Rupert Murdoch's got problems. His employees are being arrested, he's losing his latest acquisition, and he's just been called to testify before Parliament. But there's an easy way for Mr. Murdoch to protect himself from these inquiries and save his company at the same time: Turn the News Corporation into a Wall Street bank. There won't be any prosecutions, and the government will even sweeten the deal with billions of dollars in easy money. And if Murdoch follows the trail blazed by bankers like Jamie Dimon at JPMorgan Chase, soon they'll be begging him to acquire more companies.
Murdoch and Dimon. One runs an organization that, as we now know, broke the law so many times it could be called a criminal syndicate. And the other is Rupert Murdoch. Yet Murdoch's fighting for his corporation's future while Dimon's name is being floated as a possible Treasury Secretary. Murdoch's losing his chance to expand market share, while our government helped Dimon's bank become more too-big-to-fail than ever by grabbing up Morgan Stanley.
Now that's juice. Murdoch's been a power broker on three continents and his Fox empire has reshaped this country's political landscape, but Dimon's taken the power game to a whole 'nother level.
Rupert and Jamie
The first arrests in the Murdoch organization's wiretapping and police bribery scandal included the Prime Minister's former press secretary (undoubtedly inspiring twinges of Brit-envy in the White House press corps). Now the probe has moved beyond lower-level reporters and editors. Murdoch's been called before a Committee of Parliament, along with a key aide and his heir-apparent son. The House of Commons and the Prime Minister have withdrawn their support for Murdoch's bid to take full ownership of satellite TV network BSkyB.
By contrast, despite its long list of proven crimes nobody at Dimon's bank has been arrested. Apparently arrests, like the financial consequences of one's actions, are for borrowers only. And Dimon only appears before our elected representative for cozy private get-togethers, not public inquiries.
We are two people divided by a common... well, common law. Great Britain's ruling center-right coalition is putting Murdoch on the spot, while our center-right coalition puts Dimon on a pedestal. Murdoch's trouble are front-page stuff. Dimon only makes headlines when he's posing for flattering soft-focus prose portraits, venting his pique at mild rebukes of his crime-ridden industry ("Bankers! Bankers! Bankers!"), or basking in those periodic Treasury Secretary rumors. (2008: "Dimon is the leading candidate ..." 2009: "Jamie Dimon, Treasury Secretary?" 2011: "Chasing Jamie -- Why Dimon might replace Geithner.")
Another story, headlined Jamie Dimon Seen As a Good Fit for Treasury, said fawning things like "Dimon... achieved rock star status during the financial crisis," "people familiar with Dimon's thinking said he 'would love to serve his country," and "... the timing might be right for Dimon." That story appeared in the New York Post -- Rupert Murdoch's New York Post.
It's a small world, alright. And the higher you rise, the smaller it gets.
News Corp. and JPMorgan Chase
Isn't this comparison unfair? There's a growing body of evidence that Murdoch employees wiretapped phones, tormented innocent families, and bribed police officers. JPMorgan Chase's record can't be that bad, can it?
Actually, it's worse. JPM has a long history as a serial corporate offender, and its crimes helped bring about a major financial collapse (although, come to think of it, so did the policies promoted by Murdoch's news organizations.) And we're not just talking about relatively genteel crimes like financial fraud. JPMorgan employees also committed down-and-dirty Tammany Hall-style crimes like bribery and bid-rigging. Bank employees spread $8 million around Jefferson County, Alabama to win municipal contracts, for example, and it took a settlement worth three-quarters of a billion dollars in fines and foregone fees to settle he case. (That's "billion," with a "b.")
Dimon's bank paid $25 million to settle another case involving the sale of unregistered securities -- which is a crime -- in the state of Florida. It paid more money to settle charges that it illegally propped up a failed mortgage lender, along with some other banks. (In this kind of fraud the lender has already failed, but banks make it look as if it hasn't. Think of it as a financial Weekend at Bernie's. In this case a lot of investors putting their money into a fiscal corpse, which means they were defrauded with help from Dimon's bank.)
JPMorgan's in-house foreclosure operation was described as a sleazy operation where "Burger King kids" -- untrained young people -- were hired to foreclose on homeowners. And just this week a story that got buried in the national media was prominently featured in local newspapers in towns like Boise, Idaho and Charleston, West Virginia:
"JPMorgan Chase has agreed to pay $211 million after admitting one of its divisions rigged dozens of bidding competitions to win business from state and local governments."
When it came to graft, Dimon's dawgs were kickin' it old-school style. The national papers may yawn -- to them bank crime's just another "dog bites man" story -- but $500,000 in settlement money is a big deal to a hard-working state like West Virginia, one of many that's been left to fend for itself in the wreckage of Wall Street's crime spree.
Free to be ... Jamie and me
"We try to do the best we can every day," Dimon said of his colleagues. (Except on the days we're bribing, bid-rigging, or committing fraud, of course; hey, nobody's perfect.) That sense of entitlement isn't just a personality trait. As we now know, it's government policy. An important story in the New York Times recently confirmed that it's been the government's official policy not to investigate criminal wrongdoing in America's banks. It's relying instead on a Wall Street self-policing plan that "outsources" law enforcement to the suspected perps.
As an experienced investigator asked, "What do you do when the bank itself is run by a criminal enterprise?"
Murdoch must be asking himself how he can get a piece of that action. Just become a bank like Goldman Sachs did, with the encouragement and support of regulators, so it could be saved with TARP and Federal Reserve money. No doubt the "bipartisan" Beltway crowd can be persuaded that Murdoch and Fox are "too big to fail," too.
"Self-policing" may seem like an foolishly naïve concept (it is), but it's not uniquely American. The British authorities tried it with News Corp., too. In response Murdoch asked executive Les Hinton to lead the "investigation," and Hinton dutifully reported that the organization was clean as a whistle. The authorities accepted his report, and a grateful Murdoch promoted Hinton to run News Corp's Dow Jones Inc. subsidiary.
Now Hinton's being investigated too, bringing the scandal to the Dow Jones offices on this side of the Atlantic. And the ethics watchdog group CREW has called for an investigation of reports that Murdoch journalists illegally spied on the families of 9/11 victims in the US. That bank status can't come a moment too soon, Mr. Murdoch.
Like reports of US bank criminality, the News Corp. story percolated for a long time before becoming a full-blown scandal. The turning point came when it was revealed that Murdoch's employees deleted email messages on a murdered child's cell phone to make room for more messages, giving her parents false hope that she was still alive. The story exploded, and now each day brings new revelations.
That should be a cautionary tale for Wall Street: Just when you think you've gotten away with it it can all blow up on you, and all because some innocent family was harmed. There are a lot of foreclosed families out there, guys, so don't sleep too peacefully in those Hamptons hideaways. As Dr. King used to say, "The moral arc of the universe is long but it bends toward justice."
In the meantime, Mr. Dimon's organization has set aside $2.3 billion to cover the fines and settlements it expects to pay for its past criminality and fraud.
Freedom is only the beginning
When a CEO can settle that many crimes with SEC so easily, he's doing fairly well. ("No SECs please, we're British!") When that many laws are broken and no executives go to prison, he's doing very well. When he's allowed to complain to sympathetic reporters in the aftermath of his corporation's crime wave that he's not being treated deferentially enough, he's doing extremely well.
But when stories keep suggesting, without a hint of irony, that he might become the Secretary of the Treasury? That's just awesome. Jamie Dimon has climbed the pinnacled Everest of self-promotion. And magically, he keeps on climbing. I bow to you, sir.
Rupert Murdoch probably won't be charged with anything, unless a "smoking gun" turns up. In the old days, the best he could do is hope the public eventually forgets that his corporation harbored a rat's nest of corruption and crime. But times have changed. If Murdoch can pick up one-tenth of Jamie Dimon's mojo, by this time next year he won't just be forgiven. He'll be Chancellor of the Exchequer.
(I discussed this story yesterday as guest host on The Young Turks. The video is here.)
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow