Since the financial train wreck of September 2008, Jamie Dimon, the CEO of JP Morgan Chase, has fought tooth and nail against any new federal regulations of Wall Street. Now with his bank's recent loss of $2 billion (and counting) involving the same credit default swaps (CDSs) that played a key role in bringing down the financial system, Mr. Dimon apparently wants us all to forgive and forget and let him get on with business as usual.
The public opprobrium directed at Wall Street throughout 2008 and 2009 met with no satisfactory reformist result. The white-collar perps responsible for plunging American society into the abyss were rewarded for their malfeasance and walked away as rich and powerful as ever. Jamie Dimon personifies the hubris of these self-anointed "Masters of the Universe" and his pathetic attempts to spin his way out of the current CDS boondoggle is another glaring reminder of the wider lack of accountability.
In 2008-2009, two administrations, acting with Congress and the Federal Reserve, simply stuffed the big banks with taxpayer cash and let them go their merry way. When it comes to lobbying, Dimon's banking conglomerate has outspent all others in the industry, throwing down $7.41 million in 2010 alone, (and that doesn't include the wads of campaign cash and SuperPAC donations). It has become abundantly clear in recent years that neither the Obama Administration nor the Congress has the will to take on the financial services oligopoly. Dimon, with his political clout, became the poster boy for everything that is wrong with Wall Street, and through his high-profile lobbying efforts, Washington as well.
Any setback to the policy-making elite's long-term project of pauperizing the working class in this country is a good thing. Jamie Dimon's $2 billion comeuppance is already sparking a renewed effort to impose a tougher version of the Volcker Rule that would at least ban the kind of proprietary trading in derivatives that caused JP Morgan's recent multi-billion dollar losses. The shattering of this latest Wall Street Ponzi scheme is a good thing because it shifts the optics and forces a conversation about greater federal oversight.
With new evidence mounting each day that the system is as broken as it was before the meltdown of September 2008 and will likely require another colossal taxpayer bailout at some point, the public might be able to compel even the isolated 1 percenters among Washington's policy elite to take heed.
The Frank in "Dodd-Frank," Representative Barney Frank of Massachusetts pointed out in a tweet that JP Morgan's $2 billion loss on just one batch of CDS transactions was "five times the amount they claim financial regulation is costing them." True enough. Too bad Frank and Nancy Pelosi and Harry Reid missed their historic opportunity to break up the too-big-to-fail banks when they had the chance. It wasn't long ago when Treasury Secretary and former Goldman Sachs CEO, Hank Paulson, came hat-in-hand to Congress begging the American taxpayers to pull the chestnuts out of the fire for him.
Dimon's new predicament points to the absurdly inflated derivatives "market," which according to some accounts, has swollen to a notional value of $600 trillion (or even $1.2 quadrillion!). What do figures like these even mean? Are we supposed to wait around for the next catastrophic financial meltdown in the hope that we can then elect people with the guts to stand up to people like Dimon?
In 2011, Dimon's overall compensation was $23 million, a 12 percent increase from the year before. Things are going great for him. But his brand is tainted. On NBC's Meet the Press, David Gregory, that dispenser of Beltway cant for the 1 percent, gave Dimon a "do-over" on his show. According to the New York Times, Dimon "had to troop back to NBC... and apologize again for the losses." Those are some pretty shitty optics.
The banks were rewarded with bailouts and "quantitative easing" instead of being punished for wrecking the U.S. economy. They became even bigger and more consolidated and concentrated. They imperil our nation's future, promising to bring us a "new normal" of high unemployment and paltry social spending.
The Occupy Wall Street movement was the logical outgrowth of the lack of substantive reform following the crisis of 2008.
Josh Bevins of the Economic Policy Institute, in the final pages of his 2011 book, Failure By Design, lays out a pragmatic course for the nation if we are to climb out of this Age of Decline: "Building an economy that reliably generates rising living standards for all will require choosing a very different path," he writes:
"[1.] The value of the minimum wage should be raised and then indexed to keep up with wider economic growth instead of being subject to the whim of politicians who aren't concerned about the plight of our lowest-wage workers.
[2.] The laws governing workplaces should be changed so that workers who want to join a union can exercise that choice without taking heroic risks in the face of employer resistance.
[3.] Americans should be guaranteed that their retirement and health security will not be fatally compromised by a run of bad luck or an unscrupulous employer or insurance company.
[4.] Economic elites should not be allowed to decide which parts of the American economy should be integrated into a much poorer global economy and which parts should be shielded from this integration without taking into account the effects such decisions for all of America's workers.
[5.] The excesses of the financial sector should be reined in.
[6.] International capital flows should be monitored and managed to keep them from wreaking havoc both here and abroad.
[7.] Ambitious investments - many public - should be made in the country's infrastructure, especially for meeting the needs of a greener economy.
[8.] Full employment should again be enshrined as a policy target for which the Federal Reserve and other policy makers are accountable.
[9.] Lastly, closing the troubling racial gap in employment, wages, and net worth should be a primary target for policy makers." (Bivens, pp. 96-97)
Important people have been telling us for years now that inequality is a deep problem in American society that crimps demand from the broad working class. Others have pointed out the skyrocketing CEO compensation and screwed up incentive structure on the Street. We've been hearing all the correct criticisms and policy prescriptions from people like Robert Reich, Joseph Stiglitz, Dean Baker, Elizabeth Warren, Paul Krugman, Simon Johnson, Nouri Roubini, Naomi Klein, and many others.
But to tell you the truth I'm bored with it all now.
The Republican Right is allowed to repeat the mantra of bending down to the "job creators" as our path to prosperity even when long-term unemployment is at a historic high and consumer demand is in a deep trough. And people like Dimon (or John Corzine of MF Global) are allowed to squander billions of dollars like so much pocket change spilled into the crevices of a couch.
President Obama has shown he's not going to do anything substantial to wrest control away from these global financial conglomerates. And a Mitt Romney presidency will only turn over to them more power while clobbering the working class.
Men like Jamie Dimon (or Edward Conard of Bain Capital, who was recently profiled in the New York Times Magazine cheerleading for greater inequality in America), deserve nothing but our scorn and ridicule. The unfortunate fact is, as things stand today people like Jamie Dimon (or Rupert Murdoch and Rebekah Brooks across the pond) are simply too rich and connected to be held accountable. They're out of touch with the social reality they've helped create. The suffering of others is simply not on their radar. They're unbalanced people; money motivated, greed obsessed.
That leaves us with Occupy Wall Street and the building of a mass movement as the only viable option of steering the nation off the course of permanent high unemployment, low wages, weak labor unions, and a shredded social safety net. With a little luck and a few more blow-ups on Wall Street we might be able to generate the political will to finally break up the financial behemoths and put the nation on a course that takes into consideration the human needs of the 99 percent.
Follow Joseph A. Palermo on Twitter: www.twitter.com/JosephPalermo1