive compensation bemoans the catastrophic unintended consequences of his actions. The perverse incentives that led so many economists to ignore common sense and common decency and to pander to the plutocrats are obvious.
One of the first things I learned in dealing with Congress during the savings and loan debacle was that my unsophisticated relatives were spot on about the reality of Congress and lobbyists and that my “sophisticated” understanding of lobbyist and congressional behavior (based on “incentives” and “concern for reputation”) that I learned from some of the world’s top political scientists and economists was hopelessly naïve. The carpenters have proven vastly more accurate than the theoclassical and even neoclassical economists. If the idea of having to bribe a billionaire CEO with tens of millions of dollars annually in order to induce him to act as if he were moral and not to loot “his” bank sounds like an insane way to run a financial system to you – you have more common sense than any 3,000 theoclassical economists combined.
Jesus was a carpenter. If Jesus were let loose in JPM for thirty seconds does anyone doubt what he would do? Writing articles in which you remove fraud and ethics from an issue that should be almost entirely about fraud and ethics is an unethical journalistic practice committed by those who benefit from pandering to plutocrats.
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He has to keep on rewarding himself. Not doing so would be admitting his mistakes and I doubt he will ever go down that road.
This system has corrupted so many people that most have at least 1 skeleton in a closet so good people are dangerous and to be marginalized.
The tipping point will not come until the top 10% ex 1% loses some wealth.
I am just in the process of reading Adam Smith’s Theory of Moral Sentiments for the first time. Just got to the bit where he says if we could see ourselves as others do, there would be a major improvement in behaviour. Seems quite apposite here.
Smith did say a lot of things people seem unaware of, didn’t he? Apart from the invisible hand quote which gets cited endlessly.
Bill Black attacks some thieves (some bankers) but defends theft (government privileges for banks). Hypocrisy much?
Dare you invoke Jesus, Bill?! You should read what Jesus said about the Old Testament and what the Old Testament says about usury and oppression of the poor – the basis for modern banking.
Please share with us where Prof. Black “defends theft” government privileges.
One concedes that there are all varieties of hypotheses tolerated on this blog. However, it must be mentioned that some ideas are nearer to evidence and some are some distance away from proof.
What galaxy are you in, F. Beard? Bill Black has written the definitive book on fraud and continues his work tirelessly taking down those those interests most responsible. Those who are selling anti-government propaganda benefit in two ways:
1) It promotes the elevation of the private market at the expense of the state
2) It obscures the interrelatedness of private-public actors working to gut the state of power
We all embody some degree of hypocrisy. If I were to follow you around for a few hours and observe, I suspect I would find a fair share from you. Nonetheless, Dr. Black is one figure that we might say is the “least hypocritical among us” as he has been consistent for decades when thousands of scholars in economics, criminology, sociology, and business schools across the country have swallowed the Chicago school as truth.
No, when I think of hypocrisy, I think of entire fields of lawyers, economists, policy makers, business school professors, and those who consider themselves analytically critical thinkers missing one of the most salient points of generation (Ackerlof & Romer, 1993) – How control frauds work. Dr. Black helps remind us (probably for him ad nauseum) that FRAUD is at the center of economic crises and the thieves are running the show.
However, he provides hope that if we are to confront our abusers, then it must be in the form of our government, using existing laws, and understanding the de-regulation, de-supervision, and defacto de-criminalization are the operating systems that need change. F Beard, where is this change going to occur, but only through government?
As someone who admires Dr. Black, I take offense your portrayal. You must be in a place far away not to know the excellence this man brings.
Excellence? Yes, he is excellent – excellent at defending thieves (the banking cartel) from other thieves (their management).
Ya see, it’s not that a government-backed credit cartel is INHERENTLY wicked (according to Bill Black); it’s that the thievery is not regulated properly or there are a few bad apples.
Here’s some truly great men, at least wrt the inherent wickedness of government-backed banking: Famous Quotes on Banking (Note: I don’t necessarily endorse the solutions proposed by any site I use as a reference.)
F Beard, this is absurd. So, the onus is now upon you to detail (and be specific) the thieves he defends. This was asked of you previously.
Secondly, in the immortal words of Inigo Montoya (Princess Bride), you keep using this word (Inconceivable) “government-backed cartel” and I do not think it means what you think it means. An argument can be made that you understand very little of Dr. Black’s work.
Third, please do not reference a site for quotes. Your job is to find one that fits and make the case yourself. And it would not hurt to actually read Dr. Black’s prolific work before throwing out absurd labels that wastes the resource of time and insight. You could be much better than this, F Beard
So, the onus is now upon you to detail (and be specific) the thieves he defends.
What? Shall I list every bank and credit union in the US? Bill Black’s concern is thievery FROM banks, not thievery BY banks, their normal business plan, especially from the poor.
But show me where Professor Black has recommended a Postal Savings Service (for risk-free storage and transactions only), the abolition of government deposit insurance and the abolition of the Fed and I’ll admit I’ve been unjust.
The banking cartel has survived for centuries, despite the damage it does, partly because of allies disguised as foes.
This is just more of the same inflammatory jabbering. No evidence in his work of the claims you make, means F Beard has little credibility.
Have you sat in on one of his classes? What do you actually know about the man? Have you published on predatory lending practices affecting the poor? Have you actually read more than 1 article/book from Dr. Black’s vita?
Once again, the onus is upon you to make the case. So far, as much as I can see, the only case you have made is that Bill Black is not Elizabeth Warren.
Liz Warren? LOL! Are you kidding? There’s another faux-reformer if I’ve ever heard one.
The job of Liz and Bill is to save government-backed banking from itself so it may live to loot another day.
FYI, I used to be a fan of Mr. Black until I finally realized what he wasn’t saying and wasn’t attacking and that he did not understand that when it comes to government-backed banks NO ONE is so-called creditworthy.
This coming from a guy that the incredulity of its members to own any responsibility to/of their acts, its just tribalism for tribalism’s sake and individuals when convenient, tho its more concerned about maintaining status for status sake, no matter what evidence is put under its nose, because???? Oh yeah… its irrefutable, irrevocable, a tenet unto itself – with out challenge, an all encompassing codification of not only humanity, but, the universe its self, a halo effect multiplied by the number of its believers and nothing else, all shoved down the gob of humanity for what… self validation???
And have you got spittle on your beard too? :)
Oh come on. We should be happily demolishing a fundamental injustice together (I won’t do all or even much of the work required since I did not create this problem).
But justice is coming one way or another though it will be far better if we exercise our own initiative:
“You hypocrites! You know how to analyze the appearance of the earth and the sky, but why do you not analyze this present time?
“And why do you not even on your own initiative judge what is right? For while you are going with your opponent to appear before the magistrate, on your way there make an effort to settle with him, so that he may not drag you before the judge, and the judge turn you over to the officer, and the officer throw you into prison. I say to you, you will not get out of there until you have paid the very last cent.” Luke 12:56-59 New American Standard Bible (NASB)
I don’t work with people who are clinically questionable, its a trust thing.
where is this change going to occur, but only through government?
Agree. Government will have to:
1) Provide a Postal Savings Service.
2) Provide restitution to the entire population in the form of new fiat.
3) Abolish government deposit insurance.
4) Abolish the Fed.
In other words, the government will have to quit being fascist and work for the COMMON WELFARE, not the welfare of the banks and the rich.
Too Libertarian here. The aspects you list wanting change with would have too many unintended consequences with too few benefits. Common welfare is a concept most of us can embrace, but I would avoid painting the WITT (we’re in this together) crowd as Libertarian-centric. There are many systems currently abusing common welfare: fracking, drinking water (Charlotte today, West Virginia weeks ago), living wage, college debt, High Frequency Trading Desks at Multinational banks, privatization of public education, pay to play legislative corruption, ALEC, faux-regulation, regulatory delay tactics, food adulteration, less than impressive bank settlements, and the list goes on and on. We might start with more pressing issues than changing the currency.
We might start with more pressing issues than changing the currency.
Yes, if you prefer hacking at the branches instead of the roots of evil.
Lee Raymond is “famously independent”?
No, Lee Raymond is a sociopath. Lee Raymond is devoid of conscience. Lee Raymond is an inverse moral barometer: he almost always chooses to do the spectacularly wrong thing.
I didn’t know Raymond was on JPM’s board. That is truly damning.
My guess is that Gretchen Morgenstern, who is far less of a kissass than Sorkin or Stewart, wasn’t given the assignment of writing about Dimon’s pay raise because she wouldn’t have written the kind of apologia Stewart did. I wonder whether the NYT has a banking (or other business) relationship with JPM. If they did (or do) I doubt they would disclose it.
The most common thing about “common sense” is that it is very uncommon!
Tax GREED out of existence and ALL corruption will come to a screaching halt!
Wealth does not create jobs! The demands of human survival create ALL jobs.
The ULTRA GREEDY continue to use human trafficking for profit, which has always been and will always be the source of the Great Wealth hoarded by those who organize and use others for personal gain. We call it “Free Market Capatilism” when in fact it is “Extraction Economics” sanctioned by governments for the ultimate benefit of the 0.01% of the worlds Elite!
Always and everywhere it’s about the money and government’s TAX CODES clearly decide which individuals gets to extract the most from society. Clearly “WE THE PEOPLE” collectively lack the “Common Sense” to see how we’ve all been brainwashed by the ELITE who now “run the table” for thier exclusive benefit. This will end ugly – it always does!!!!!!!!!!!!
“If the idea of having to bribe a billionaire CEO with tens of millions of dollars annually in order to induce him to act as if he were moral and not to loot “his” bank sounds like an insane way to run a financial system to you – you have more common sense than any 3,000 theoclassical economists combined.”
Yes! And, if calling on the bought and paid for servants of said billionaires to make a few cosmetic changes, designed to further disguise the purely kleptocratic nature of our system, is your idea of “activism” then you are just another brick in the wall.
http://www.youtube.com/watch?v=YR5ApYxkU-U
I think you may need a “primer” on Bill Black.
http://www.nakedcapitalism.com/2012/04/bill-black-the-silver-anniversary-of-the-keating-five-meeting-citizens-uniteds-precursor.html
I find your comment offensive. Have you no knowledge of Dr. Black’s activism? He has written detailed letters to our president and others, describing the nature of Mr. Dimon’s (and other’s) frauds. He is teaching economics and law in Kansas City, and I suspect a bit of ethics as well. He has done as much as anyone to undue the “kleptocratic nature of our system,” so deriding him for chiding that system’s propagandists – rather than what(?), shooting them(?), seems somewhat beneath your namesake – Odysseus. If Dr. Black’s references to Bastiat and Paine regarding the mute acceptance evil giving it the imprimatur of good, doesn’t convince you that we need to “correct” authors when they spew propaganda, read a bit of Lakoff to understand how frames like “we need to pay to get the best” create their own reality. Black is no brick.
In response to Ulysses.
I’m not quite sure how you construed my enthusiastic endorsement of Professor Black’s statement “Yes!” as deriding him, or even as in any way belittling his considerable accomplishments. My comments about bricks in the wall was a more generic call (that I’m sure prof. Black would agree with) for more radical reforms that would actually prevent future Jamie Dimons from acting with impunity.
“Chiding the system’s propagandists” is very important, but only as a prelude to concrete actions that actually limit the system’s ability to continue its most abusive, predatory practices.
A few weeks ago I defended Robert Reich against what i thought were unfair attacks based on nothing more than his reformist (rather than revolutionary) inclinations. What I was trying to say here was that folks who can’t imagine going further in their “activism” than strongly worded letters to the editor, are playing by the rules the system has set up to keep us powerless.
We are now at a point where LOTE voting, signing online petitions, etc., have been conclusively demonstrated to be woefully insufficient tactics for reversing the trends towards kleptocratic tyranny that we see all around us. Professor Black is actually far more revolutionary than most self-styled “progressive activists” who are too busy fund-raising to even notice the crimes of Wall Street.
Gifted writers like Prof. Cornel West and Prof. Black are essential to the people’s movement for systemic reform. I welcome prof. Black’s presence on the barricades and I’m frankly flabbergasted that my enthusiastic response to his writing could have been so hugely misinterpreted!
“Yes! And, if calling on the bought and paid for servants of said billionaires to make a few cosmetic changes, designed to further disguise the purely kleptocratic nature of our system, is your idea of “activism” then you are just another brick in the wall.”
I assumed that the “you” in the above quote was Dr. Black. What was your intent?
My intent was to call out the Daily Kos/MoveOn style Obots who declare victory when our Supreme Leader deigns to mention inequality as a concern in the SOTU. They act as if he’s the second coming of Mother Jones when he calls for paying federally contracted workers $10.10/hour (why not $15?) which is something he could have done 5 years ago if it had actually mattered to him.
I have nothing but admiration for academics like Prof. Black, who take considerable risks in naming names and describing actual crimes of our ruling kleptocrats!
If Lee Raymond considers President Obama and the Department of Justice to be “evil incarnate”, the same president and DOJ whose policies have thrown trillions of dollars at the financial institutions and who refuse to indict any CEO’s from those financial institutions, that suggests Mr. Raymond is not only ethically bankrupt, but more than likely has some major psychological issues.
JPMorgan Chase Board of Directors:
Linda B. Bammann
James A. Bell
Crandall C. Bowles
Stephen B. Burke
James S. Crown
James Dimon
Timothy P. Flynn
Laban P. Jackson, Jr.
Michael A. Neal
Lee R. Raymond
William C. Weldon
If I see any of those names associated with other financial institutions or corporations, I will know they are also “compromised”.
John Mc stated above that:
“However, he provides hope that if we are to confront our abuses, then it must be in the form of our government….”
To my mind the above sentiment sums up the tragedy of the modern progressive Left. It refuses to consider the possibility that both the modern State as well as modern Big Capital/Finance are jointly responsible for our contemporary system of domination.
Bill Black must now shift his considerable critical insights from a focus on purely private sector fraud/corruption to public sector fraud/corruption and the public-private system of domination which they have jointly created.
The crisis which the Left faces today(its refusal to analyze its own assumptions) can probably be traced back historically to its march to power after the French Revolution.
Wasn’t it the case that the Jacobin(\Big State) tradition became a type of official Left trademark but was originally the outlook of the more radical wing of the middle class and as such continually under attack by more vigorous sectors of the revolutionary Left from Karl Marx to Rosa Luxemburg?
Wasn’t it only after the professionalization of the Left ( with the Bolshevik coup) where all forms of political domination where reduced to economic domination– consequently concealing that a portion of a new ruling elite was beginning to emerge within the State framework?
Wasn’t this type of Jacobin(Big State) tradition bought lock, stock and barrel primarily by Marxist-Leninist professional revolutionaries advocating democracy, understood not in terms of the sovereignty of the people and their real interests but as a defense of people’s objective interests deduced from a mechanistic class analysis interpreted primarily by an intellectual (usually Marxist-Leninist) elite?
Didn’t this perverted revolutionary trajectory come to an end with the collapse of the Soviet Empire and then the transformation of the official Left into a key part of a new status-quo public-private network of domination?
Aren’t supposed progressive players like Barack Obama and Cass Sunstein today simply the face of corrupt public sector linkages with the face of corrupt private sector actors like Jamie Dimon?
Isn’t it imperative today to have an overall critical analysis of both of these sectors as the two key agencies of modern social domination?
If such an examination never takes place doesn’t the Left simply become the most sophisticated ideological apologist for our present apparatus of power?
Excellent questions!! We cannot continue to ignore the complicity of most establishment politicians with the crimes of the banksters. I’m more than a bit confused by folks who can’t seem to connect the dots– between corporate abuses of power and the determined push by the Obama administration to create a surveillance state that makes the Stasi look like tolerant hippies!!
A truly representative, democratic government can be a force for good, but we haven’t had that here for a long time.
Why must Bill Black shift his insights again? He is an economist, criminologist and a former government regulator who was on the front lines of the public-private takeover. If people here are unable to see his contributions above and beyond fraud research, you are not looking hard enough. His colleagues Michael Hudson & MMT group have done us a tremendous service in so many ways, but I will list of a few for edification:
1) Importance of a Multidisciplinary Lens (avoiding compartmentalized knowledge)
2) Large voices in the Heterodox world of economics (Modern Money Theory)
3) Name names, providing processes – fraud recipe, & forming language/critiques
4) Teaches History – S&L lessons, Akerlof & Romer (1993), analytics of current crisis
5) Helps us understand competing theories (Rand, Chicago School, Mosler, Keynes)
6) Institutional Analysis – JPMorgan, BofA, Standard Chartered, Lincoln Savings
7) Naming Media Whores – Sorkin, David Brooks, DealBook, NY Times etc.
8) Analyzing Regulatory, Economic, Criminal current events (see Real News)
My take is the Bill Black has been and is providing insights almost daily. He does not need to shift anything. He is a national treasure doing what he is doing presently.
Given that it has become apparent that the best way to rob a bank is not, in fact, “to own one” as in the 1980s when Bill Black still had a government job (as you reference above), but rather “to own the government” as becomes clear today, the real question is not Bill Black’s record but rather why are you so resistant to the idea that Black should “now shift his considerable critical insights” to the private/ public nexus that has effectively disenfranchised him?
I think the real impetus for this series of questions about the state is not Bill Black –although, frankly, chasing down tin-pot journalists is not the best use of Bill Black’s time as I have stated more than once already myself– but rather this comment by you:
“Those who are selling anti-government propaganda benefit in two ways:
1) It promotes the elevation of the private market at the expense of the state
2) It obscures the interrelatedness of private-public actors working to gut the state of power ”
First, you have no cause to launch that criticism at the person to whom you responded because you didn’t attempt to discern what they might be saying about the state and what it enabled historically, and continues to enable today.
Second, “the state” is not being gutted of power, as you suggest. “The state” is more powerful than ever before, it’s just not doing what you– or Bill Black– want it to do. ie., “The state” fired Bill Black, but it didn’t go anywhere. It’s still here watching me type this comment for example, (which I hope “it” doesn’t deem too subversive!).
Why is that so hard for liberals to get? And I think this is a real question, I’m not just being snide. I think the problem is in the way liberals and neo-liberal propagandists in the US alike frame “the state,” as a force that opposes corporate power.
But this is false. The state in the US never opposed corporate power, it has consistently enabled corporate power–with NO notable exceptions– going all the way back to Alexander Hamilton. Why else would Robert Rubin name his think tank “The Hamilton Group”?
From time to time, it is true, corporate plutocrats prefer stability, just the way the Republicans where I live like to keep the water clean and to preserve open space. That move towards stability within which industrial power could further develop in the 20th century US did put a crimp in the destabilizing financial sector that was endangering that development, thereby resulting in a job for Bill Black.
That period of stability also afforded an emerging group of “liberal” bureaucrats and politicians and certain sections of the population–but not all sections of the population– the illusion that the government worked for them, as citizens and as “workers.” The government didn’t work for them. The government created a market in consumption within which industrial corporations could develop further. Broadly, “Fordism.”
But as Naomi Klein suggests, today’s corporate plutocrats don’t necessarily value stability, as they’ve discovered that stable developed economies don’t necessarily afford great profit making opportunity. Undeveloped economies, war economies, and unstable developed economies are a more profitable field in which to operate. And, true to form, “the state” has enabled every single one, just as it earlier enabled Fordism.
In light of all this, and much else too, growing “anti-government” sentiment isn’t quite the thought crime you want to make it out to be.
JT Farraday,
First, I think Professor Black’s book is even more prescient now. The game is larger and the players have different titles – same process. Also, I am not resistant to a shift in his incredible insights, but I think they are many embedded in his work that need greater amplification.
Second, I think there is a fundamental misunderstanding in the characterization in Dr. Black’s work from F Beard.
Third, I do have cause to criticize without delving into the PPP issue as I think it is a gross mischaracterization of Dr. Black’s work. I did, however, ask for some evidence of “this enabling”. I was able to discern what was being said. The fact that I do not respond to every aspect of a post should alert you that I found other pieces more salient. You might try working on not attributing false assumptions to people you have not engaged before.
Fourth, the state has been co-opted. I defer to Chris Hedges narratives for all various institutions and levers of power which have been corrupted. If you do not like gutted, then fill in your own labels. Except do not include me in your speculative musings about the problems of the left. I am neither interested in that staid discussion nor did I find your arguments persuasive.
Lastly, except for your reference to Naomi Klein- whom I value tremendously, I think your last few paragraphs are an exaggerated form of argument I did not intend to have. My thesis is that Dr. Black’s goes further than being credited here, and my sub-thesis was that I would like some direct evidence that challenges my thesis (or otherwise this is just bloviating rhetoric).
Where Are You Amram?
Always the Pilot Wave vs. the Gnostic Wave, wrestling for the Universal Mind, until the end of time. Where are you now Amram, you mushroom eating buzz head? He must have been one wild man on drugs there in the desert to write Dead Sea Scrolls Manuscript B. God only knows what he saw, but Scooby Doo would’ve run like hell. I know I would have. Most people do . . .Ecce Homo . . .”What is the truth?” -Pontius Pilate
Pilot Wave:
“‘If you’re on the board, you’ve got a guy in Jamie Dimon who’s considered the top commercial banker in the country, if not the world,’ Professor Larcker said. ‘What if you punish him and he gets angry and leaves? You’ve got a gigantic hole. Who do you plug in? How much value do you destroy if you have to replace him, ”
Pilot Wave vs. Gnostic Wave:
“We have approached it [emancipation of Carribean slaves] as though it were a railroad, a canal, a steamship, or a newly invented mowing machine, and out of the fullness of our dollar-loving hearts, we have asked with owl-like wisdom, Will it pay? Will it increase the growth of sugar? Will it cheapen tobacco? Will it increase the imports and exports of the Islands? Will it enrich or ruin the planters? How will it effect Jamaica spirits? Can the West Indies be successfully cultivated by free labor? These and sundry other questions, springing out of the gross materialism of our age and nation, have been characteristically put respecting West India Emancipation. All our tests of the grand measure have been such as we might look for from slave- holders themselves. They all proceed from the slave-holders’ side, and never from the side, of the emancipated slaves. . . . it is nothing that the whipping post has given way to the schoolhouse; it is nothing that the church stands now where the slave prison stood before; all these are nothing, I say, in the eyes of our slavery-cursed country. But the first and last question, and the only question which we Americans have to press in the premises, is the great American question (viz.) will it pay?”
-Frederick Douglass, WEST INDIA EMANCIPATION, speech delivered at Canandaigua, New York, August 3, 1857
Frederick Douglass was one of the greatest of all Americans. Living in Rochester, NY, he spoke and wrote words of timeless value:
“At a time like this, scorching irony, not convincing argument, is needed. O! had I the ability, and could reach the nation’s ear, I would, to-day, pour out a fiery stream of biting ridicule, blasting reproach, withering sarcasm, and stern rebuke. For it is not light that is needed, but fire; it is not the gentle shower, but thunder. We need the storm, the whirlwind, and the earthquake. The feeling of the nation must be quickened; the conscience of the nation must be roused; the propriety of the nation must be startled; the hypocrisy of the nation must be exposed”
http://www.fordham.edu/halsall/mod/douglass-hypo.asp
I’ve long agreed with Bill. Beard mentioned the ‘bad apple’ approach, but I’ve found that ineffective in system description all my career (though I once believed it). Our systems rely on the bad apple approach when we catch things going wrong. In child abuse cases we find 17 agencies all failed the kid. Who would design a system with 17 “relevant” agencies to sort something as evil as this in the first place? This sits very uneasily with claims our organisations are full of decent, hard-working people – incapable of spotting obvious evidence and actually doing the right things. I could not have sold PPI or interest-rate swaps without knowing I was ripping the customers off and committing a crime in my own moral view. Yet this behaviour became the norm amongst honest, hard-working bank clerks and has still not been declared criminal. It was, of course, a form of criminal deception (permanently depriving others of cash by deception). In the myth, a bad apple rots the rest in the barrel too.
I don’t believe a word said on executive pay or other obscene forms we see in sport, celebrity and the rest. If we lost them all to a virus preying on avarice we would find no skills lost. The key in “executive remuneration” is the prevention of a global salary cap, yet we have managed global wage arbitrage. I believe millions could replace Dimon and his ilk, but with the system left as it is, any of us might well be as bad. What we have is competition by cheating and bribing match officials – all in an era of action replay and technological assessment better than the human eye. I would suggest the Hillsborough inquiry as a microcosm of the financial world. This was a soccer disaster in England at which 96 died 25 years ago in which we now know almost every man-jack connected with authority and the press lied.
Why does anyone deserve 10 million dollars?
We need a maximum wage.
Maximum wage and maximum wealth. And a 100% inheritance tax. Great ideas.