Crime Does Pay for Banksters


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.”

32 thoughts on “Crime Does Pay for Banksters”

  1. raff,

    I am skeptical of Bill’s conclusion that there is provable criminal conduct. Citing to his prior “accomplishments” has the effect of accrediting his current remarks, giving them a misleading gravitas. It’s easy to make “big picture” observations and accusations when you don’t have to do the work to prove them. Bill was always in management positions — he didn’t do the actual investigations or try cases. I don’t dispute that he was instrumental in exposing the Keating Five, but he can’t claim to have been “integral” in obtaining 1000 convictions. That’s just self-promotion. (Indeed, I am skeptical that there were as many as 1000 convictions in connection with the savings-and-loan crisis, unless you count defalcating tellers and branch managers.)

    Having a great deal of familiarity with one of the institutions cited, I can say that the provable violations were lower down. Making the case that there was culpable criminal conduct at the top would be far more difficult.

  2. “Why Won’t Obama Go After Criminal Bankers?”

    WHAT? You must be a Democrat, itching to vote for more in 2016.:

  3. What does one call a Government that allows corporations to create laws (ALEC) that create walls to protect the very corporations that screw the People over?

  4. In America, we have two sets of Laws.
    The first set is used to protect the elite…
    … The second set is used to prosecute Just-US!

  5. It has become more than a case of golden parachutes. It is now an airborne assault on everone below.

  6. Well that Alex Pereene guy comes off as a total jerk. Certainly the caller is unskilled in presenting his case & in handling Mr P, but this Alex guy totally attacks liberterian principles, ignoring Laisez Faire & championing big government. The principles are very simple & completely workable, more than you can say for big government & Social ‘Democracy”. These big bankers are in cahoots & profiting from government; there is nothing laisez faire about it.

  7. Porkchop,
    For the purpose of correcting my last sentence. It should read” Personal comments about him are not relevant unless you are suggesting that he is not being honest with his readers”.

  8. Rather than getting a multimillion dollar raise Dimon deserves to be investigated and prosecuted but then he himself said he knows nothing about anything when it comes to wrong doing at the company he runs for a near lets say $20 million so……

    When one looks at the make up of corporate boards, it is not hard to see the conflicts that lead to obscene compensation packages but Dimon is particularly egregious. Shareholders in most companies are institutional investors and other billionaires, I don’t have much sympathy for them because they managed to keep him in the two most powerful positions at JPM. The whole JPM situation is an example of how corporate greed and goverment capture and incompetence make our laws nothing more than mere irritants to corporate big wigs.

  9. Elaine,
    Thanks for the great article. It is right on point and sheds further light into the too big to fail or jail banksters.

  10. Porkchop,
    Did Mr. Black say anything wrong in the quotation and if so how? He is not the only one making those kind of claims and his statements jive with the linked articles and other articles. Personal comments about him are not relevant unless you are suggesting that his not being honest with his readers.

  11. rafflaw,

    I think you might find the following video that was posted last fall interesting:

    Matt Taibbi Watches Alex Pareene Popping CNBC’s Jamie Dimon Bubble

  12. rafflaw,

    I used to work with Bill Black back in the savings-and-loan scandal days. I like Bill. But the fact is that Bill has a big ego, overstates his role in those 1000 convictions, and underestimates what it actually takes to prove a crime, or even an administrative violation that would lead to payment of restitution or issuance of a removal-and-prohibition order. To his credit, Bill pushed very hard to have Charles Keating prosecuted by the Office of Thrift Supervision (and others), but Bill was not the one who conducted the investigation or tried the case. Another very fine lawyer was the lead trial counsel on that, and the prohibition order against Keating still stands (the only sanction against Keating that withstood all appeals).

    At some point in the mid-1990’s, Bill decided he would rather go back to school, get a Ph.D., teach and write books. Now that’s what he does. Statements like the above help sell books.

  13. One can only assume that Mr.Dimon’s bodyguards are the best paid AND top performing in their trade (unlike Mr.Dimon himself), simply to provide him the protection that is inevitably needed to thwart but a single well armed, well prepared, and quiet disenchanted consumer, stockholder, or even simply a media consumer fed up with the felonious shenanigans that these demigods of banking and Wall Street get away with while the mainstream constituent has been virtually completely disenfranchised by the corporate influence on Capitol Hill. I fear that the stockholders may not be the only ones willing to try and take matters into their own hands, and certainly there will be a significant repressive backlash from their bosom buddies on Capitol Hill should this occur.


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