FCIC Calm Before the Storm: Bankers Still Basking in Their Own Glory

Phil Angelides, the former state treasurer of California who is the commission’s chairman, told Mr. Blankfein “it sounds more like you were selling cars with faulty brakes and then buying insurance on the driver.”

Mr. Angelides, who lost the governor’s race in California to Gov. Arnold Schwarzenegger in 2006, pointedly compared some Wall Street chief executives to blackjack players who could win huge amounts of cash but not lose anything.

The only thing about the current situation that gives me some comfort is the eerie similarity with similar hearings that took place after the the 1929 crash. Stuffed with arrogance and hubris, these bankers have always regarded themselves as the fourth branch of government. As Rothschild said, if you have the purse strings you have the power (paraphrasing). But every so often the bankers get a spanking and some even go to jail.

It is difficult to understand the magnitude of their destruction even now. We know a lot of people lost money, income, savings, wealth and dignity over the course of this mess. But we still have yet to feel the pain of title defects when the title insurers and lawyers start balking at supposedly clear or marketable title created at the inception and during transfers of interests in these loans. And the full loss in taxes on reported income has not been explored, which might (if governments do anything about it) be a positive offset to some of our problems.

And of course the final recognition that there is no where to hide on principal reduction. The only question, which I asked two years ago before this exploded, is how to share the losses so that nobody gets destroyed. (My solution was “amnesty for everyone”, but nobody paid attention). Right now we have fewer TITANS controlling more wealth and the rest of us sucking wind where there was money. That is our money they are controlling. They didn’t earn it, and they didn’t obtain it through normal commerce. They got it through fraud.

So at some point we are going to be required to accept one of two things: (1) the perpetrators get to keep their bounty or (2) the victims are restored, as much as possible, to the condition they were in before the fraud. If we choose option 1 then we are headed down the same rabbit hole that deceived everyone into thinking everything was all right while the banks siphoned the life out of our economy. If we choose option 2, then we start on the road to recovery, regeneration and rejuvenation of a nation that for the sake of everyone needs to succeed.

Few Burns for Four Bankers on the Hot Seat

WASHINGTON — The four bankers of the apocalypse strode into the Congressional hearing room and formed a crooked line. They raised their hands haltingly, looking at one another as if to see whether the other guys were going to do it, too. It was one of the more indecisive swearings-in you will ever see on Capitol Hill.

As cameras clacked Wednesday, four of the nation’s highest financial fliers took their places before the 10-member Financial Crisis Inquiry Commission charged with determining the causes of the nation’s financial debacle.

The bankers — Lloyd C. Blankfein of Goldman Sachs, Jamie Dimon of JPMorgan Chase, John J. Mack of Morgan Stanley and Brian T. Moynihan of Bank of America — joined a gallery of titans who have suffered through this ritual: tobacco executives, automakers and baseball’s steroid users, among others. Few Americans remember what they said, but the images endure as cultural mug shots.

Mr. Dimon (the silver-haired one) arrived first Wednesday morning, standing with his arms folded behind his witness chair, smiling for the cameras. He accepted a small packet of peanut butter cookies from a woman in the audience who rushed up to him. He was joined in chit-chat by Mr. Blankfein (the bald one), then Mr. Moynihan (the baby-faced one).

Mr. Mack (the bushy-eyebrowed one) stood apart from the others in the back of the hearing room. “I’m not going up there,” he said to no one in particular, resisting the photographic firing squad until the last possible second.

Then the gang that couldn’t oath straight mumbled its “I do’s.”

For those anticipating a cathartic ceremony of dressing-downs, apologies or verbal brawling, there was little of it during the three-and-a-half-hour hearing. Nor did the circular House hearing room resemble anyone’s idea of a circus tent; it was packed but quiet, scattered with a few innocuous protesters. The 10 commissioners pressed the bankers on executive compensation, on managing risks and on lending practices, keeping up a brisk pace while the witnesses fidgeted like busy people who all had planes or trains to catch.

The initial round of questions and responses provoked disapproval, a few pointed fingers and sporadic shows of humility from the witnesses. “If you do everything right in business, you’re going to make mistakes,” said Mr. Dimon.

Labored metaphors abounded. Phil Angelides, the former state treasurer of California who is the commission’s chairman, told Mr. Blankfein that he sounded like he was selling cars with faulty brakes and then buying insurance on the driver.

Bill Thomas, the panel’s vice chairman and a cantankerous former congressman from California, compared the work of the commission to an iceberg that was only one-eighth visible over the water.

Commissioner Byron S. Georgiou noted that the banks had “eaten their own cooking” (sort of a gastronomic version of the “made their own bed” cliché). Mr. Mack heartily agreed.

“We did eat our own cooking,” he said. “And we choked on it.”

After Mr. Angelides called for a quick break, the chief executives bolted — except for Mr. Mack, who stayed behind at the witness table. “What are people supposed to think when they see these bankers taking big bonuses?” one reporter asked Mr. Mack, who began his answer by noting that he did not get a bonus. Behind him, a woman wearing a Washington Nationals baseball cap was scurrying around, trying to get people to take her homemade fliers denouncing the Bank of America. She wore a “Fire Kenneth Lewis” T-shirt (Mr. Lewis was until recently the bank’s chief executive).

“I’m here because I want to put these guys in jail,” said the woman, Judy Koenick, of Chevy Chase, Md.

No stranger to muscular but diminished adversaries, Mr. Angelides, who lost the governor’s race in California to Gov. Arnold Schwarzenegger in 2006, pointedly compared some Wall Street chief executives to blackjack players who could win huge amounts of cash but not lose anything. Mr. Dimon responded, “You can lose your job, and your reputation.”

Finally, before lunchtime, Mr. Angelides dismissed the executives.

A reporter asked Mr. Mack if the experience had been fun. “Well,” he said, making his way to the exit, “it’s just something that we had to do.”

Following a few feet behind, Mr. Dimon made the mistake of stopping to chat with someone and found himself gridlocked in a solo press conference.

Why were the chief executives not more apologetic? a reporter asked.

People “have to be very specific” when asking for apologies, Mr. Dimon cautioned.

He squared his shoulders and headed for the back door, only to meet an insistent question from Jonathan Karl of ABC.

“Mr. Dimon, does Wall Street get it?” Mr. Karl asked the banker, who kept walking and had nothing more to say.

Tags: Amnesty for Everyone, Bank of America, Blankfein, Brian Moynihan, FCIC, Financial Crisis Inquiry Commission, Jamie Dimon, John Mack, KKenneth Lewis, Mark Leibovich, New York Times, Phil Angelides, principal reduction
Posted in bubble, Corruption, Eviction, securities fraud |