They're missing the point. When CEO Jamie Dimon announced that JPMorgan Chase had incurred at least $2 billion in losses from risky, unsecured, derivatives-types trading, it uncovered the scandal of our time once and for all.
The Chase disaster gives us a much-needed a glimpse into our corrupt political system, its Wall Street paymasters, and the media voices that allow people like Dimon to escape scrutiny.
The JPMorgan Chase story is the story behind the financial crisis that has thrown millions of people out of work. It's the story behind our ever-growing wealth inequity. It's the story behind Washington's inability to prosecute criminal bankers, regulate reckless ones, and propose the economic solutions the rest of us urgently need.
Predictably, the pundits who aid and abet people like Jamie Dimon are dismissing this story's importance, pointing out that $2 billion (it could become much more) pales against the $19 billion in profit Chase reported last year.
But it was potentially $2 billion earned through crime. And more importantly, this story isn't just about Chase's errors and crimes. It's much bigger than that.
Besides, $19 billion in a single year? That's a big part of the story, too.
The Case Against Chase, its CEO, and its accomplices is too big to cover all at once. Here are the aspects of this under-reported story we plan to address in the days and weeks to come.
Depending on the day and the measurement used, JPMorgan Chase is now the largest or second-largest bank in the world. Its Japan operation alone has been cited by that nation's regulators as a systemic risk because of its size.
If Chase began to collapse because of risky betting, the government would be forced to step in again.
Jamie Dimon knows that. It's a lot easier to gamble when you know somebody else will be forced to bail you out if you lose too much.
Chase, like the other mega-banks, has systematically engaged in criminal activity for years. At the same time, it has used its vast wealth to corrupt our political and regulatory systems. And it has been aided and abetted by willing collaborators in the media, every step of the way. It gave up nearly three quarters of a billion dollars in settlements and surrendered fees to settle one case alone -- that of bribery and corruption in Jefferson County, Alabama.
Chase has paid out billions to settle charges that include perjury and forgery (in its systemic foreclosure fraud and abuse), investor fraud, and sale of unregistered securities. And these charges were for actions that took place while Jamie Dimon was the CEO.
The first of Dimon's executives have offered their resignations in this latest scandal. But investigations of everyone from Lucky Luciano onward have focused on the boss, not just the underlings. Laws like the Securities Act and Sarbanes-Oxley provide strict legal guidelines for corporate CEOs and their staff. There's strong evidence to suggest those laws have been stretched to the breaking point -- and beyond.
We may someday look back at Jamie Dimon's increasingly shrill cries of persecution as a cry for help or a plea to be caught. He has not only fought the regulation of Wall Street banks. He's used extreme language to characterize criticisms of bank activities as a) mean, b) an attack on all forms of business, and c) bigotry that is no different from racism.
Dimon has used his visibility -- and his lavish public relations budget -- to obtain highly flattering profiles of himself in major U.S. publications. And he's used that public platform for, among other things, arguing for unwise ideas in public policy areas where he has no expertise. Most of those ideas involve forcing the American people to suffer additional financial hardship in order to pay for the damage caused by Dimon and his colleagues.
Just last week Dimon was arguing for the "Simpson/Bowles plan" authored by two private individuals, which would impose the same kind of austerity on the United States as that which is currently wreaking economic and political havoc on Europe.
If nothing else, Dimon is consistent: He can't respond to reality any more effectively in the policy arena than he can in the banking sector.
Dimon argues against regulation by saying that bankers are moral and sophisticated enough to manage their businesses without oversight. But he's been making those arguments to a nation that's standing in the wreckage his colleagues left behind the last time they were allowed to play with trillions without adult supervision.
And he has somehow managed to argue simultaneously that no other bankers are as smart as he is, and that nevertheless they should be unregulated because guys like him are so smart. That doesn't make sense.
Despite Dimon's illogic and the criminal track record of his organization, he has been flattered, quoted, and profiled in major news publications at roughly the same frequency as Lindsay Lohan has been in entertainment mags, and for the same reason: He makes good copy if you don't dig too deeply.
The day before the scandal broke, in fact, Dimon punked CBS host David Gregory on Meet the Press by pontificating on political and other matters in a pre-taped interview, knowing that this story was about to break tomorrow. We won't knock Dimon for not breaking the story (there are rules about handling information at a publicly traded company, although Dimon never seems to have cared much about them before.)
But it was an embarrassment to Gregory just the same.
The flackery didn't start after this story broke. The supposedly 'hardball' coverage of this '"error" typically amounted to little more than the kind of damage control Dimon and his PR team were no doubt hoping they'd get. The incident was described as an "embarrassment," a "mistake," an "error."
Few news outlets discussed the size of JPMorgan Chase and other too-big-to-fail banks, which continued to grow even after the passage of a financial reform law. They failed to discuss what would happen if the bank got into serious trouble.
And they glided lightly over the fact that crimes may have been committed. When they did, they were quick to characterize this scandal as the work of overzealous or crooked underlings.
That's what they said in Alabama, too.
The Influence Peddlers
Banks have paid Washington lobbyists $50-60 million per year for the last few years -- and they've gotten their money's worth.
Real financial reform was hamstrung under Dodd/Frank by behind-the-scenes wheeling and dealing. Even that bill's modest reforms are being undercut by Republicans from Mitt Romney downward, who are determined to avoid even the pretense of regulating the nation's reckless and criminal bank enterprises.
The White House had yet to indict a single banker for the events leading up to the financial crisis, although billions have been paid out it settlement fees for criminal activity.
When you look at it in context, $150-200 million over three years is one of the best investments Wall Street has ever made.
The Federal Reserve rescues failed bank executives -- often breaking its own rules to do it -- and yet cites the same rules when it refuses to help other businesses, or individual consumers, in ways that would do much more to restore the economy. No wonder: The Fed's board includes many of the same bankers who broke the economy -- including Jamie Dimon.
Intransigent pro-bank regulators refuse to carry out their own agencies' mandates if it would discommode Wall Street.
And Administration officials meet routinely with double-dealing bankers like Lloyd Blankfein from Goldman Sachs, according to visitor logs, while rarely laying eyes on foreclosed homeowners or other ordinary citizens.
Some of the bank executives they meet with are their own colleagues. There are so many people moving from Wall Street jobs to high government positions -- and back again -- that our country's center of economic power now resides somewhere on the Amtrak route between New York and Washington. (I'm guessing Metropark, NJ.)
Some people have called for reasonable steps in the wake of this scandal: Tighten banking regulations. Strengthen the Volcker rule. Restore Glass-Steagall.
Each of these moves would be a start -- but they would only be a start. But the story of Jamie Dimon and JPMorgan Chase illustrates a far deeper, far more systemic problem. They highlight the broken and corrupt matrix of relationships between rich (and often lawbreaking) bankers, politicians and regulators in Washington, and supplicating figures in the national media.
This is an opportunity to explain what's wrong with our system and pursue ways of fixing it. Let's seize the moment now -- before it's too late and they break the economy again.