I want to give a hat tip to a recent Wall Street Journal article that brought to my attention two damning admissions by JPMorgan’s (JPM) CEO and Chairman of the Board, Jamie Dimon. The irony is that Dimon was lulled into making these admissions because he was basking in the perfect calm created by the confluence of Sorkin’s and CNBC’s storied sycophancy at the one place on earth where elite bankers feel most loved, honored, and protected – the annual meeting of the ultra-wealthy in Davos, Switzerland. Sorkin was the only interviewer, so Dimon faced no risk of tough questions. It may well have been this perfect setting that caused Dimon to let slip the mask and reveal two illustrative sins of elite bankers reported in the WSJ article.
“A spokesman for J.P. Morgan declined to comment on the continuing investigations. Mr. Dimon said in a January 2014 interview on CNBC that it has been a ‘norm of business for years’ for banks to hire [ex government officials and the] sons and daughters of companies’ [controlling officers] and to give them ‘proper jobs’ without violating the law.
‘But we got to figure out exactly how to create a safe harbor for that so you don’t…end up getting punished,’ he told the interviewer, according to a CNBC transcript.”
Yes, you read that correctly. It has been a “norm of business for years” for multinational corporations to hire the “sons and daughters of companies’ [controlling officials]” and to hire “ex government officials” in order to secure the favor of those powerful officials for the banks. Dimon’s concern is that it is essential that firms should be able to continue to purchase this influence with other elites in this manner with no threat of ever “getting punished” for buying influence with such powerful foreign officials.” JPM’s priority is “to figure out exactly how to create a safe haven for that.” The elite firms’ “norm of business for years” is not an admission from Dimon’s perspective, but rather a claim of right. Anything that elite firms have done successfully for years to purchase influence with other elites (including hiring “ex government officials”) is obviously something that they have a right to continue to do – with total impunity from “getting punished.” It’s not bribery, it’s buying influence with powerful officials who run firms and government agencies and ministries.
I promptly found the CNBC interview transcript, and it was such a classic of its genre that one can see how Dimon could let down his guard and make these admissions, or as he presented them, legitimate demands on the U.S. government to create such a “safe harbor” for U.S. multinational corporations.
Two Good Ol’ Boys at Davos
The joy begins with the professional tone and distance that Sorkin brings to sycophancy. Dimon reinforces this professionalism throughout the interview. Their opening exchange sets the stage.
ANDREW ROSS SORKIN: Jamie Dimon, thanks for being here.
JAMIE DIMON: I’m thrilled to be here, Andrew.
The interview ends on the same high, professional tone.
ANDREW ROSS SORKIN: –thank you very much, Jamie. Appreciate it. Thanks.
Just two good ol’ boys shooting the breeze in Davos.
JPM’s “Chinese Princelings” and JPM’s “Purity”
Sorkin brings up the fact that JPM hires “Chinese princelings” to curry favor with their parents. Dimon responds that “I’m not going to through any of the current” governmental investigations of JPM. To Sorkin’s credit, he asks a follow-up about JPM losing a potential IPO engagement with a Chinese firm due to a “Chinese princeling” issue. Dimon responds with this a fabulous line: “we’re trying to make decisions that try to make us as pure as possible.” Yes, Dimon rebrands JPM as purer than Ivory soap. His very next argument is this is why it is essential that the governments create a “safe harbor” so that JPM can hire the princelings and ex government officials in order to curry favor with the elites that control firms and governmental agencies without any risk of “punishment.” You know, “as pure as possible.”
Sorkin Closes for the Killer Interview Question to Dimon
It’s an incredible set up for Sorkin. Sorkin pounces for the kill, leaping on his now helplessly hypocritical prey. Or, alternative B, he doesn’t actually listen to Dimon’s amazing answer to his question and instead interrupts the answer just as Dimon demands the creation of a “safe harbor” under which firms like JPM can continue to hire “Chinese princelings” and “ex government officials” for the express purpose of buying corporate and governmental influence without any risk of “getting punished.”
ANDREW ROSS SORKIN: Is there anything in this–
JAMIE DIMON: –getting punished.
ANDREW ROSS SORKIN: –whole thing that you’ve read that’s made you uncomfortable?
JAMIE DIMON: I’m not– actually I don’t want to go anymore into that one, yeah.
When Dimon blows off Sorkin’s inane question about whether he has read anything that has made him “uncomfortable,” Sorkin switches to the perfect Davos question. “Is the stock market out over its skis relative to where we are in the true economy?”
Who’s Your Daddy?
It never dawns on Sorkin during the interview that there might be something desperately wrong about Dimon’s belief that multinational corporations have the inalienable right to buy influence through their hires of “ex government officials” and “Chinese princelings” and that the duty of the U.S. government is to create a “safe harbor” for JPM’s officers so that they can be assured that they can freely buy influence with no risk of “getting punished.” Their epitome of merit-based hiring at JPM’s China operations is based on the answer to the colloquial question: “who’s your daddy?”
I would argue that there is nothing illegal about hiring people on the basis of things other than merit.
The illegal act is when the government official (elected or appointed) allows that relationship to influence his / her official duties. The private company will do all it can to maximize its influence, it is the job of the public sector to be a watchdog for society as a whole ( how effectively it accomplishes this feat is another matter).
Of course, non-Democratic governments create an additional wrinkle, as there is no mechanism for people to choose their “watchdogs”. But I have no problem with companies using nepotism / trying to buy influence, and can think of no way of disallowing it (other than restricting the positions ex-public sector employees can take, which I believe we do).
End too big to fail (w/ consumer banking protections in place) elect / appoint politicians / regulators that uphold public interests, and let financial fail when they allow unqualified people to make major choices–that’ll change these practices organically.
Re “… it is the job of the public sector to be a watchdog for society as a whole.”
You mean… the public sector that has been compromised by hires such as these? That public sector?
It’s the whole point of such hires to be able to influence the public sector, and specifically to undermine it’s ability to function as a watchdog. So tell me again… how can this possibly work?
Unfortunately, this can all easily reflect our current government’s international policy. Yes, it still stinks to high heaven, but the blame for a rockslide is not the slide, it’s in pulling out or shifting the few rocks that allowed it to start.
There are 3″I’s” to contingency management.
Handle the IMPACT
Act to INTERCEPT what’s already incoming.
Target the INSTIGATORS.
If we don’t do all three simultaneously, we can’t win agains our own disorganization.
Instigators in this case goes all the way back to the lack of focus and coordination between large-scale merchants and consumers, leading them to economic civil war instead of unity. Banksters then become an essential tool of the “winners” of that mal-adaptive, economic civil war.
What is a consensus Desired Outcome of this electorate? Do we ever bother to whittle that down to a few points of consensus anymore?
Whatever it might be, can we just get on with making our nation insanely great, instead of just letting factions go overboard at the expense of the whole?
Once reviewed that way, it seems less worrisome to just jail all the banksters, replace them with mobile phone apps, and focus on creating and maintaining a more informed electorate, capable of shock-&-awe level quality (including tempo) of distributed decision-making.
Isn’t the latter what makes a great democracy? Not how what level of looting here and abroad our banks achieve?
Jamie Dimon should be able to gamble all he wants…he should just have to use his own money (or his investors). He shouldn’t be able to counterfeit state money to gamble with.
Its really so simple…by agreeing to do due diligence (underwriting), banks are allowed to create state money as a franchise, make loans to qualified borrowers and profit from it with almost no chance of failure…truly money for nothing (chicks still aren’t for free). Banks have the sweetest deal in all of capitalism. If they fail, it is due to either incompetence or criminality. In the first case the offending bank must be absorbed by a competent one (all FRBS banks are branches of the Fed anyway), and in the second case the banks operators should do jail time and give up any ill-gotten gains.
If our regulators don’t understand this we need better regulators, but then that’s what Professor Black has been saying for some time.
From there the eternal question “stupid or evil” is moot.
Yea I don’t understand Mr. Blacks continual shock about the way the world works, you would think he would be used to it by now after all these years. Yes, the financial system is a corrupt, parasitic entity that controls our world. We already know this. Do we need to explore all the different manifestations of this truth, giving each one its own ‘oohs’ and ‘ahhs’, day after day?
No, we need revolution and change. It is time for people to come together and stand up for themselves and reclaim control of the world (if they ever had it to begin with).
Speaking of Jamie Dimon slips, I was surprised by the one Elizabeth Warren quotes in her book. She quotes Dimon as remarking that banks must have a boom/bust every few years. I was amazed by the remark. I had never heard that admission from a banker before. By the way, Warren said she did not believe that. I believe Dimon is correct and that the boom/busts are built into the banking operations just as Dimon suggests. I would hope this admission would get more attention and that the reason for it could be eradicated from our monetary system. History is definitely on Dimon’s side on this one.
I believe Dimon is correct and that the boom/busts are built into the banking operations just as Dimon suggests.
I wouldn’t say it was natural, nor an any act of nature, it is precisely every 10 years, when the other has receded in public memory, that it begins all over again.
Just as it isn’t natural that with every jobless recovery, the numeric data proves that precisely one-fifth the US workforce is laid off.
Quite a bit of fine tuning from the Fed to keep certain bubbles going . . .
What Diamon’s remarks illustrate is a clear two-tier system, a kind of “separate reality” that divides the upper echelon from everyone else. While we are expected to obey the rules, Diamon and his class do as they please with no consequences.
Many people think the FDIC is sooo nice while in truth it is a just a band aid to cover the wounds caused by banking frauds. The FDIC should be scraped and our mantra should be: “Dump the FDIC and cure the banking disease. We don’t want band aids any more.”
I keep coming back to this and thinking about how to define the word “pure” as Dimon uses it. He appears to equate it with “immunity to interference and criticism,” i.e., the unchecked exercise of his will. Of course I am not surprised to see that that is what he wants, but his choice of the word “purity” seems to suggest that he thinks of this as not only what he wants because he wants it and is entitled to it, but that he also thinks of it as a moral position to attain. But it’s one that he plans to attain not by selflessly risking his own comfort, security, interest, and life for a principle ( like MLK Jr or Mother Teresa or any number of heroes throughout history) but by simply purchasing immunity from criticism. It’s a monstrous inversion of the ordinary accepted sense of the word “pure” and he is completely unaware of the difference.
I have never met Mr. Dimon, however, I have met many characters in the upper echelons of publicly listed businesses.
The one thing they have in common is that they suffer no shortage from a sense of superiority or entitlement.
Bear in mind that the likes of Dimon, Zuckerberg, Soros, Gates etc. can all pick up the phone and call President Obama to have a chat. Simply because they are rich they have this access — the great unwashed masses, not so much.
For most, it’s difficult if not impossible to understand the egos of the Dimons of the world.
Think about it for a moment, they are at the top, they reap unreal fortunes from committing outrageous acts knowing they face no penalties only more bonuses.
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If we tolerate “the revolving door” in the United States, and hiring the children of high or former officials (think Chelsea Clinton, for example) why not also tolerate similar corruption when Americans do business abroad?
After all, are we not the best example of “Democracy that works?”
Has not The Almighty given us the task of spreading our Democracy, the way we are and the way we live, to the world at large? Doesn’t everyone have a few bruises and warts we’d rather not disclose?
And if we don’t like what we see ourselves doing in China, India, Europe or Africa, why not begin changing how we live and what we accept ad rational and normal here at home?
Really. Jamie Dimon should have been in jail many times over for his crimes. He and his fellow thugs deserve zero protection. An intelligent man and all he uses that for is his own greed and low life thuggery.