How did we end up with such smart scoundrels? Even after it was known that Jamie Dimon's bank blew more than $2 billion on the same suspect derivatives trading that has bankrupted the world's economy, Barack Obama still had praise for the intellect of his political backer and the integrity of the bank he heads: "JPMorgan is one of the best-managed banks there is," the president told the hosts of ABC's "The View" in an interview televised Tuesday, adding, "Jamie Dimon, the head of it, is one of the smartest bankers we got. And they still lost $2 billion and counting."
A lesser bank would have gone under and needed to be bailed out, Obama argued: "That's why Wall Street reform is so important." But even when fully implemented, Obama's tepid reforms would not have stopped this scam and will not stop the others that are sure to follow. Being one of the smartest bankers means you are among those who best know how to skirt the law or, if that cannot be done, how to successfully lobby to gut it.
Dimon understands and performs this drill well, for he was in cahoots with his mentor, Sandy Weill, in engineering a series of mergers and acquisitions that would have violated the Glass-Steagall law, which for decades had prohibited co-mingling investment and commercial banking. The two business executives were able to get Congress and President Bill Clinton to reverse Glass-Steagall, a change that made legal the creation of Citigroup, the too-big-to-fail bank that eventually was saved from bankruptcy only through an immense taxpayer bailout.
The best and the brightest in this case are the bane of the nation because their genius lies in outwitting all efforts to hold them accountable. Dimon, the most recent in a parade of now-disgraced Wall Street golden boys, was nonetheless just awarded $24 million in compensation for 2011 by JPMorgan. Like his mentor Weill, who ran Citigroup into derivative trading hell, Dimon will no doubt suffer little legal unpleasantness or social ostracism stemming from his dodgy behavior. Weill will soon be inducted into the American Academy of Arts & Sciences as an outstanding business leader and philanthropist.
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