That's how much JPMorgan Chase has paid in fines, settlements and other litigation expenses in the last four years alone.
More than half of that amount, $8.5 billion, was paid out in fines and settlements as the result of illegal actions taken by bank executives.
$8.5 billion is almost 12 percent of the net income the mega-bank brought in during the same period.
These figures comes from "JPMorgan Chase: Out of Control," an impressive analysis of the bank's performance by Joshua Rosner, an investment analyst at GrahamFisher. And there's more. Since Rosner published his report only last week, JPMorgan Chase has settled another dispute.
This latest agreement is with the trustee for customers of fraudulent investment firm MF Global.
The MF Global deal included a $100 million cash payout from Chase, and an agreement to waive the $417 million in claims it had made against MF Global's clients. If you add in the full amount of this agreement, the bank has given up more than $9 billion in settlements since 2009.
Now we're over 12 percent just in payouts. Throw in all the other litigation costs and the total comes to well over 20 percent of the bank's net income in a four year period.
And illegalities aren't the only thing that's costing JPMorgan Chase's shareholders a lot of money. There's also the London Whale foul-up, an apparently illegal series of trades that's already lost the bank $6.2 billion.
Add it all up. Then throw in the massive fines JPMorgan Chase paid before 2009, but after Dimon took the helm. Then add in the likely cost of the cases which loom before the bank today. You'll find that the Price of Evil for Dimon & Co. is very high -- at least by normal standards.
Bad CompanyIs "evil" too harsh a word? Merriam-Webster defines evil as "morally reprehensible," "arising from actual or imputed bad character or conduct," "causing discomfort or repulsion," or "causing harm." Which of those descriptions is not true for the leaders of an institutions that's paid billions for misdeeds such as:
- Reportedly taking MF Global's customers' money as that firm was collapsing under the weight of its own fraud;
- Closing the bank account and freezing the credit card of a hedge fund manager because he criticized its handling of MF Global on television;
- Bribing officials in Jefferson County, Alabama, which subsequently went bankrupt;
- Fraudulently submitting court documents in support of its foreclosures, using a group of untrained college students and other young people (known in the firm as "Burger King Kids") to prepare and submit the papers.
The Gang That Couldn't Cheat Straight
If "evil" strikes you as too harsh you may not like the word "incompetent" either. But the Office of the Controller of the Currency, which is not known for being overly aggressive with bankers, secretly downgraded its internal assessment of the bank's management and ruled that its internal oversight "needs improvement."
The OCC found that the "Matters Requiring Attention" within the bank include its much bragged-about risk management, its money-laundering controls, audit oversight, and its valuation of its trading positions."
What's a little laxity about money-laundering between friends?
They're not just taking us for a ride. They're bad drivers. By being both unethical and incompetent, the management at JPMorgan Chase has violated the moral principle expressed so eloquently the late, great country singer Vern Gosdin: "If you're gonna do me wrong, do it right."
Who's in Charge Here?
You'd think shareholders would be up in arms at Dimon and the Board of Directors for mismanaging their bank so badly. And yet they're all still in their seats, thanks in part to the way large corporations are allowed to manipulate their own corporate governance. Dimon is both CEO and Board Chair, an extraordinarily privileged position he was not asked to give up after the London Whale scandal.And about that scandal: There are four things worth knowing about the Whale:
- The trades were illegal, according to all the evidence.
- Despite the bank's bragging about its risk management model -- which it publicized widely as a lure to investors -- that model wasn't followed by the London office.
- Jamie Dimon's publicists and politician friends have burnished his reputation as "America's best banker" - and he bypassed his bank's org chart so that the London unit reported directly to him.
- His friends and publicists have also burnished his reputation as the country's most ethical banker. As Henny Youngman used to say, How do ya like me now?
The media climate's changing, too. Lynn Parramore of Alternet has written a piece called "The Spectacular Rise and Fall of Jamie Dimon, Wall Street's Golden Boy." A Google search of "Jamie Dimon" and "tarnished" (as in reputation) yields articles from USA Today, Bloomberg News, and WGBH News. And Dimon was finally forced to resign his seat on the Board of the New York Federal Reserve.
At long last, people are openly questioning the competence and ethics of Dimon and his team.
But nothing's really happened. Dimon's still the boss. Nobody's been charged with a crime. The only 'punishment'the bank has faced has been fines which, while massive by ordinary standards, are a slap on the wrist considering the gravity of the offenses.
The bank executives who committed those crimes haven't paid a penny in restitution, nor have they been charged with crimes. Those fines have been paid by the bank's shareholders, who in some cases were the victims of the very crimes that led to the fine in the first place!
It's like we said the other day about Cyprus: In banking, the victim's expected to pay restitution to the criminal.
Chase's most recent annual report, the document which represents it to current and prospective shareholders, boasts of a "laser focus on managing expenses" and states that "As a business, we are guided by our objectives to expand and deepen client relationships, invest consistently in our franchise, and maintain our risk and expense discipline."
How's that working out for you?
Senators came down hard on these malefactors last week -- rhetorically, anyway. But the government isn't cracking down on this den of iniquity. It's enabling it. As Rosner notes, "Rather than being driven by the strength of its operations and management, many of JPM's returns appear to be supported by an implied guarantee (emphasis Rosner's) it receives as a too-big-to-fail institution."
That's right: Instead of cracking down on these guys, the government is helping them get even richer -- and helping their out-of-control bank get even bigger and more dangerous. And they're doing it at a time when the Attorney General of the United States has made it clear that he will not prosecute criminals at a too-big-to-fail bank like Chase. Talk is cheap, but actions speak louder than rhetoric.
Life is still good for Dimon and some of the other senior executives at JPMorgan Chase: Shareholders can't -- or won't -- fire them. The government won't prosecute them. Taxpayers are helping them get rich. And every day their institution becomes bigger and more powerful. Sure, all that power doesn't come cheap, but they've found other peoplewilling to pay the price ...
$16 billion and counting.
The price of evil may be high at JPMorgan Chase, but the malefactors who actually committed the wrongdoing aren't paying it. Wrongdoing and incompetence may be expensive. But for executives at JPMorgan Chase and our other too-big-to fail banks, it's also surprisingly affordable.
Further reading from our archives:
Senators Roast JPMorgan Chase. Are The Winds Shifting For Diamond Jamie?
Is JPMorgan Chase the Scandal of Our Time?
Who Was 2010's Worst Corporate Outlaw?
Young Americans: Syracuse Students Reject Jamie Dimon
"Jamie Didn't Know"
Diamond Jamie: Corporate Crime Watch
10 Reasons to Be Suspicious About Facebook's IPO fiasco
The Case Against Jamie Dimon: Oligopoly, Pain, and Systemic Risk in Five Slides
Why AIG's CEO and Jamie Dimon Don't Give a Damn What You Think