Any hearing in the Senate of the United States but especially any hearing relating to money and banking, money market operations or the operations of banks in general. Throw in a bit of derivatives, options and cross border management and you have a howler.
The day started with Carl Levin, Dem. from Michigan and chair of the committee, reading a series of questions of which he understood nothing, prepared by his staff who understood only slightly more, to Ina Drew, the former executive at JPM who was responsible for the unit which caused all the fuss. Now I don't think Ms. Drew is stupid because JPM paid her some $30 million for a couple of years (which she gave back) and JPM is not known for paying that kind of fold to a box of rocks. She was, however, a lousy witness; halting of speech, uncomfortable and at times looking downright scared. She also blamed those who worked for her at the time essentially stating that they lied about the true state of their book. People in her position fall on their sword and move on. You know the lines, "It happened on my watch" or "I was the one in charge" or the best of them all, I have always been prepared to accept the credit when due to me and the responsibility for failure." I like that one. After that comes out is when you blame the lying bastard for not keeping you informed.
OK, let's square up. Bad trade? Yep. Stupid attempt to "double down" to recoup? Yep. Stupid to try to cover it up? Yep. Anybody get hurt? Well, the shareholders I suppose but JPM just hit a record high. Loss of potential capital? Yep...the shareholder's capital. Did the bank lie to the regulators? Who the hell knows. Mr. Levin is not known as a non-partisan sort. This report I m sure contains every piece of mud that could have been dug up and very little exculpatory language as to the actions of the players. So is the great L'Affair Morgan going down in history as one of the great bank catastrophies of all time? Nah. It will have been forgotten in a year or two. What this is all about is simply another battle in the great Too Big To Fail war, highlighting, unfortunately for Mr. Levin and the Senate--once again I might add-- the codicil to the will of one of the greatest of all known stupidities of The Financial Reform Act known as Dodd/Frank.
We can go all over this again but to what pont. Critics on both sides of the argument bring good points from the central issue of size and how big is to big to be managed to the every-day-more-apparent stupidity of Shelia Bair thinking she can close down a $2 trillion institution operating in 100 countries like 7th 8th National Bank of Catpoo, Co. Some Senator even got into why should we subsidize "too big to fail banks because their cost of funds is actually lower", which
a. isn't true in all cases and
b. where it is, in the bidding for wholesale deposits, it's because WITH YOUR STUPID LEGISLATION YOU MADE IT THAT WAY YOU IDIOT!
This will go on for a while with the likes of Levin claiming we need even tougher regulations because the banks will figure out how to get around what we already have given their past actions. Lunar Base to Carl: that is the nature of things when you write legislation, and certainly the nature of things when you write stupid legislation. I once told Charlie Schumer that if you gave me two smart lawyers and three brand, new MBA's who would work 20 hours a day I'd get around any legislation he could write in 72 hours. He laughed...LAUGHED! Then again that was before Charlie became a Senator, got filthy rich (how did he do that?) and took a stupid pill.
I couldn't watch it all because I had an appointment with the Doc as we are off for Two Weeks starting tomorrow driving around Va. and points south. It will not be every day but I'll be here most of the time. Oh, did you here? Over There, the Euros told France and Italy that it was fine with them if the two didn't meet their fiscal targets as long as the deficits were used for what amounted to infrastructure development. I have a feeling somebody in D.C. had the best idea in a loooong time. I think we must have lent them Joe Biden and his suitcase full of "shovel ready jobs." How's that for friendship across the waves? I mean, after all, why should we have all the yuks?
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