Robert Reich: Wall Street loves socialism for bankers – but not for ordinary people
NB: Here as in most contemporary commentary, the author identifies socialism as state financial intervention in the economy; not as management of production by and for workers and in the long-term interests of society. Nevertheless, his point is worth making. DS
J P Morgan CEO Jamie Dimon decries socialism.
Unless of course it’s the banks that need a government bailout. In his annual letter
to shareholders, distributed last week, JPMorgan Chase CEO Jamie Dimon took aim
at socialism, warning it would be “a
disaster for our country,” because it produces “stagnation, corruption
and often worse.” Dimon should know. He
was at the helm when JPMorgan received a
$25bn socialist-like bailout in 2008, after it and other Wall Street banks
almost tanked because of their reckless loans. Dimon subsequently
agreed to pay
the government $13bn to
settle charges that the bank overstated the quality of mortgages it was selling
to investors in the run-up to the crisis.
According to the Justice Department,
JPMorgan acknowledged it had regularly and knowingly sold mortgages that should
have never been sold. (Presumably this is where the “stagnation, corruption and
often worse” comes in.) The $13bn penalty was
chicken feed to the biggest bank on Wall Street, whose profits last year alone
amounted to $35bn.
More posts on contemporary capitalism
Besides, JPMorgan was able to deduct around $11bn of the
settlement costs from its taxable income. To state it another
way, Dimon and other Wall Street CEOs helped trigger the 2008 financial crisis
when the dangerous and irresponsible loans their banks were peddling – on which
they made big money – finally went bust. But instead of letting the market
punish the banks (which is what capitalism is supposed to do) the government
bailed them out and eventually levied paltry fines which the banks treated as
the cost of doing business. If this isn’t
socialism, what is it?
Yet it’s a particular
form of socialism. Millions of homeowners who owed more on their homes than the
homes became worth didn’t get bailed out. Millions of workers who lost their
jobs or their savings, or both, didn’t get bailed out. No major banker went to
jail. Call it socialism for
rich bankers.
It’s a gift that keeps
giving. Dimon took advantage of the financial crisis to acquire Bear Stearns
and Washington Mutual, vastly enlarging JPMorgan. America’s five biggest banks,
including Dimon’s, now control 46% of all deposits, up from 12% in the early
1990s... read more:
