Wall Street is in a tizzy because Evil Eric Holder of the corrupt Obama Justice Department is mistreating poor Jamie Dimon, CEO of JPMorgan Chase. The bank's proposed multi-billion dollar penalty is a politically motivated witch hunt against JPMorgan and its heroic CEO.
Obama hates free market capitalism. Dimon and JPMorgan helped save America. That's the story, at least.
Eric Holder may be evil and his Justice Department could be playing politics — but I call B.S. on the rest of it. Dimon is no hero. JPMorgan is a bank that deserves to die. If we really had a "free market," it would already be dead and gone.
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Those who attack Dimon are not attacking capitalism because he is not a capitalist. Those who defend JPMorgan are not defending free enterprise. They may think they are defending free enterprise, but in reality, they are defending state-sanctioned corporatism.
Banks are fundamentally dishonest businesses
that survive only because the government protects them from competition. Most banking activity would be fraudulent in any other context.
Under capitalism, a bank that simultaneously lends the same money to multiple borrowers would quickly go bankrupt. JPMorgan is clearly not bankrupt, so it is clearly not capitalist.
This brings us to the other misperception. A large part of the various multi-billion dollar penalties JPMorgan now faces arise from acts by Bear Stearns and Washington Mutual before JPMorgan bought them in 2008. Defenders say we should not hold Dimon and his bank to account for problems they didn't create.
This story is completely wrong. If anyone forced Dimon to buy those firms, they did it without leaving a paper or electronic trail. You can bet JPMorgan's lawyers would publicize any such evidence if they had it.
As Jamie Dimon knows very well, when you buy a business, you buy its assets AND its liabilities. If you don't want the liabilities, you structure the transaction to make this clear. Dimon did not do so. He wanted to buy Bear Stearns and WaMu BECAUSE of their liabilities.
Those risks of unknown magnitude are what made the companies so cheap. They would have been even cheaper had the taxpayers (that's you) and the Federal Reserve not taken the worst of the toxic waste. Dimon bought the remaining bones with his eyes wide open. He thought it was a good deal.
Media accounts from 2008 tell a different story. Dimon saw a chance to scoop up once-valuable firms for pennies on the dollar. He grabbed it, voluntarily, with the full support of the bank's board of directors. They all thought the potential profit justified the risks. Jim Cramer even drooled about this "genius deal" on CNBC. Check the tape.
Dimon and JPMorgan rushed through their due diligence rather than let the chance slip away. It was a very bad decision. Dimon would take the blame and resign if he had any sense of honor.
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Instead, he wants to rewrite history and avoid the consequences of his own bad judgment. Sorry, Jamie, but I don't buy it. No one else should buy it, either. You and your bank aren't too big to fail
Ethically speaking, Jamie Dimon and his bank are no better than the food stamp recipient who blows the whole month's money in one day, then complains he's hungry. Dimon should get the same answer: "Sorry, pal. You made the choice. Now live with it."
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