Saturday, 16 March 2013
JP Morgan Chase was raked over the coals all day Friday in a Senate subcommittee hearing in which our august solons displayed a surprising degree of real bipartisan agreement on the subject of whether giant Wall Street banks like JPMC are out of control. The answer seems to be a resounding YES, and even though these pols are beholden to and dependent on finance bucks for their careers—which means actually doing something about it remains a remote possibility—they also maybe vaguely worried that things might completely fall apart. For which they will be roundly and rightly blamed.
The hearing came one day after the release of a damning report on JPMC’s huge losses in the derivatives market last year, which would be strictly their problem were the bank not so gargantuan as to put the entire financial system at risk if they manage to blow themselves up. Michigan veteran Carl Levin patiently interrogated bank execs and exposed their dissembling and rank bullshit over hours of delightful examination, which I listened to while working from home on other things. Even John McCain came by to join in and asked decently well informed questions. (Sadly, no other Democrats turned up, which speaks volumes about their priorities and paymasters.) It was a reminder that the legislative oversight function can still work when someone wants to exercise it—too bad it’s no longer in operation in civil liberties or foreign wars. But I digress.
There are ample accounts of what was discussed and the details of interest, including live blogging by both Matt Taibbi at Rolling Stone and Yves Smith at Naked Capitalism, plus good accounts in The Guardian and elsewhere. These observers picked up on many juicy moments of truth (and falsehood). The summary for people without the patience to delve into the details is that the bank took a huge shitpotful of money, some of it federally guaranteed deposits, and gambled with it. Then lost. Then lied about it.
As we learned in all too recent memory, this behavior is extremely dangerous for the rest of us because a big trading operation like JP Morgan can bring down the walls of Jericho in a twinkling once people fear they are insolvent and won’t be able to pay their debts. Banks don’t pass around money, despite appearances; they trade on faith, and when they start faking it, the system freezes up. Money and credit flow, which means they have to remain in a liquid state. Lying, stealing and fraud turns them to sludge or concrete, and we promptly teeter on the brink.
What was not discussed at any point—and the main disappointment of the session, in my opinion—was the question of legality. There were misrepresentations, yes, there was deception, yes, there was books-cooking, yes there was in fact fraud against shareholders, yes yes yes. But no one said, Were these actions crimes? If that question doesn’t eventually get asked, all the satisfying public humiliation of these bloated bankers is merely that, a moment where they have to squirm and we get to rub our hands. Then they go home with their billions and have the last laugh. All in a day’s work!
The other take-home lesson is that the usual narrative liberals tell each other about the bad old GOP reactionaries being responsible for our ills doesn’t float here. These guys are being protected and enabled by PRESIDENT BARACK OBAMA and his Department of ‘Justice’. Oh Lord, let the scales fall from our eyes, and may we see the light.
Posted by Tim Frasca at 05:49