JPMorgan Chase CEO Jamie Dimon, a longtime Democrat for those who don’t know, endorsed a higher top marginal tax rate and an increase in the capital gains rate in a speech at the Council on Foreign Relations yesterday. He also blamed the sluggish recovery on over-regulation and uncertainty and endorsed Bowles-Simpson as an economic salve. “This economy would have been booming” if Congress passed Bowles-Simpson, Dimon said. You need to put the endorsement of marginally higher taxes in the context that they exist in service to a fairly nasty and counter-productive austerity program.
Dimon also discussed Bear Stearns, the subject of a lawsuit over their issuance of mortgage backed securities last week. He said that JPMorgan Chase has lost between $5 and $10 billion as a result of the Bear Stearns deal, and that he would put the fact that the government asked his firm to swallow Bear Stearns in 2008 “in the unfair category.”
But Dimon saved his best petulance for a discussion of the Fail Whale trades, the multi-billion dollar trading loss out of the company’s London office.
In one of his last visits to Washington, Dimon faced a barrage of questions from members of Congress about JPMorgan’s $6 billion “London Whale” trading loss in the spring. While Dimon remains contrite about the loss, he insists lawmakers overreacted.
“We made a stupid error,” he said. “Businesses make mistakes, they learn from it and get better. Only when I come to Washington do people act like making a mistake should never happen. Only with academics and politicians is it not allowed.”
What he calls a mistake, others would call a criminal action, as the bank failed to honor internal controls mandated under the Sarbanes-Oxley Act, instead allowing traders to provide the valuations for its financial disclosures to shareholders.
It appears that JPM is attempting to make the case that rogue traders, with criminal intent, mismarked the books. That may be so and relevant criminal charges against those traders should be pursued. But that strategy does not protect management. If there was mismarking, especially to the extent that occurred here, it is the responsibility of management to know or have procedures in place to alert them to the potential for fraud.
Sadly, the government appears to be buying the “rogue traders” line, or at least the media is helping them out a bit. Andrew Ross Sorkin’s Dealbook shop at The New York Times feeds information about an investigation into the Fail Whale trades focused squarely on the traders:
Federal authorities are using taped phone conversations to build criminal cases related to the multibillion-dollar trading loss at JPMorgan Chase, focusing on calls in which employees openly discussed how to value the troubled bets in a favorable way.
Investigators are looking into the actions of four people who previously worked for the team based in London responsible for the $6 billion loss, according to officials briefed on the case. The Federal Bureau of Investigation could make some arrests in the next several months, said one person who spoke on the condition of anonymity because the inquiry was ongoing.
The phone recordings, which were turned over to authorities by JPMorgan, have helped focus the investigation, the officials said. Authorities are poring over thousands of conversations, in English and French. They are also relying on notes that employees took during staff meetings, instant messages circulated among traders and e-mails sent within the group.
JPMorgan Chase clearly wants to sell out its former traders and confine the blame to them. I never look a gift prosecution of corrupt bankers in the mouth, but the law stipulates that the top executives, including Jamie Dimon, are responsible for any fraudulent valuations delivered to shareholders. Period. Sarbanes-Oxley makes this incredibly simple. But JPMorgan has tossed the government a few bad (and small) minnows, and the government has so far taken the bait.
Incidentally, some of the traders in question are from France, which will make it nearly impossible to get them extradited to face charges. So if there are prosecutions, they would fall on individuals who cannot be put behind bars!
If JPMorgan Chase “submitted inaccurate financial statements to regulators,” as the report indicates, top management is responsible under Sarbanes-Oxley. Criminally responsible, in fact. Anything less simply ignores the clear duty under the law.




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Perp walk bait for bubba. The rule of law only applies to those without presidential cufflinks.
I work a lot with SOX-related controls. Jamie Dimon had to have signed off on the financial statements and assertions to the SEC of their correctness. He was supposed to KNOW what was going on. If he did not know, then shame on him! If Dimon skates on this, no CEO will be held accountable for anything and SOX enforcement will collapse.
So the dude’s a comedian, too? If there’s any justice in the world, he’ll get his big break during open mic night at ADX Florence.
“Anything less simply ignores the clear duty under the law.”
Let us be absolutely clear, DDay, WHOSE DUTY, under the LAW, are you addressing?
DW
Allow me add some “depth” to the question.
“False” submissions require that those whose responsibility is to ENFORCE the law … do so.
So, the abject failure is NOT MERELY that of the “top management” at the “banks” … it is, also, of the regulatory agency (or agencies) … AND those responsible for the ACTION or in-actions of that (or those) regulatory agency (or agencies).
And those who are responsible at the “top” of the government are who, specifically?
Why, Congress AND (“here”, the “where does the buck stop” question comes into this discussion) the White House … specifically the President of the United States of America … unless we are to postulate that the President simply does NOT know … or understand … not caring is not a viable excuse.
At some point, “high crimes and misdemeanors” (lovely phrase, that) MUST come into “play”.
For no one can reasonably argue that this “example” and MANY others relating to criminal fraud, do not have a deleterious and destructive effect upon civil society and the well-being of “the people” (a “quaint term” with about a much “meaning” as that “quaint piece of paper, no doubt).
Ah, well, apparently everybody has “other” things on their minds?
DW
Wow! Criminal? I’m sure that was not their intent. Hang on. Let’s not wake up the attorney general, what’s his name, until we get proof. Criminal activity, that’s really hard to believe. /s
May I suggest…….
IfWhen Dimon skates on this, no CEO will be held accountable for anythingWHo’s gonna prosecute him? Obama, Holder, SEC????
So they kill their own and eat their dead. No surprise here.
Dude, you’re on fire today! I know this really chaps your ass and MINE too more than practically anything else, Gitmo, drone assasinations, FISA, you name it, this administration has pissed me off. And I’m on anti-depressants and BP meds.
As you have said previsously, with n o rule of law, we are doomed. The apocolypse? May not be so bad.
Hang on. Might be an “up” side to this.
I was discussing civics with my niece the other day. She’s 16 and very smart. Related to me by blood dontcha know. She reminded me that the president of the UNited State is the chief official responsible for upholding the law of the land and he has at his disposal and under his direction both the attorney general and the FBI to do so.
Is that right????
Anybody else getting a “Watergate deja vu” feeling here?????
First Equifax and now this.
David, you really working overtime in the “truth and justice” department today.
Take a break. Pace yourself. Send your cape out to be cleaned. YOur country needs you.
There was a article in the NYT magazine this past week (I think) about the lady executive who oversaw all the trading at JPM. She quit as a result of it. Let’s see if the FBI catches any whales or minnows in this investigation. That lady would seem to be culpable. Under SOX a lot of the other top execs could be too. That is why there are a lot of people on WS who want to “modify” SOX. If I were Dimon I would blame her and try to limit the damage there. We will see.
PS. Or as he has already said, it was just a “mistake” so don’t blame me.
Sooo…… they’re gonna throw some people under the bus, huh???????
..
..
..
How big a bus???????
I think that’s the plan at DOJ.
“If JPMorgan Chase “submitted inaccurate financial statements to regulators,” as the report indicates, top management is responsible under Sarbanes-Oxley. Criminally responsible, in fact. Anything less simply ignores the clear duty under the law.”
When did the Obama Administration ever give a damn about the law? Our trojan horse president has shredded the Constitution not just Sarb-Ox. The man himself is a war criminal, you think he’s gonna sit still and let his favorite Wall Street butt-boy suffer any legal consequences over something as trifling as theft and mismanagement?
When hell freezes over…
So, who are you gonna vote for, “lefties?” How much sickening hypocrisy can you live with?
Vote Jill Stein for President and progressive third party on down the line, as I will do, in the swing state of Florida. And any craven Obamatons out there who are outraged by my choice can fuck off.
The Democratic party needs to be disappeared. Now!
When you have a $7 billion dollar hole (or something like that) it gets hard to fill up with the serfs, if you get my meaning. Under SOX you are supposed to have risk management sufficient to prevent that kind of loss. But it didn’t work under the mortgage crash so why should it work now? Bill Black has written lots of things about what he calls accounting control frauds. At least on the surface that is what this one sounds like. This is part and parcel of capitalism. Dodd-Frank won’t work any better.
Jamie Dimon should be in prison and JPM should be broken up yet we have Obama declaring Jamie is the best because he play by the rules! what rules are they? How to stick to the global community and get away with it!
Always appreciate your insight.
I just hope they get a big enough bus.
NO prosecutions in three years, nine months, and 11 days.
Well, Jamie agreed to be the White House helper in exchange for not perp walking him, going out there and offering to take a tax increase on his wealth and all. So he should get off easy for that. Sarbanes-Oxley Schmarbanes-Oxley.
Plus, he threatened that if they prosecute him a lot of jobs would be lost, and who was that prosecutor who told us in a speech that’s what you have to do to convince people not to prosecute you?
It all makes perfect sense.
Plus, he’s a savvy businessman and all that.
Dimon will spend twenty years in jail.
Not really, but typing it was fun for a second.