Today Senator Elizabeth Warren pointed out Chairwoman Yellen’s nonsensical assurances that ‘too big to fail’ tax-payer-backed banks have been reigned within manageable risk limits. Au contraire… Here is a direct video link. Glass Steagall-like break ups remain the only reasonable course.
Gary Shilling’s July (subscription) letter this month offers a detailed update on the US banking sector: “Big Banks shift to lower gear” and points out that bank CEO pay is linked to size much more than performance and so CEO’s resist dismemberment and constantly plan to grow even bigger!
On the much over-praised and overpaid Jamie Dimon of JP Morgan, Shilling offers the following historical context:
“Interestingly, Dimon had been fired at Citigroup in 1998 by his former mentor, Sandy Weill. He then became CEO at Chicago’s Bank One, which was troubled after a series of large acquisitions. He returned to New York when JP Morgan bought Bank One and ascended to the top. It’s interesting that a small group of people rotate among big banks’ senior positions, and getting into trouble at one institution is no impediment to becoming CEO at another.
Furthermore, the London Whale fiasco has not hindered Dimon’s compensation, although he suffered a pay cut at the time. In January 2014, the JP Morgan board raised his pay 74% to $20 million for 2013, a year which the bank agreed to more than $20 billion in fines and other legal payouts and suffered its first quarterly loss in nine years.”
Lest anyone forget, the Citigroup from which Dimon was fired by Weill was the same National City Bank that was found to be a major contributor to the pump and dumps that led to the crash of 1929 and the Great Depression. The same National City Bank who’s activities revealed by the Precora Commission led to The Glass Stegall Act of 1932 which broke up the tyranny of the mega-banks. In addition Citi CEO Sandy Weill was the same guy that worked so tirelessly lobbying politicians and instigating the demise of Glass Steagall which was finally killed by Bill Clinton in 1999. The same Citi that blew up and was bailed out by the US government in 2008. Sandy Weill, the same now retired CEO who today says he was wrong and big banks are a menace, and we need to break them up again to protect taxpayers and the economy from the next big meltdown. See: The untold story of the Bailout of Citigroup for more.
It would be hard to believe such an incredible story, if it were not tragically true. And still our society applauds and reveres the banksters. The mind boggles.
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