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Jamie Dimon, like nearly every other bank executive working today, is the product of an egregiously flawed MBA curriculum that remains largely absent ethical foundation, or corporate commitment to the interests of non-leveraged stakeholders ranging from employees and public sector service providers all the way to national interests and security.
Robert Butche, Publisher, Newsroom Magazine
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Jamie Dimon’s recent announcement that JPMorgan-Chase had booked a $2 billion loss on synthetic securities trading was unsettling. What immediately followed was a 10% slide in JPM’s market capitalization, talk of hearings on Capitol Hill, and investigation statements by the Securities and Exchange Commission and the Commodity Futures Trading Commission.
From what we’ve seen in press reports, those most knowledgeable about the balance of power between lobbyists and politicians seem far from ready to bet on significant change in how American banks are managed, or regulated.
Yesterday the Department of Justice made known it was launching an investigation. Earlier this morning, Reuters confirmed reports that the FBI is also launching an investigation.
Pending the outcome of those investigations, and any charges that might obtain, what we know for certain is that the so-called SuperBankers, both American and foreign, are back doing the same stupid things that resulted in financial dislocation for nations, industries and ordinary citizens.
More On . . .
Why, one might ask, are the central engines of our capitalist system so prone to engage in behavior that might warrant investigation by Justice, SEC, FBI or CFTC?
The answer is not one of capitalist excess, but one of flawed business school curriculum that leads to MBA training absent meaningful foundations in behavior, social accountability, ethical foundations or personal responsibility.
Our energized economy depends on giant banks whose size and sophistication makes possible financial support for massive projects that benefit everyone. Big banks need big thinkers and liquidity to serve their critically important role in America’s capitalist economy.
There is nothing inherently wrong with big banks. There is a great deal wrong with big banks being mismanaged, or overtly incentivized for managerial enrichment, or taking non-financing risks with depositor monies.
Bankers who personally take no significant risk while incentivized by rewards for short-term performance, are enabled, if not driven by what has become high-level criminal-like behavior learned and made to seem respectable in today’s most prestigious business schools.
Not every business school is infected, and some, including Johns Hopkins University’s Carey Business School, under founding dean Yash Gupta, were established to broaden business school curricula to include ethics and values.
In the name of efficient use of capital and optimization of earnings our most prominent and seemingly successful business leaders have become largely single stakeholder oriented.
What separates criminal and criminal-like behavior is to some degree reflected in overt distortion of governing law that keeps bank theft unlawful for outsiders but somehow lawful when perpetrated by insiders. Thus while it remains unlawful for bank-robbers to extract un-owned money from a bank it is no longer ( since repeal of Glass-Steagal, for example ) unlawful for bank executives, employees, directors or traders to do so.
Managers driven by the need to post quarterly earnings by engaging in transactions that put at risk their bank’s entire equity position align themselves with a single stakeholder’s interest at risk to all others — including ordinary taxpayers who are on the hook for any and all ensuing losses.
All other stakeholders, community, employees, depositors, taxpayers, social stability and national survival are effectively, if not completely ignored in favor of executive and trader interests.
Seasoned business leaders know-well there is good reason for incentivization that aligns executive and managerial interests with those of the institution and all of its stakeholders.
There is a great deal wrong, and criminal, when stakeholders are collectively put at risk for what may partially or exclusively be the private benefit of an executive, manager or trader.
Compared to what JPMorgan-Chase says might become even larger losses from activities and risk-taking Mr. Dimon alleges to have been inappropriate ( synthetic-securities trading ), all the bank robberies in history have the feel of being pitifully insignificant.
But bank robbery remains a crime while bank mismanagement and gambling remain little more than criminal-like business as usual.
Bank mismanagement and risk-taking used to be a crime before America’s Band Of Brothers bankers inveighed upon Congress to let them have more fun with other people’s money.
Whatever happened to all of America’s responsible bankers, one might wonder?
They’re still around. Next time you’re out and about drop in on one of your Community Banks to meet some of the men and women who understand and accept being accountable and responsible with other people’s money.
Then, if you don’t already have an account with them, you might consider opening one.
America’s responsible bankers, the ones who finance your community, businesses and governments with your deposits deserve your support — and your thanks.
Based on all that we know today the SuperBankers and traders who were collectively and inexcusably let off the hook by the administration at the behest of Treasury Secretary Geithner, and against the pleadings of responsible and experienced financial mavens including Larry Summers, should be investigated and, if warranted, prosecuted for their crimes, malfeasance and contempt for nation.
Anything less constitutes a clear and present danger to American interests that far outweighs external risks including Al-Quida and the Taliban.