Power, corruption and lies - we truly do need new order!

The EU blog is nothing if not contemporary, even when revisiting previous stories! Today we come back to JPMorgan Chase, once again under the spotlight for the very same reasons we got into this story in the first place - power and money, and the theoretical abuse of same. Perhaps not quite the "Power, Corruption and Lies" of New Order fame, but for sure there seems to have been a healthy dose of all three in the financial world over the last several years.

Once again, we are back at a critical vote to decide whether Jamie Dimon should be allowed to wield an unnatural amount of power and control over the financial giant by retaining the titles of both CEO and Chairman of the board. It was expected that firebrand Lee R. Raymond (formerly CEO of Exxon Mobil) would have done more to reign Dimon in, and maybe even push for his removal as chairman, but so far this has not happened.

Some feel that Raymond has not done enough to limit some of the wilder risk-taking at the bank, but at the same time, he was very aggressive in clawing back huge bonuses from executives involved in aberrant trades, and in January led the charge to cut back Dimon's salary by a whopping fifty percent. Panic not, even with this reduction, Mr. Dimon still maintains a healthy base of some $12M a year, give or take some change. That is a cool million, per month, people, so shed no tears on that note!

Furthermore, Raymond was a hugely influential and stabilizing influence during the foundation shaking acquisition of JPMorgan by Chase Manhattan back in 2000, and he helped ease the path for the entire organization - so he has hardly been totally asleep at the wheel.

The result of this non-binding vote will be released on May 21, and while it is not clear as yet, I think there is an overwhelming sentiment that Mr. Dimon should be focused on running the bank's business, while someone else should be running the board. Lee R. Raymond was a ferocious and feared leader at Exxon, and it is not clear whether his apparent reticence in ousting Dimon as chairman is due to a true belief in the man and his abilities, or is merely representative of insider politics that is rife in such organizations.

In any and all cases, they only seem to get richer and richer, even when the entire country appears to be suffering distress at the remaining and ongoing fallout from the financial collapse of 2008/9. There are currently as many as eight federal agencies investigating the bank's practices and that just about says it all, quite frankly.

What a shocker to hear of the monster $2B trading loss recently by JPMorgan Chase et al? Not. Most of these people barely got a slap on the wrist by Obama, as per Tim Geithner's wishes, when the financial sector collapsed a few years ago. While that strategy may partly be seen as having provided a degree of (apparent) stability at a very shaky time, it continues to pervade the financial sector today in that shameless greed and the ravenous desire to make more money by such types is undersigned and underwritten by the US government itself. We all heard that derivatives and credit default swaps were supposed to be financial instruments that were now to be looked at like upside down crosses, and not the tools on which to place unnecessary risk, so why did the normally conservative JPMorgan empire allow such a massive exposure to toxic assets and risk, again?

It seems that we are supposed to be thrilled that for once, heads are going to roll, and the first to go has already been canned: their Chief Investment Officer (CIO), one of the most powerful women on Wall Street. Well, it only seems fair and proper in some ways, I mean, how can you be called an "investment" officer, when you just repeated past mistakes and incurred a multibillion dollar loss? Damage control also seems to fall very heavily on the side of media-friendly Jamie Dimon (CEO), who one and all appear to see as the man who is sorting it all out. Yet, he is the BOSS. By default, he authorized such "investments". Additionally, mere weeks ago, he said that he stood by his CIO and their recent transactions, and that time would prove them all right. Not. Again.

It is always the same with such types and with Wall Street in general. When it goes well, we don't hear too much about it, other than the occasional outcry at massive sums of money being handed over in bonuses. But it's your retirement fund or my insurance company that also got boosted, so, fine. Then when disgrace occurs, well, it's all part of doing business, and Obama et al. tell us it's okay, and we disown this or deny that, wait for the hue and cry to die down, and then we get back to business as normal. It's all in a day's work, on Wall Street. But Jamie Dimon, as capable a banker as everyone seems to claim that he is, is the boss, and has too much power: that is the problem. For sure, the roles of CEO and Chairman should be split at an institution the size of JPMorgan. It is not in their interest to have one person in control of all of it, who then basically turns around and says it is too much for one person to oversee, as his excuse for a monstrous loss in the billions. Additionally, we need to see that he forces through clawback clauses in rogue executive contracts, and takes back the bonuses already paid to these people, who have just cost them billions. He may be popular, today, but if he doesn't appear to take this as seriously as it merits, the cries for his own demise will get louder and louder, and we think that's exactly how it should be.

Greed is one thing, but greed that is so overboard that it becomes incompetence by the sheer nature and degree of the risks incurred to feed that greed? Well, that type of greed needs to be sent home hungry and locked out of the kitchen for sufficiently long to remind it of the staggering failure that this greed just delivered onto the dining table. It is, quite frankly, a rotting, stinking slice of humble pie, very well earned to boot! Eat that for a few months, and then we will see if there has been a change of heart, or not. - Kevin Mc
Footnote: Later today, even with 40% of shareholders supporting a split in roles as discussed above, Jamie Dimon got to keep his double job, as both CEO and Chairman. Again, hardly shocking. They also voted in approval of his salary for the past year, a "healthy" $23.1M. Cough. But I bet the fact that the FBI are now stepping in to dig through the matter and see if any Federal Securities laws were broken will make tonight's champagne taste slightly less sweet.