Jamie Dimon’s Shameful Spouting about ‘anti-American’ Basel III regulations
Thursday, September 29, 2011 at 9:04AM There are few things more cringe-inducing than a government-subsidized bank CEO spouting self-serving, entitlement-laden idiocy to the world just because he and his bank might be subject to some extra constraints. That hasn’t stopped JPM Chase CEO Jamie Dimon from acting like a spoiled, sociopathic brat while characterizing proposed Basel III capital requirements and regulations as ‘anti-American’ at every opportunity.
They are not ‘anti-American’ but globally risk-mitigating in a time of widespread economic Depression, a point lost in the haze of Dimon’s megalomania.
Basel I and II enabled European banks and townships and pension funds to purchase AAA securities extensively. American banks went into manufacturing over-drive to oblige, creating 75% of the $14 trillion of mortgage-related assets between 2003-2008. Related risk and loss continue to proliferate the globe. Basel III goes further towards refining capital requirements to contain damage.
Dimon doesn’t want a capital surcharge for big banks, or higher capital requirements for US mortgage securities, because that might entail further examination of his bank holdings, not because the excess capital would be a hardship. Nearly $1.6 trillion of excess US bank capital is sitting on the Federal Reserve books right now, doing nothing productive or job-producing.
Here’s what’s really anti-American – big banks receiving extreme federal assistance while the rest of the country is crushed, loan refinancing and other foreclosure reducing negotiations are anemic, and both private and public sectors can’t finance enough job growth to alter our horrific unemployment or poverty situation.
JPM Chase had the government back its Bear Stearns purchase (we’re still on the hook for $29 billion related dollars) in March, 2008 and facilitate its acquisition of Washington Mutual that fall. It took advantage of $40 billion of FDIC debt guarantees in early 2009, and received $25 billion in TARP money that was only repaid after its trading profit got a big enough boost.
The toxic asset and derivatives pyramid that emanated from Wall Street and spread to Europe continues to brutalize the global economy from the United States to Iceland, Norway, Greece, Italy, Spain, Portugal and Ireland.
American banks similarly catalyzed the 1930s Great Depression, forming shady trusts and fraudulent assets (the 1929 version of the CDO) to puff up values galore as the biggest banks cashed out leaving everyone else holding the bag.
The difference is that back then banks were slapped with more than additional capital requirements. The 1933 Glass-Steagall Act forced banks (including the Morgan Bank and Chase) to chose between commercial and investment banking focus, whereby commercial banks received FDIC backing for their customer deposits and access to Federal Reserves loans, but speculative, asset-creating firms were on their own. To be sure, there have been currency and debt crises since, but none reached today’s level, in the wake of Glass-Steagall repeal and government subsidy overload.
Sitting in his prime position as a Class A NY Federal Reserve director before, during and since the fall 2008 crisis period (he was re-elected in 2010, the same year he bagged a $17 million bonus), Dimon’s callous attitude toward global and domestic risk and the banks’ role in it, is particularly heinous.
This summer, JPM Chase settled (with no admission of guilt) fraud charges for its CDO practices for $153.6 million. There are a plethora of class-action suits in the pipeline. No matter. Old habits don’t die without being killed.
So far this year, JPM Chase is the world’s top creator of securities backed by commercial loans (or CMBS) with 19.5% of the market. Absent stricter regulations to the contrary, such as resurrecting the 1933 Glass-Steagall Act, it also happens to be the top loan contributor (or supplier of loans) for CMBS deals. Lending and packaging loans in the same bank is an obviously perilous mix. And if you think CMBS won’t be another subprime, guess again. CMBS delinquencies are at record highs. More dangerous, JPM Chase is second only to Goldman Sachs in credit derivatives exposure and runs a $73 trillion derivatives book.
In other words, Jamie Dimon should be worried about other things besides some extra capital requirements from Basel III. He should shut up and watch his mortgage and derivatives portfolio. And we should be glad there’s even the remotest opposition to his drivel. Basel III isn’t at all perfect. It’s not a new Glass-Steagall. It doesn’t alter the way banks do business and the structure in which they operate. It doesn’t stop the careless outpouring of money from central banks and entities into the hands of eager banks and their investors at the expense of the world’s citizenship and economic security. But, if anything makes Jamie Dimon this irate, you know it can’t be bad.
(Note: A shorter, gentler version of this comment appeared in the NYT Room for Debate section on Sept. 29)
Basel III, CMBS, JPM Chase, Jamie Dimon, Wall Street 
Reader Comments (11)
That graph on p. 12 of that derivatives report mentioned is seriously killer!!!!!
Thanks for a great and thought-provoking post, and truly the only outcome, as soon as Obama became president, was to nationalize the Federal Reserve, the top ten banks, and reinstitute the financial transaction tax (1914 - 1966).
But then, a close examination of the personnel and presidential appointments to all administrations from Reagan to Obama indicates there has been a seamless continuum --- same people, different sock puppet in the Oval Office (Reagan, Bush #1, Clinton, Bush #2, Obama).
Time for a change.....
dimon is doing his job
how long can you trade fiat securities? for ever - until revolution
how long until revolution? 100 years of tireless effort has ensured that the word itself is viewed as evidence of lunacy. you cannot breed humans for docility because it is illegal. but you can engineer them
enjoy and god bless
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And the above pretty much says it all......
Hey Nomi ,are you enjoying the Wall Street protest/ protestors?
"..derivative cocktails nobody understands.."
President Obama (10/06/11)
"..exotic financial instruments nobody understands."
Senator Maria Cantwell (2009, 2010, 2011)
I understand, Mr. President
Why do self-described democrats continue to repeat the US Chamber of Commerce talking points?
I understand credit derivatives; I was around at their creation in the '80s.
I understand ABS CDOs, CLOs, CBOs, CMOs, CPDOs, ABCP, CSOs, securitization (and contrary to what the so-called "experts" claim, securitization didn't begin in the late '70s -- it was resurrected then, it began back in the early 1900s, and exploded during the 1920s, leading to the Great Crash of 1929), and credit default swaps in all their variations.
I understand the bivariate Gaussian copula model and why its application in hedging is a total scam.
I understand the variation on the binomial theorem applied by AIG -- and how it translated to billions in CDS sales, while keeping zero capital on hand to back them up -- another scam and the largest insurance swindle in history.
I understand the abject dishonesty of a CNN snarky reporter who falsely claims to an "Occupy Wall Street" protester that the bankersters paid back the taxpayers, when $23 trillion was given them, and according to a recent limited GAO audit of the Federal Reserve, another $16.1 trillion, and between $25 billion to $80 billion was forgiven AIG.
I understand that when the Fed and Treasury buy toxic assets (i.e., worthless credit derivatives) that ain't no payback to the taxpayers, but a definite loss and double payment to the banksters.
I understand thousands of categories of credit derivatives, and the creation of credit derivatives in the '80s to clean up the S&L debacle.
I understand that jobs were created in the investigations of the guilty parties, and how over 1,000 banksters were convicted and jailed.
I understand that the banks have committed at least hundreds of thousands, if not millions, of felonies in their filing of false affidavits, popularly referred to as "robo-signing."
But most of all, Mr. President, I understand that laws will never be upheld as long as crooks like you, George W. Bush, Bill Clinton, George H.W. Bush and Ronald Reagan are in office.
How much of this "creativity" pervades the banking sector? How thick do you think the layering of phony costs are padded onto basic banking activities that take away from the efficient functioning of the economy? Wouldn't these costs be spread out in many different directions had they not been siphoned off by a narrow interest group? Thanks.
Harry M. Markopolos
In this King World News exclusive interview, Harry Markopolos the Whistleblower who brought down Bernie Madoff’s $65 billion Ponzi scheme reached out to KWN with the latest fraud he and his team have uncovered. Markopolos stated, “The Bank of New York is going to go down, Eric. Between Bank of New York Mellon and State Street, these two institutions have stolen between $6 to $10 billion from tens of millions of Americans retirement savings accounts. It’s been a hell of a crime spree for the bank, but now they are being brought to justice.”
Markopolos also told KWN, “The New York Attorney General filed suit on Tuesday (against Bank of New York Mellon) for stealing money from pension funds on currency transactions. This theft has been from tens of millions of Americans, policemen, firemen, librarians, municipal workers, judges and the list goes on and on and they’ve been doing it for decades.
At this pace Harry Markopolos and his team are fast becoming synonymous with fighting corruption and crime on a massive scale. Who knows, they may be this centuries new “Elliott Ness” and legendary team of law enforcement agents nicknamed “The Untouchables.”
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/10/8_Harry_M._Markopolos.html
The two items below make great bookmarks (and wonderful for increasing sales of small retail shops when they are placed in the store windows):
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Bill,
This 'creativity' is today's banking system, and whereas it was always a component of banking, more recently, as its mistakes and risks are subsidized financially by world governments, it will increase in an exponential fashion, depending on opportunity.
Truly, what America needs and must have is someone like the outstanding senate candidate below:
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We continuously hear the propaganda meme that people are afraid to borrow from the banks --- but the truth is that banks have been refusing to loan at record numbers.
The bankers want to spend all their free government money in speculation across the markets and foreign investment.
Therefore, in a period of record low interest rates, when housing prices have fallen considerably, few can buy at this time.
A recent United Nations economic report on food prices explained that investment in commodity speculation (speculation on foodstuffs, etc.) has increased from $13 billion in 2003 to $260 billion by 2008, a 2,000 percent increase.
Now that may appear to be a large increase, but it dramatically under reports the increase when one understands that the amount has been leveraged to a great extent; a conservative estimate would be from 10,000% to 50,000% leveraging on that $260 billion in commodities speculation --- thanks to securitized financial instruments, credit derivatives, and further manipulated with the use of credit default swaps (CDS), another category of credit derivatives. (CDSes are often referred to as “unregulated insurance” -- if they were regulated, they’d be outlawed! This is what they mean by “shadow banking.”)
Another recent report, this time by the Commodity Futures Trading Commission (USA) explained that 95% of commodity futures trades was pure speculation, not for purposes of hedging, or spreading risk, as the Wall Street bankers are forever claiming.
So we can extrapolate that massive and unwarranted speculation in food pricing (commodity futures) is a formidable cost driver – resulting in much human turmoil and tragedy while accomplishing nothing of value – except increasing the wealth of the speculators.
Of course, the same situation has been concurrently taking place in oil and energy markets, precious metals markets (gold, silver, etc.) and the healthcare sector, all affecting prices.
So to understand the massive roiling of international and national markets, using phantom money and funds, is to understand the enormous detrimental and destructive forces on people’s lives which is decidedly anti-progress in human affairs.
Understanding the connections and linkages allows one to better grasp seemingly unrelated world events: the cornering of the chocolate market awhile back, then a few months later serious political troubles erupt in the major chocolate-producing country, Ivory Coast (Africa), thus causing upheavals in chocolate (futures trading) market prices.
Behind the scenes one sees money flows between certain financial groups to certain countries’ rulers (the Ivory Coast, in this case) – and a few people are enriched, while many die and many other innocent lives are destroyed in the process.
Now we have been told another propaganda meme – that this global economic meltdown resulted from a slight mortgage default rate a few years back – a preposterous notion, given that had there been zero defaults the same meltdown would have occurred – it is unsustainable for the banksters to continue selling $100 to $1,000 worth of debt for every $1 of debt on hand – a relatively recent occurrence, all made possible by relatively recent changes in laws, regulations and legislation --- in other words, absolute corruption.
This is exactly how Wall Streeters made their billions – selling endless debt which they now tell us is our fault and our problem!
When Warren Buffett publicly denounces credit derivatives as “financial weapons of mass destruction” – then later spreads his money among congress to ensure these weapons continue to exist and proliferate – he is playing the American public in the same manner as the Robber Barons once did.
When Warren Buffett publicly proclaims that the super-rich should pay taxes also, while his company is in arrears for billions of unpaid taxes, he is playing the American public in the same manner as the Robber Barons once did.
Perhaps the time has finally arrived that the people are tired of being played for fools?
I concur with your appointment to Bernie Sanders' panel --- but Jeffrey Sachs?
Puuuuhlease --- wasn't he with the Shock & Awe team way back when?
Would have preferred Mark Blyth (Brown University), Michael Hudson, Robert Scheer, etc., but not Jeffrey Sachs, not matter how much he has politically repositioned himself!