NationofChange/Robert Reich: Dimon in the rough

NationofChange – Progressive News and Activism
Dimon in the rough

JPMorgan Chase CEO Jamie Dimon's real concern is that America may end the kind of socialism he and other denizens of the Street depend on – bailouts, regulatory loopholes, and tax breaks.
Robert Reich / Robert Reich / Op-Ed - April 15, 2019

Image Credit: Chip Somodevilla/Getty Images

Get news the mainstream media doesn’t want you to see.

In his annual letter to shareholders, distributed last week, JPMorgan Chase CEO Jamie Dimon took aim at socialism, warning it would be “a disaster for our country,” because it produces “stagnation, corruption and often worse.”

Dimon should know. He was at the helm when JPMorgan received a $25bn socialist-like bailout in 2008, after it and other Wall Street banks almost tanked because of their reckless loans.

Dimon subsequently agreed to pay the government $13bn to settle charges that the bank overstated the quality of mortgages it was selling to investors in the run-up to the crisis. According to the Justice Department, JPMorgan acknowledged it had regularly and knowingly sold mortgages that should have never been sold. (Presumably this is where the “stagnation, corruption and often worse” comes in.)

The $13bn penalty was chicken feed to the biggest bank on Wall Street, whose profits last year alone amounted to $35bn. Besides, JPMorgan was able to deduct around $11bn of the settlement costs from its taxable income.

To state it another way, Dimon and other Wall Street CEOs helped trigger the 2008 financial crisis when the dangerous and irresponsible loans their banks were peddling – on which they made big money – finally went bust. But instead of letting the market punish the banks (which is what capitalism is supposed to do) the government bailed them out and eventually levied paltry fines which the banks treated as the cost of doing business.

If this isn’t socialism, what is? Yet it’s a particular form of socialism. Millions of homeowners who owed more on their homes than the homes became worth didn’t get bailed out. Millions of workers who lost their jobs or their savings, or both, didn’t get bailed out. No major banker went to jail.

Call it socialism for rich bankers.

It’s a gift that keeps giving. Dimon took advantage of the financial crisis to acquire Bear Stearns and Washington Mutual, vastly enlarging JPMorgan. America’s five biggest banks, including Dimon’s, now control 46% of all deposits, up from 12% in the early 1990s.

And because they’re so big, Dimon’s and other big Wall Street banks are now considered “too big to fail”. This translates into a hidden subsidy of some $83bn a year, because creditors who face less risk accept lower interest on deposits and loans.

More socialism for rich bankers.

After the financial crisis and bailout, Congress enacted a milquetoast version of the Glass-Steagall Act, a banking law from the Great Depression that bankers killed off in the 1990s. The replacement was called the Dodd-Frank Act.

Ever since, Dimon has pushed to weaken Dodd-Frank.

When Obama’s regulators wanted to extend Dodd-Frank to the foreign branches and subsidiaries of Wall Street banks, Dimon warned it would harm Wall Street’s competitiveness.

This was the same Jamie Dimon who chose London as the place to make highly risky derivatives trades that lost the firm some $6bn in 2012 – proof that unless the overseas operations of Wall Street banks are covered by US regulations, giant banks like his will move more of their betting abroad, hiding their wildly-risky bets overseas so U.S. regulators can’t see them.

More recently, Trump’s bank regulators have heeded Dimon, and rolled back Dodd-Frank.

Dimon was also instrumental in getting the big Trump tax cuts through Congress. They saved JPMorgan and the other big banks $21bn last year alone.

Dimon was paid $31m last year. He is estimated by Forbes to be worth $1.3bn.

Ironically, a few weeks ago Dimon warned that income inequality is dividing America. He said that a “big chunk” of Americans have been left behind, and, announcing a $350m program to train workers for the jobs of the future, lamented that 40% of Americans make less than $15 an hour.

True, but $350m over five years isn’t even a drop in the ocean for the Americans left behind.

Wall Street bonuses totaled $27.5bn last year, which is more three times the combined annual earnings of all American workers employed full-time at the federal minimum wage. That’s more than 600,000 low-wage workers.

If Dimon were serious about the problem of widening inequality, he’d use his lobbying prowess to help raise the federal minimum wage. He’d also try to make it easier for workers to unionize, and to raise taxes on the super-wealthy like himself.

But, of course, Dimon isn’t really concerned about widening inequality. He’s not really concerned about socialism, either.

Dimon’s real concern is that America may end the kind of socialism he and other denizens of the Street depend on – bailouts, regulatory loopholes, and tax breaks.

These have made Dimon and his comrades a fortune, but they’ve brought the rest of America stagnation, corruption, and often worse.

Robert Reich
Robert Reich
http://robertreich.org/
Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.
Previous article
American war is off the charts
Next article
‘Egregious abuse of power:’ Report says Trump offered pardon to CBP head if he broke law and blocked asylum-seekers

    Politics

    TAGS
    capitalism
    economy
    Jamie Dimon
    JP Morgan Chase
    socialism

Spring Fundraising Drive

NationofChange is a nonprofit organization that provides an online magazine, daily newsletter, and activist platform – all free to the public.

It's hard, expensive work, and our daily operations are funded entirely by donations from readers like you.

If you value the work that we’re doing, please help us raise $20,000 by April 1st to continue operations.
Make a donation → Become a Sustaining Member →

RELATED ARTICLESMORE FROM AUTHOR
Blog
Barr is just another word for obstruction
Politics
Band together, progressives, so you can win
Politics
Dem Party sets new record for announced candidates: Chaos anticipated.
video
Justice
Video shows officer shooting unarmed man in jail cell
Health
Medicare for All: Accept no substitutes
Politics
‘Egregious abuse of power:’ Report says Trump offered pardon to CBP head if he broke law and blocked asylum-seekers
Health
Monsanto found liable for French farmer’s illness
Culture
Trump threatens sanctuary cities with more undocumented immigrants; politicians welcome his plan
Culture
How the disappearance of immigrant workers created a movement in a county that voted for Trump
Environment
With youth climate actions backed by leading experts, latest round of protests highlights call for bold and urgent action
Politics
Individuals working for Wall Street, private equity and Big Pharma love to donate to Cory Booker
Culture
No accountability: How the civil justice system fails Black Americans killed by police
COMMENTS
SITE AREAS

    Home
    Newsletter
    Latest
    Blog
    BookClub
    RSS Feed

ORGANIZATION

    About
    Donate
    Careers
    FAQs
    Submissions
    Contact

RECOMMENDED SITES

    Robert Reich’s Blog
    This Can’t Be Happening
    Campaign for America’s Future
    TomDispatch
    Democracy Now!
    Truthdig
    Inter Press Service
    YES! Magazine
    In These Times

The NationofChange logo
ABOUT US
At NationofChange, our mission is to help people create a more compassionate, responsible, and value-driven world, powered by communities that focus on positive solutions to social and economic problems.
Contact us: info@nationofchange.org
FOLLOW US

    Contact

© Copyright 2011-2017 - NationofChange