Respectfully submitted by Lawrence E. Rafferty-Weekend Blogger
In the past we have discussed the allegedly illegal and fraudulent practices of the Big Banks that helped bring the economy into Recession, but until now, we have not seen such a blatant example of how it pays for Big Banks to break the rules and get ahead at the same time. As you may recall, JP Morgan Chase Bank recently agreed to a $13 Billion dollar settlement with the Justice Department for allegedly defrauding customers. That sounds like a big number, but that was only part of the total fines and penalties JP Morgan Chase was liable to pay in 2013 due to its less than honorable business practices.
It may surprise you that after agreeing to the $13 Billion settlement and having to pay other large fines, the CEO of Chase is getting a big raise. An $8.5 Million dollar raise!
“Jamie Dimon, chairman and CEO of JPMorgan Chase, will be paid $20 million for his work in 2013, restoring most of the $11.5 million cut directors imposed a year earlier following the company’s embarrassing derivatives loss. The sum includes a base salary of $1.5 million, plus $18.5 million of restricted stock, the company said in a public filing on Friday. Dimon was paid $11.5 million for 2012, half of his $23 million compensation in each of the prior two years, according to company filings. The raise, decided by the board of directors, comes after JPMorgan annual profits fell 16 percent in 2013 as the company agreed to pay out some $20 billion to settle legal claims from government agencies and private investors.” CNBC
I guess I am just naïve to think that if the bank I was in charge of was on the verge of civil and criminal charges and I had brokered the deal to “limit” the costs to the bank to $13 Billion in the one case, that maybe the Board of Directors might ask for my resignation, if not firing me on the spot. After all, as the CNBC article quoted above states, the profits of the bank fell 16 percent!
According to another CNBC article, the Board of Directors did struggle with the decision to almost double his compensation. “JPMorgan’s board voted this week to increase Mr. Dimon’s annual compensation for 2013, hashing out the pay package after a series of meetings that turned heated at times, according to several executives briefed on the matter. The raise—the details were not made public on Thursday—follows a move by the board last year to slash Mr. Dimon’s compensation by half, to $11.5 million.” CNBC
Don’t forget that the reason why Mr. Dimon’s compensation was lowered to a “mere” $11.5 million in 2012 was due to the “London Whale” trading fiasco that also occurred under Mr. Dimon’s watch. Is it just me or could all of this nefarious conduct by the bank, led by Mr. Dimon, lead a reasonable reader to wonder what does it take to get fired at JP Morgan Chase? It seems obvious that if you are Jamie Dimon, you can be praised by some members of the Board for reducing the exposure of even larger and more disastrous penalties, even though the practices that led to that same civil and criminal liability came while you were the CEO.
It has been suggested by one former regulator that much of the profits made by JP Morgan Chase and other big banks in their alleged fraudulent behavior have gone into the pockets of the bank’s executives.
“Regulator William K. Black Jr. played an integral role in the prosecution and conviction of more than 1,000 bankers over the savings-and-loan scandal of the 1980s. Black, who is now a top economics professor, is understandably disturbed by the fact that there has not been a single prosecution of the major Wall Street executive over the much larger scandals which led to the 2008 financial crisis.
Black observed this week that the bank’s fraud proceeds “went largely to the senior officers and directors of JPM, Bear, and WaMu in the form of bonuses.” The Board’s behavior can therefore be seen as a divvying up of criminal booty, whatever the personal involvement of the Board members themselves.” Nation of Change
Maybe I am missing something, but it may be time for the JP Morgan Chase shareholders to find a new Board and a new CEO. If I was a shareholder of JP Morgan Chase, I think it would be a fair question to ask why is incompetence and allegedly criminal activity rewarded in the form of an almost 50% raise? Another question that keeps coming to mind is why aren’t some of these banksters doing the perp walk? What do you think?
Lawrence E. Rafferty-Weekend Blogger
“The views expressed in this posting are the author’s alone and not those of the blog, the host, or other weekend bloggers. As an open forum, weekend bloggers post independently without pre-approval or review. Content and any displays or art are solely their decision and responsibility.”