Question: What happens when a politician wants to look tough on Wall Street, without actually doing anything to rein in the big banks' excesses?
Answer: Scott Brown's recent letter to JPMorgan Chase.
Scott Brown wrote to JPMorgan CEO Jamie Dimon, supposedly "to express [his] concern with the surprising $2 billion trading loss" by the bank -- a total that has since climbed to $3 billion. But anyone who reads the letter carefully can see it for the transparent and disingenuous attempt by Brown that it is to look concerned about the havoc in the financial markets.
In that letter, Brown calls for only one thing: a clawback on the compensation of "the responsible parties in your company." The problem is that Dimon already said that was likely to happen.
How tough and independent -- telling a bank to do what it already said it would do!
What's more, the Dodd-Frank Act makes clawbacks mandatory in some cases. So what does Brown do? He tells Dimon that clawbacks are mandatory in some cases. What a maverick. Perhaps the bank should compensate Brown for the helpful legal advice (beyond the $50,000 that JPMorgan officials have already donated to Brown's campaign).
Lest his pointless letter seem too threatening to his scores of friends on Wall Street, Brown slips in some language that they would understand: "While regulations are necessary, it is also very important that when unprecedented mistakes do occur, banks will use the internal policies that they have set up to promote employee accountability."
Translation: When Wall Street screws up on an unprecedented scale and engages in risky behavior that undermines confidence in the market, they should treat it as an internal matter. No need for the government to get involved -- just move along, folks.
This, incidentally, is the same message as the one being spread by extreme conservatives like Senator Lamar Alexander of Tennessee. Of course, it was the lack of government involvement that allowed the financial crisis to happen in the first place.
Contrast the Scott Brown / Lamar Alexander approach with that of the Obama Administration, which has argued that the country still needs better regulations in the financial markets. Obama has pointed out that "JPMorgan is one of the best managed banks there is" and that Dimon "is one of the smartest bankers we've got, and they still lost $2 billion and counting...." In other words, even when a bank is well-run, there is the potential for catastrophe without proper regulation. There are few stronger pieces of evidence for this than JPMorgan's ability to quickly lose billions of dollars with some ill-advised keystrokes.
Brown tries to distinguish himself from Alexander and his ilk by pointing out that he voted for Dodd-Frank. What he neglects to mention, though, is that before he voted for it, he worked to weaken it by undermining the Volcker Rule.
All this, just days after he refuses to disclose who from JPMorgan might be serving on his finance committee, and after the Boston Globe revealed he has been raising more money from New York City than Boston and has set up a slush fund with the National Republican Senatorial Committee to help his campaign that is now flush with Wall Street cash.
This, by the way, is just the latest in Scott Brown's chameleon act.
When he stumps in Massachusetts, he tries to look like a moderate. But when he communicates with supporters outside the state, he morphs into a Republican in the mold of George W. Bush, recklessly calling for slashing government.
When he's on Main Street, he breaks out his pick-up truck and barn jacket. But when he's on Wall Street, he's right at home, pocketing millions of dollars from bankers who need him in the Senate.
When he's struggling to sway independent voters, he tries to look like he's above politics. But when he put his campaign team together, he showed his true colors, sharing a senior adviser with Mitt Romney and hiring a spokesperson who worked in the George W. Bush White House.
It's time to hold banks like JPMorgan Chase accountable, and for Scott Brown to stop pretending to be someone he isn't.
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