JPMorgan And The Death Of Corporate Reputation

BOOK REVIEW

The Death of Corporate Reputation: How Integrity Has Been Destroyed on Wall Street, Author: Jonathan Macey.

By Steve Denning – All the big financial firms like Goldman Sachs [GS], UBS [UBS], Citibank [C], Bank of America [BAC], and JPMorgan Chase, have settled cases involving not just shady practices like price gouging, gaming the system, toll collecting, zero-sum trading and excessive compensation but also illegal practices such price fixing of LIBOR, abuses in foreclosure, money laundering of drug dealers and terrorists, assisting tax evasion and misleading clients with worthless securities. The cases were settled for what is chump change to the banks, without admitting or denying wrongdoing.

Fixing the financial sector will always appear to be an impossible task if we frame it as one of regulators trying to control and contain the nefarious activities of the banks and the hedge funds. If the issues are seen in a broader context, and the activities of the banks are viewed as one aspect of the way in which the shareholder value notion has been devastating many sectors, then we could get to the root cause of the financial sector’s problem and figure out what would be involved in fixing it. more> http://tinyurl.com/clor8le

Related>

• The failure to prosecute corporate crime undermines U.S. justice, Russell Mokhiber, Reuters

Europeans Are Thinking the Unthinkable: That Debt Defaults Might Make Sense

By Michael Sivy – None of the euro zone’s problems have gone away. Political crises beset France, Italy and Spain. Smaller countries, from Portugal to Cyprus, face even more pressing financial troubles. Germany grows less and less willing to foot the bill for bailouts.

There is, in fact, a historical case for tolerating default. Argentina suffered a financial crisis in 1999 that led to a period of high unemployment… more> http://tinyurl.com/c5rfxh3

Regulator says banks still a risk for taxpayers

By Douwe Miedema – Tom Hoenig, vice chairman of the Federal Deposit Insurance Corp (FDIC), said in New York that the Volcker rule – which would bar banks from betting their own money on financial markets but has not yet been finalized by regulators – would not go far enough.

Instead, Hoenig wants to force banks to hive off risky activities such as trading and creating derivatives and to eliminate any taxpayer subsidy for these businesses. more> http://tinyurl.com/d4fnso4

Related>

• Republicans press Fed on when regulators can break up a bank, Reuters

Gold’s fall not a harbinger of happy days

By James Saft – Monday marked the second day of gold’s worst two-day tumble since 1983, as it fell more than 9 percent amid huge volumes, taking its total losses since Friday to 14 percent.

Rather than worrying about the histrionics of gold, we should be paying close attention to the economic data. It has not been encouraging.

China, particularly, is no longer quite the engine of growth and demand it once was.

Neither are things humming very convincingly along in the U.S., as shown by poor industrial and jobs data recently. more> http://tinyurl.com/c8td5qz

Related>

• Paul Krugman v. David Stockman: The Great Debate Over Gold Continues, Ralph Benko, Forbes
• Einhorn’s big bet on gold slammed by sell-off, Svea Herbst-Bayliss and Matthew Goldstein, Reuters

Russia after Cyprus: Bringing the money home

By William E. Pomeranz – The Kremlin’s initial outrage over developments in Cyprus – and the island’s shocking expropriation of billions of dollars held by Russian companies and citizens – has given way to mild indifference. “If somebody gets caught and loses money at the two largest [Cypriot] banks, it’s a shame,” First Deputy Prime Minister Igor Shuvalov recently stated, “but the Russian government isn’t going to do anything about it.”

It turns out that the European Union settlement that left Cyprus’s banking sector in shambles has done Moscow a big favor. Not only did the EU take down a major offshore banking center, it helped President Vladimir Putin’s campaign to return to Russia any money stashed away in offshore bank accounts. more> http://tinyurl.com/d3rzv2h