Wednesday, January 13, 2010


The Perp Walk at the Financial Crisis Inquiry Hearings

By Les Leopold

January 13, 2010 - 5:30am ET

The first panel to testify on Wednesday before the Financial Crisis Inquiry Commission features a who’s who of high financial crimes and misdemeanors. Here’s the lineup.

Lloyd “doing God’s work” Blankfein leads off as CEO of Goldman Sachs. He doesn’t come cheap, having “earned” $136.6 million over the past five years. Mr. B is in the hot seat because his company is making record profits during the worst economic year since the Great Depression. Maybe he should explain to us if all that profit and soon-to-come bonuses have something to do with the taxpayer largess: $10 billion in TARP funds (now paid back), another $12.9 billion of taxpayer money through AIG (never to be paid back), and all the free money it can grab from the Fed (which we'll never notice). Blankfein has a charming case of foot-in-mouth disease, which just might liven up these hearings. Let’s see if the committee can get him to utter one unscripted sentence. They should start by asking him how much taxpayer money is going to those who are coaching him for these hearings.

Jamie “Obama loves me” Dimon, CEO of JP Morgan Chase was paid $97.4 million during the last four years of the bubble. He’s been given a kind of immunity from Obama who thinks he is a saintly financier (and campaign contributor). Dimon will take advantage of that cover to claim that he and his bank did nothing wrong and everything right. His not very subtle message will be that had the other banks behaved as honorably as his, there would have been no crisis. He also will come close to committing perjury if he claims that his bank could have survived without any direct or indirect bailout funds – that he only took the money because the government asked him to. With roughly 12 percent of all bank deposits in the U.S., Dimon knows his bank is far too big to fail. There will be no serious reform until Dimon is forced to break up his bank into smaller units. Hopefully the committee will demonstrate to the American public that he and his banking empire are a clear and present danger to our livelihoods.

John “we cannot control ourselves” Mack, CEO of Morgan Stanly ($57.2million over the last four years) has had his candid moments, like when he admitted that the financial industry couldn’t police itself and needed strong government regulations. My guess is that his handlers won’t let him go there again unless he’s pressed. It would be nice to know how much money his firm has received directly or indirectly from all the various government programs. Then we might want to ask how much his bank is spending on lobbying to put loopholes in the very regulations that he admits are needed.

Brian "baby face" Moynihan, Bank of America, is the new boy on this block having just been promoted from the ranks to CEO, because no one from the outside would take the job. As the former in-house council he knows where all the bodies are hidden and how to avoid disclosing their locations. As a result, we should expect him to give name, rank and serial number... little else. Since he has just taken the helm, he also will recite the Boy Scout’s oath and promise to make sure his institution will contain risk and serve its clients, its stockholders and the American people, so help me God. According to the Boston Globe Moynihan has a "reputation as a whip-smart and indefatigable executive who mastered many disparate tasks assigned to him."

Barf Bingo: Words to Watch Out For

Take out your scorecards and look for the following words. :

“Innovation” Paul Volcker, who should know, has told bankers that they haven’t created anything new and useful in a generation except for the ATM. Nevertheless we can expect these CEOs to discuss how important it is for our economy to encourage financial innovation.

“Competitiveness” The top 19 banks now have more than 65 percent of all bank deposits in the US. That oligopoly, however, will claim that too much government regulation will harm America’s competitiveness.

“Retaining Talent” This is financial community’s stellar argument for getting paid 100 times the top neurosurgeon in the country: If they don’t offer that level of pay, they will lose talent to other enterprises. And they say it with a straight face even after that talent nearly destroyed the global economy.

Warning: If these bankers show signs of impatience, just remember that they live in different time zone: On average they are accustomed to earning about $10,000 an hour.

Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It Chelsea Green Publishing, June 2009.

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