Twenty four centuries ago Socrates argued that the greatest of evils and the only evil worse than doing wrong was getting away with it. Since we experienced the economic near-collapse four years ago, we have also witnessed complete and utter failure in the administration of justice. Senior levels of the Department of Justice, of the banking industry, of the political system, are all “getting away with it.”
Is there any chance that Covington and Burling, the firm which represents JP Morgan, Goldman Sachs, Morgan Stanley, B. Of A., Wells Fargo, etc., and spawned AG Eric Holder and AAG Lanny Breuer, might be receiving disdain and a wagging finger from Socrates looking down from wherever he now sits and observes? Where have ethics gone?
We were recently provided with results of research which claimed that of five hundred financial sector senior executives in the US and the UK, 24% said unethical or illegal conduct was necessary, 26% said they had firsthand knowledge of wrongdoing, and 30% said their compensation pressured them to violate their ethical standards or violate laws. What a surprise, we thought. How could that be? Even the talking heads pretended to be flummoxed. Here’s another one to stupefy the public: 26% of the respondents in this survey said they had firsthand knowledge of wrongdoing. I don’t believe it. Any of it. Actually, it’s not that it’s not believable, because this is not an opinion arrived at through analysis – it is that this is simply not true. Such low percentages would fly in the face of common sense and human nature, . . . oh, and observation.
These percentages are likely off from reality by 100%. No one with any faint familiarity of the Street reading these fictional statistics would have difficulty, if applying objectivity and assessment that driven by motivations such as self preservation, a vast majority would throw ethics aside in favour of bonuses and prolonged career well-being.
Anyone who has hovered around the Wall Street crowds knows, for example, that insider trading is “de rigueur.” There are laws which traders heed, such as, “don’t you dare make a trade for the house without inside information or some knowledge.” But we will continue to hear otherwise, and occasionally be spectators to a very public destruction of a sacrificial lamb.
HSBC Holdings this past week made news when it became the subject of allegations that it conducted money-laundering for drug lords, dictators, and thieves, operating in places from Mexico to Saudi Arabia. It didn’t help that the bank provided terrorists with access to U.S. Dollars and the U.S. Financial system. Why does this bank still have anyone holding an account after news like this? Why isn’t the executive suite and the Board of Directors flushed? Oh, of course, a resignation or two, like David Bagley, the head of HSBC compliance, and all is forgiven. No harm done.
When we watch a Congressional committee pretend to question Jamie Dimon, the head of JP Morgan, we know the sparring will not be a public admonishment, or even a censure. JP Morgan turned $5 billion into noxious vapors, and Dimon faces Congressmen and eats their lunch, or as Daniel Day Lewis might say, “Drinks their milkshake.” He is evidently smarter than anyone who faced him from the bench, and his arrogance intimidated them. Congressmen will not get truth from Dimon or any of the guys controlling the money joystick. What they seem not to know, is that Arrogance is rooted in Insecurity. Don’t back off, go get him.
Are we not amazed when we observe Ben Bernanke in front of the Senate Banking Committee telling them nothing, and being asked nothing? It’s a thing of beauty. Deer-in-the-headlights would look more effective from behind the bench. When Bernanke makes profound statements like, “The most effective way that the Congress could help to support the economy right now would be to work to address the nation’s fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery,” followed by the unequivocal, desk pounding, and seizure causing, “We will evaluate our options going forward,” . . . and the Senators sit numb and clueless, but struggle to appear plugged-in. We shake our heads in disbelief at the dearth of political leadership. We then cross our fingers and turn to Justice and the system that should be getting answers and marching fraudsters unceremoniously to a tiny room. We hear nothing. Silence.
Trillions have been created to bailout financial institutions, governments, and a few too many companies. We have become numbed to the term “bailout.” Who controlled the bailouts? The very individuals who control the printing presses which you most fear, or should fear. Those very same presses which have decimated the purchasing power of your money over the past fifty years while moving economic controls beyond power of governments. It did not help to frame our confidence when we learned at least 18 former and current directors sitting on Boards of Federal Reserve Banks handed their own banks and companies over $4 Trillion in low-interest loans from the Federal Reserve. GE received $16 billion from The Fed, but does anyone in position to do something about it care that GE CEO Jeffrey Immelt was a New York Fed Board Member?
Jamie Dimon trumps Immelt, however, with JP Morgan getting $391 billion of the $4 trillion in emergency Fed funds. The amounts are insane, and of course, so are the bonuses these guys paid themselves. Their own Boards would never argue with them. That isn’t how the system works. It is not surprising that a Dimon walks into Congress and treats it as an annoyance. A gnat on his arm would get more respect. He doesn’t even approach Congress with contempt, he regards it as a bad joke. Conflict of interest? Abuse of power? No one asks. Guys like Dimon make Putin look like a kleptocratic piker.
Forbes magazine digs into its humour drawer and comes up with, “If Jamie Dimon had been on the Titanic, he’d have jumped in a lifeboat … and then issued a press release describing his heroism.” What jokes will Forbes come up with when the full extent of the Libor scandal finds daylight? Manipulating interest rates sounds uninteresting, compared to oil price manipulations. Uninteresting, unappetizing and tedious, until you discover that up to $800 Trillion in financial products depend on the Libor rate. No one knows the extent of the fraud. While you toil at your job, or trudge through the want ads looking for one, think of what shaving a few points here and there off $800,000,000,000,000 might mean as it bounces at the speed of electrons around the world.
And yet, from the well connected and well-paid heads of the DOJ, not a squeak. Still silence. Ssshhhh. There are no consequences. There can be no repercussions. The pretence for this inaction revolves around the supposed “complexities” of the financial sector where many heads should be rolling. The books are too big to understand, too big to analyze, too big for a forensic audit, and, well, . . . just too darned complicated to find guilt. Who believes this insanity? If any of the senior politicians who led the social/economic experiment which brought us the financial implosion, and a few senior bankers who took advantage of the abuse possibilities were even charged, not even convicted but just charged, there might be a chance at clarity going forward.
We hear nothing but misrepresentations from our genius experts and the media on the state of the National and global economies. The top of the food-chain on these misrepresentations, and those in the MSM feeding us the distortions without intelligent analysis, are anesthetizing the majority of taxpayers into paralysis.
So back to Socrates and consequences. Where is the most senior cop in America in all this? Where is his boss? Nowhere. With induced condoning from the AG and his needy leader, a lazy and uninformed MSM, and an inept Congress, the “they” whom we are intimately familiar with, are all “getting away with it.” Narcissism must be a contagious disease. Ethics or integrity anyone? Anyone? As Socrates claimed, getting away with it is the worst of evils.
Therein lies the product of Leadership Missing in Action.