Yesterday U.S. prosecutors accused two low-level JPMorgan executives with criminal charges of wire fraud and falsifying regulatory filings of risky and complex credit derivatives that led to the bank's massive loses in the 'London Whale' scandal. JPMorgan, as do all banks, had the obligation to honestly report its assets on an objective 'mark to market' manner. The bankers being indicted are accused of willfully cooking the books, applying a marking methodology that vastly understated the losses being incurred.
In his news conference of the charges being levied, Preet Bharara, U.S. Attorney of the Southern District of New York, insinuated a culture widespread among banking institutions permitting such fraudulent valuations, lacking adequate internal controls and not being sufficiently attentive to the culture of permissiveness they create.
The words prominently put forward by Bharara were "alleged lies and misrepresentation" that he attributed to the two JPMorgan underlings being charged. He also took direct issue with an earlier and very public and misleading statement that the entire affair was but "a tempest in a teapot" as bruited loudly and clearly by the bank's Chairman and CEO Jamie Dimon at the very outset of the bank's public disclosure of the growing debacle, calling it instead a "perfect storm of individual misconduct and inadequate internal controls." Dimon's statement, patently dismissive of the massive losses being unraveled, was not categorized, in this instance, as "lies and misrepresentation." As all too common in the government's enforcement procedures, whereby the corner office was assigned no actionable responsibility on the manner in which they ran their operations, the glaring paucity of internal controls, nor accountability for the culture they imbued, nor the misleading statements they, along with their underlings, made.
Clearly, given the events of the day an appropriate history lesson is in order. Please be patient, but given the excesses of today's banking institutions, Wall Street and the crony capitalism that is swallowing American initiative and the American dream, the following is a clarion call to our governing class to take heed and to answer the call.
During his Presidency Andrew Jackson was considering canceling the charter of the then 'Bank of the United States.' A document was presented to him at the time 'praying' that he would not take the charter from the 'Bank of the United States' and restore its government deposits. The document bore the signatures of many noted men of 'financial standing' in Philadelphia.
Consequently these men were invited to the White House to state their arguments.
"He shook hands and said, 'Gentlemen, what can I do for you?' He sat at a table and listened to them closely for an hour. When they had finished, he made no comment and they thought they had won him to their cause.
Then he spoke, 'Have you anything more to say, gentlemen?' They admitted they had not. Then he arose from his seat and gave them an answer, 'Gentlemen! I too have been a close observer of the doings on the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won you divided the profits among you, and when you lost you charged it to the bank. You tell me if I take the deposits from the bank and annul its charter I shall ruin ten thousand families. That may be true gentleman, but that is your sin. Should I let you go on, you will ruin fifty thousand families and that will be my sin. You are a den of vipers and thieves. I have determined to rout you out, and by the eternal, (bringing his fist on the table) I will rout you out!'
Well, history tells us that "Old Hickory" carried out his threat. Ruination did not visit ten thousand families but the incomes of many of Philadelphia's financiers were considerably reduced." - ("Andrew Jackson and the Bank Of The United States" Stan V. Henkels/1928)
Painfully, and with only a whisper of hope, we look to Washington and long to see that somewhere, somehow our Andrew Jackson will alight and bring a sense of shared purpose and responsibility back to our government and to our lives. That finally, the age of "crony capitalism" and Wall Street hegemony which we are living in, will be put to rest.
Andrew Jackson, we need you now!
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