Pilant's Business Ethics

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Tag: JPMorgan Chase

Dimon Screwed Up, Got a Raise Anyway!

Dimon Screwed Up, Got a Raise Anyway!

I apparently misunderstand the theory of the free market. I thought that successful performance was to be rewarded. And that disastrous or failing performance was to be penalized. But I am mistaken. For Jamie Dimon, failure is not failure, disaster is not disaster, life is good all the time – great job if you can get one!

Business ethics!! Do you reward constant business ethics violations? If you count settling multiple regulatory settlements in the billions of dollars as business ethics violations which apparently JPMorgan’s board does not, it might make you uncomfortable. Apparently in the mind of JPMorgan, business ethics is a matter of opinion, right?

Once again, I have another negative example to show my students. Instead of virtue being rewarded I have an example of rampant misconduct involving incredible amounts of money being rewarded. It makes my job more difficult.

But it’s not just me. Everyone who values justice, everyone who believes in right and wrong, everyone who believes in the value of business ethics, is being slapped in the face by this decision.

It is a blatant reward for misconduct and incompetence. It’s wrong. It’s destructive. It’s the wrong example for every human being on this planet.

Do we live in such a morally bankrupt system that not only do we have to suffer massive financial lawbreaking but watch it being rewarded too?

James Pilant

Jamie Dimon gets raise despite JPMorgan’s massive regulatory fines – Salon.com

JPMorgan Chase’s “punishment” was short lived. Last year, following the egregious “London Whale” scandal — a multibillion trading loss by the bank (which led to $1 billion in regulatory fines) — Dimon’s salary was cut in half to a measley $11.5 million.Wall Street memories are evidently as short as its pockets are deep. Dimon is getting a raise again. The New York Times reported:

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.

… JPMorgan’s directors may have decided that Mr. Dimon, as his peers may, should get a raise, but to ordinary Americans — and possibly to regulators — the decision to increase his compensation may seem curious given the banner penalties that federal authorities have extracted from the bank. It is not unheard-of for chief executives to lose their jobs when their companies have been battered by regulators.

via Jamie Dimon gets raise despite JPMorgan’s massive regulatory fines – Salon.com.

From around the web.

From the web site, A Means to an End.

http://meansstotheend.wordpress.com/2013/12/22/jamie-dimon-strikes-again/

I guess either Jamie Dimon, his personal attorney or someone from chase noticed my latest blog post Taking What’s Ours Part 6 .

Our Attorney along with the Federal Judge in Indianapolis received a notice Friday morning December 20th that a petition had been filed against us in New York by Jamie Dimon’s personal attorney.

What was the petition?

It was a cease and desist petition to keep us from talking and writing about what we were doing to Chase Bank any further.

The Judge placed a conference call with our attorney and Jamie Dimon’s attorney.

The conversation was recorded and on the record.

Dimon’s attorney proceeded to tell the Judge and our attorney that his client was at fault for all of this and that we could continue seizing assets until we had ALL of our money. Mr. Dimon just didn’t want us to write about it anymore.

The Judge proceeded to tell Mr. Dimon’s Attorney that the case was in his Federal Court and that he wasn’t going to allow a petition to hinder our Freedom of Speech.

This was a failed attempt to silence us and we will continue writing about our experiences.

I would like to thank Mr. Dimon’s attorney for admitting your client was at fault for all of this on the record. I’m sure this will prove valuable to us with any future lawsuits we have against Chase and your client, Mr. Jamie Dimon.

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You Have To Prosecute Individuals

 

You Have To Prosecute Individuals

There has been much anger in the financial press about JPMorgan having to pay a multi-billion dollar fine. It has been strangely charged that this is a government attack on capitalism. No, actually the bank broke the law and failed over and over again to act in an intelligent manner about its investments or its clients. But Gretchen Morgenson is absolutely right. This kind of fine isn’t really getting tough with the banks. It’s merely carrying on the long tradition of banks paying some proportion of the losses they caused while criminal prosecution as individuals is off the table. 

There is no real penalty here. The billions are just the cost of doing business. The bank has paid out fines before. The bank will pay out fines again. The fun and enormous profits of reckless speculation will remain.

There will only be an effective deterrent when wrongdoers are punished personally by fine and imprisonment.

You can’t attack prevent crime by attacking organizations with minor financial penalties. You could effectively if you were willing to pull the corporate charter from the bank and destroy it, or seize all of its assets. But I see no willingness to do that. The only effective tool present is the power to prosecute individuals.

It is bizarre to tell students to act with business ethics when they can read everyday in the news of the incredible money being made by individuals under the cover of banks deliberately, knowingly breaking the law. But even that is eclipsed by the simple and horrible fact that we do not impose penalties on individuals.

Without justice, how we expect people less favored than bank executives to believe in the law?

James Pilant

Why JPMorgan May be Getting off Easy

In a criminal investigation, JPMorgan Chase is facing action from federal authorities who suspect that the bank turned a blind eye to Madoff’s Ponzi scheme. That’s yet another headache in a week of migraines for America’s largest bank; last Friday JPMorgan Chase reached a tentative $13 billion settlement with federal prosecutors for its alleged manipulation of mortgage securities, which helped trigger the Great Recession. There may be more pain to come as the megabank faces litigation on a number of fronts.

http://occupyamerica.crooksandliars.com/diane-sweet/why-jpmorgan-may-be-getting-easy#sthash.lIimWj0v.dpbs

From around the web.

From the web site, Democracy Now!

Banks Poor Record Keeping Strikes Again

 

Debt collectors assisted by poor bank record keeping.

Debt collectors assisted by poor bank record keeping.

Banks Poor Record Keeping Strikes Again

Big Banks Face Investigation Into Whether They Helped Debt Collectors Pursue Faulty Judgments

The largest U.S. banks face a multi-state investigation into whether they helped debt collectors pursue faulty judgments against credit card customers, according to people familiar with the matter.
At issue is whether weak record-keeping by banks or a failure to pass accurate information to collection agencies harmed consumers.
The allegations against the banks echo those central to last year’s $25 billion federal-state mortgage settlement to resolve charges that the banks “robo-signed” documents and pursued foreclosures with faulty information.
This latest probe targets the same banks, including Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, said the sources who spoke on condition of anonymity because the investigations are continuing.
As with the mortgage cases, the investigation focuses on the banks’ poor paperwork and their weak tracking of the debts.

Big Banks Face Investigation Into Whether They Helped Debt Collectors Pursue Faulty Judgments

The banks poor record keeping or phrasing it differently, a reckless indifference to the property rights of mortgage holders, is in the news again.  The banks originally used their record keeping to facilitate seizing properties they lacked proper title to. But that wasn’t the only damage being done. It would appear they sold to debt collectors, debts owed to them by the mortgage holders dependent on the very same records they misused for years. You would think they would have noticed there would be a problem but no, people don’t like to think about their mistakes and crimes. So, we have former bank clients who owe no money being hounded by debt collectors.

Has anything been done to discourage these practices? It seems the profit never ends and no one is penalized? Does that mean that the banks can preserve for use over the next decades? Are these going to become standard bank practices?

These practices of banks poor record keeping and lying affidavits are illegal but with scarcely any penalty imposed they are undeniably profitable.

Aren’t these what Milton Friedman referred to as the “rules of the game,” and if you play by those, isn’t everything okay, you know – free choice, freedom to choose?

I suppose the feds will follow the usual practice of fining the banks a pittance and then allowing them to choose who should receive monetary relief if anyone at all.

This may not discourage the banks from continuing these kinds of acts. Shouldn’t the practice of banks poor record keeping put up a red flag for some regulator?

James Pilant

From around the web.

From the web site, Living Lies.

http://livinglies.wordpress.com/2012/12/20/if-the-bank-filed-foreclosure-ppapers-thats-good-enough-for-me-judge-alan-schwartz-dade-countyz/

From the comments by Matthew Bavaro

So, the bank rested and I got an opportunity to cross examine the witness, or so I thought. I was barely allowed to even ask a question. He shot me down almost every time I asked something. When I went to put my position on the record, he would not allow me to open my mouth. Well, I am not a wall flower, I am going to stand up for my clients.

 The acceleration notice that Bank of America sent was invalid in my opinion and about a dozen other judges around the state have found in favor of the homeowner on this very issue with the same acceleration letter from Bank of America. When I raised this to him, he could not believe that I had the audacity to actually ask him to rule in favor of my client. He implied that he is not going to allow a homeowner to stay in their homes without paying their mortgage even if the bank screwed up. When I asked to read the appellate opinions into the record regarding the paragraph 22 defense, his response was basically that he did not care about the letter they sent and the fact that they filed a foreclosure action alone is good enough for him.

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Mortgage Industry as the Wolf?

Mortgage Companies as Wolves

Mortgage Companies as Wolves

Mortgage Industry as the Wolf?

Foreclosure Review In New Settlement Leaves Homeowners In Banks’ Hands

For more than a year, housing advocates and their allies worried that a review of foreclosed loans managed by banking regulators was vulnerable to mortgage industry interference.

On Monday, the Office of the Comptroller of the Currency and the Federal Reserve Board — the two regulatory bodies that had taken the lead in making the nation’s largest banks accountable for rampant foreclosure fraud — announced that homeowners no longer need worry about the independence of the reviews. The regulators, essentially admitting that the reviews were too difficult to conduct, and that assigning appropriate compensation to those most harmed by the banks was no longer a priority, said the mortgage companies themselves will determine how to distribute $3.3 billion to more than 4 million homeowners forced into foreclosure in 2009 or 2010.

Housing advocates, while acknowledging that the foreclosure reviews were flawed, said they don’t understand how turning the process over to mortgage companies improves a system already insufficiently independent.

“The regulators have decided to replace the fox in the henhouse with the wolf,” said John Taylor, president of the National Community Reinvestment Coalition, a Washington-based housing nonprofit. “It is just incomprehensible to me that they could not find a third party that has the wherewithal and independence to fairly determine what the damage is to homeowners.”

Foreclosure Review In New Settlement Leaves Homeowners In Banks’ Hands

Is this good business ethics? Well, let’s look at it from the mortgage companies’ point of view. They made an enormous profit by misleading courts and mortgage holders as to who actually owned the property. In many cases, they told clients that they should skip payments, usually three payments, explaining to them that they would then qualify for government programs like HAMP. Once the home owner had skipped the payments, the bank immediately foreclosed. It terms of money, it was an incredible success.

Let’s analyze based on the Social Responsibility. Social responsibility rests on four pillars: economic, legal, philanthropic, ethical, and philanthropic.

Did the mortgage companies profit? Yes, but it depends on which stakeholders you look at. The shareholders did well. The employees did very well. The customers, at least as far as mortgage holders, were crushed. They are unlikely to ever be customers again. It is very difficult for families to buy a home in the first place. A second bite after foreclosure is not likely. The community was hurt badly by the thousands of empty homes, the collapse of the housing industry and the larger economic bust.

But let us have a special look at our last major shareholder, the regulatory agencies. They came, they saw, they said it was too difficult and gave it all back to the banks after extracting a promise that the banks will be good and give back 3.3 billion of the money they stole in the first place. It would appear the regulators are doing okay. They have shed their responsibilities to the public, which is always much easier than doing your job.

Was it legal? No. The banks violated the law thousands of times, perhaps hundreds of thousands. They lied routinely in official documents requiring affidavits and, for all intents and purposes, were in the business of stealing homes. They have, however, walked away unscathed.

Was it ethical? You have lying on a cosmic scale and theft of the property in the many billions of dollars. I don’t feel further analysis is required here.

And finally, was it philanthropic? Did they give back to the community? This is a pure case of negative philanthropy. The banks often had no concept of what to with the homes they took. They often didn’t care for them. Sometimes, they found it cheaper just to bulldoze them. They took value out of the community and replaced it with negative costs.

This is another sorry episode, which I will wonder if it is wise to mention to my business students? Should I tell them that stealing people’s homes will make you enormously rich while you with virtually no penalties? I am honest. I will. But I would rather not have negative business ethics taught so well by the mortgage companies. It makes what I do look foolish.

James Pilant

From the web site, The Support Center:

Major banks have once again agreed to a settlement, this time worth $8.5 billion, to compensate homeowners whose homes were fraudulently foreclosed upon in 2009 and 2010 through practices such as “robo-signing.” JP Morgan Chase, Bank of America, and and Wells Fargo will pay $3.3 billion to homeowners, and the remaining $5.3 billion will reduce mortgage bills and forgive principals on homes that were sold for less than what the owners owed on their mortgages. 3.8 million homeowners will be eligible to receive compensation ranging from a few hundred dollars to a maximum of $125,000.

In another settlement, Bank of America has agreed to pay the federal housing finance agency, Fannie Mae, $11 billion for selling the agency bad mortgages that defaulted, causing Fannie Mae to assume all the losses. $3.6 billion will be used to compensate for the bad mortgages, and $6.75 billion will be used to buy back mortgages.

Both of these agreements are part of a process to mitigate the impacts of the housing crisis and to hold the banks accountable for their role in both creating the housing bubble and in using questionable, if not fraudulent, methods in servicing their loans and processing foreclosures. Having faced significant losses, Bank of America continues to move out of the mortgage market, and in the deal with Fannie Mae, it agreed to sell the servicing and collection rights for 2 million loans, totaling $306 billion. Some economists and analysts are concerned that as the major banks shift away from mortgage lending, the industry is being consolidated into the hands of a few banks. However, though the housing market is recovering slowly, banks, such as Bank of America, might not be in a position to compete, given the losses they’ve already incurred and the problems they’ve had in servicing loans.

From the web site, Buzz Sourse:

Housing advocates, while acknowledging that the foreclosure reviews were flawed, said they don’t understand how turning the process over to mortgage companies improves a system already insufficiently independent.

“The regulators have decided to replace the fox in the henhouse with the wolf,” said John Taylor, president of the National Community Reinvestment Coalition, a Washington-based housing nonprofit. “It is just incomprehensible to me that they could not find a third party that has the wherewithal and independence to fairly determine what the damage is to homeowners.”

Regulators said the review process, which sought to determine if specific loans were unfairly foreclosed upon, was too costly and time-consuming. Under the new deal, 10 mortgage companies, including Bank of America, Wells Fargo and JPMorgan Chase, will pay $8.5 billion. Of that, $3.3 billion is earmarked for direct payments to “eligible borrowers” whose foreclosures were handled improperly. The remaining $5.2 billion will help struggling borrowers with programs such as loan modifications.

And finally, from the web site, 4Closure Fraud (reprinted from ProPublica):

The Independent Foreclosure Review was supposed to be a full and fair investigation of the big banks’ foreclosure abuses, and it was trumpeted as the government’s largest effort to compensate victimized homeowners. Federal regulators, who designed the review, forced banks to spend billions to carry it out. Millions of homeowners were eligible and hundreds of thousands submitted claims. But Monday morning, the very regulators who launched the program 18 months ago announced that it had all been a massive mistake and shut it down.

Instead, 10 banks have agreed to pay a total of $3.3 billion in cash to the 3.8 million borrowers who had been eligible for the review. That’s an average of around $870 per borrower. But typical of a process that’s been characterized by confusion, delays and secrecy, regulators said the details of how the money will be doled out were not yet available.

The headline number for the settlement is $8.5 billion, but that includes $5.2 billion in “credits” the banks will receive for actions they take to avoid foreclosures, such as providing loan modifications. That’s very similar to the separate $25 billion settlement reached last year between five banks, 49 states and the federal government. That settlement has been criticized for awarding credit to banks for things they were already doing.

 

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Banks Need to be Protected from Themselves

 

Waiting for a bank loan.

Banks Will Always Suck At Trading, Badly Need A Volcker-Like Rule: Study

A new study by economists Arnoud Boot at the University of Amsterdam and Lev Ratnovski at the International Monetary Fund finds that recent blow-ups in the banking sector — JPMorgan Chase’s $6.8 billion “London Whale” losses and that whole financial-crisis thingy, to name two — are not isolated events, but “a sign of deeper structural problems in the financial system.”

The only prescription? Less trading by big dumb banks.

“Without policy action, crises associated with trading by banks are bound to recur,” Boot and Ratnovski write in a blog post about the paper. “Even strong supervision will not be able to prevent them. Consequently, it appears necessary to restrict trading by banks.”

Banks Will Always Suck At Trading, Badly Need A Volcker-Like Rule: Study

If you read the fuller article, and I recommend you do, you will find that banks have incentives to do what is essentially speculative trading. Right now with interest rates low, there is a terrible temptation to take their money and gamble with it since there is little profit in traditional investments. And, of course, why do legitimate investments in business, industry and homes, when you can make so much more money speculating?

The banks have to be regulated to perform their traditional functions of lending to build a strong economy. We protect banks from collapse and insure their deposits with taxpayer money because when they loan money that develops the economy and creates opportunities. What we are getting now is a lot less useful investing and a lot more gambling at the public’s expense.

James Pilant

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Matt Taibbi Admits that the President Sounds Good …

I want to believe the President. I want to trust him. I want him to be successful. But everytime I back him up, I feel like Charlie Brown trying to kick Lucy’s football. It’s a moving target and it’s not moving my way.

Matt Taibbi writing for Rolling Stone has some words on the same subject. It caught my attention immediately because he does the same thing I do when the President speaks. He avoids hearing the speech but reads about it later. The President always says wonderful, beautiful things but they are about as significant as pickup lines in a bar. Right now, he’s rallying his troops, the people that got him elected, the Progressives and the Liberals. But he only needs them for his re-election campaign and when it’s over, they are going to be disappointed again. Obama never calls. It was just what it was.

James Pilant

Obama hasn’t been a total disaster on labor. Most notably, he stepped up in
the Wisconsin mess and at least took sides in that debate, calling the push to
end collective bargaining rights an “assault” on unions.

But I remember
following Obama on the campaign trail and hearing all sorts of promises before
union-heavy crowds. He said he would raise the minimum wage every year; he said
he would fight free-trade agreements. He also talked about repealing the Bush
tax cuts and ending tax breaks for companies that move jobs
overseas.

It’s not just that he hasn’t done those things. The more
important thing is that the people he’s surrounded himself with are not labor
people, but stooges from Wall Street. Barack Obama has as his chief of staff a
former top-ranking executive from one of the most grossly corrupt mega-companies
on earth, JP Morgan Chase. He sees Bill Daley in his own office every day, yet
when it comes time to talk abut labor issues, he has to go out and make selected
visits twice a year or whatever to the Richard Trumkas of the
world.

Listening to Obama talk about jobs and shared prosperity yesterday
reminded me that we are back in campaign mode and Barack Obama has started doing
again what he does best – play the part of a progressive. He’s good at it. It
sounds like he has a natural affinity for union workers and ordinary people when
he makes these speeches. But his policies are crafted by representatives of
corporate/financial America, who happen to entirely make up his inner circle.

I just don’t believe this guy anymore, and it’s become almost painful to
listen to him.

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