Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Saturday, March 23, 2013

JPMorgan Board's Abject Failure of Oversight

In a classic example of crony board behavior, in spite of the grossly embarrassing Senate hearings highlighting massive fissures in JP Morgan's trading oversight and management, highlighting a corporate policy of proprietary trading, more clearly translated as rote gambling, that was not only countenanced but encouraged by management resulting in the disastrous positions of the 'London Whale' and its cost of billions to the institution, the Board of Directors of JPMorgan Chase said on Friday they would continue to support Mr. Jamie Dimon as BOTH the bank's Chairman and Chief Executive. (Please see New York Times, "JP Morgan Board Confirms Dual Role For Dimon.")

This not only in the face of the huge failure, as detailed in the 301-page Senate report, but also in its intransigent dismissal of a wide gathering of shareholders demanding separation of the chairman and executive posts, including the American Federation of State, County and Municipal Employees as well the pension funds of New York and Connecticut who filed resolutions to separate the two executive posts.

And why not? Being on the board of JPMorgan Chase is a happy club-like sinecure, well compensated and without much risk of being held to account. One can well presume that each of the board members have the comfort of knowing they are the beneficiaries of the board director's litigation insurance, policies holding them virtually harmless for any decisions no matter how it might impact other shareholders. And, of course, the insurance would be taken out on their behalf by JP Morgan Chase, fully expensed and tax deducted by the bank.

In doing so the board is abetting a culture of risktaking that is placing our entire banking system in danger, all the while abetting the indiscriminate and unregulated bank's gambling on such a wide array of traded derivatives ranging from credit, to oil and petroleum products, grain staples such as wheat and corn, and base metals such as copper and rare earths. The list goes on and on, while placing at risk depositor monies guaranteed by the Federal Deposit Insurance Corporation, and access to near limitless funding at near zero interest from the Fed window not to speak of their impact on the upward and costly distortion of prices ranging from gasoline to food stuffs. (Please see "Jamie Dimon's Malign Influence On The Culture Of American Banking.")

Oh yes, there was the slap on the wrist this past January when J.P.Morgan's board cut Mr. Dimon's compensation in the wake of the London Whale imbroglio from $23.1 million to a mere $11.5 million. This was after the London Whale's hiccup of more than $6.2 billion (what we know of presently). Not a bad trade off if you can get it, and Mr. Dimon still doesn't have to take the subway.

Oh, by the way, the decision to cut Mr. Dimon's salary came after a series of marathon meetings led by none other than Lee R. Raymond, the former CEO of Exxon Mobil who heads the boards compensation committee. In Mr. Raymond, Mr. Dimon and JPMorgan Chase have an expert in executive compensation to look after their interests. He knows how to get things done having pocketed some $400,000,000 as his goodbye handshake from Exxon Mobil. (Please see "Exxon's Lee Raymond, 'Steward of the Free Market System")

When is Washington going to stop the talk and walk the walk?

Original Article
Source: huffingtonpost.com
Author: Raymond J. Learsy

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