Cedar Rapids/Iowa City Gazette weekly column, “On Topic,” from 07-22-12
The past few weeks have seen a whirlwind of complex shenanigans in the financial world, enough to make even Ben Bernanke’s head swim — interest-rate manipulation, hidden losses in derivatives trades, discriminatory lending practices, hundreds of millions of dollars in “misappropriated” funds and even a nationally reported attempted suicide right here in Iowa.
All of these goings-on will total in the billions of dollars.
But, really, it’s not that complicated. It doesn’t require a degree in economic theory from Harvard to figure out.
They lied.
The JPMorgan Chase incident, for example, went like this: Americans deposited money with this country’s biggest bank. The bank moved that money to London.
The traders in London gambled it away. Then they lied about it.
And speaking of London, Barclays Bank — and allegedly a dozen or so other financial institutions — reported lower-than-actually-true interest rates to the London Interbank Offered Rate (LIBOR), the big number to which much of our globe’s financial deals are determined.
They did so because that made their own financial positions look rosier. And, gosh, presumably so they could pay less to states and cities with whom they have contracts.
Wells Fargo, this nation’s largest mortgage lender, lied to some 34,000 creditworthy black and Hispanic borrowers by tying them to more-expensive subprime loans and charging them higher fees.
And about 70 miles northwest of metro Cedar Rapids, Peregrine Financial Group founder Russell Wasendorf Sr. admitted in his suicide note that he stole $200 million from customers over a couple decades.
In some sense, justice has been seen to be served: Wells Fargo will pay $125 million and establish a $50 million fund to settle claims by discriminated customers. Wasendorf has been charged with making false statements and Peregrine is now kaput.
Barclays took out huge ads in the Times of London and other UK newspapers saying bank officials were “truly sorry.” JPMorgan Chase CEO Jamie Diamond, in an early morning conference call with analysts and the media a week ago Friday, referred to his bank’s billions of dollars in trading losses as an “accident.”
An “accident’ as in, oops, I just spilled a glass of milk, or Junior dented the bumper of the family SUV again.
And, for a touch of irony— and in case we’ve forgot what reality we’re really living in — on the same day as that conference call, JPMorgan Chase announced $5 billion in quarterly earnings. Its stock then soared six percent and, as rising water lifts all boats, the Dow ended the day up 204 points, its best day so far this month.
What are we to make of all this? Several questions rear their ugly heads. Again.
Among them is why, since 2008 and all the subsequent financial regulations, this stuff keeps happening. Why can’t big bank big shots tell the truth about other people’s money, and keep their hands in their own pockets?
And here’s another question: Why aren’t we more upset? Why aren’t we outraged?
We should be shaking-our-fists, shouting-from-the-rooftops angry. Instead, we shrug our shoulders and sigh.
We need Hunter S. Thompson. He’d channel what should be national rage provoked by these financial money-changers and boom it across the land.
It was 40 years ago that Thompson wrote his classic of fury and indignation, “Fear and Loathing on the Campaign Trail ’72.” In the intro to Simon & Schuster’s new, anniversary edition, Slate.com’s Matt Taibbi called the book “a kind of bible of political reporting.”
In first-person reporting by turns disgracefully funny and on occasion shocking, Thompson bellowed insults, he counterfeited events, he mislead readers — and he also told the truth as he saw it.
Few could portray outrage the way he did. Here’s just one example from that marvelous book about the raucous 1972 presidential campaign:
If the current polls are reliable... (Richard) Nixon will be re-elected by a huge majority of Americans who feel he is not only more honest and more trustworthy than George McGovern, but also more likely to end the war in Vietnam. The polls also indicate that Nixon will get a comfortable majority of the Youth Vote.
And that he might carry all 50 states …. This may be the year when we finally come face to face with ourselves; finally just lay back and say it — that we are really just a nation of 220 million used car salesmen with all the money we need to buy guns, and no qualms at all about killing anybody else in the world who tries to make us uncomfortable.
You didn’t always agree with Thompson, who died in 2005. Heck, there are rambling chapters in which you didn’t even know what he was talking about.
But if we wanted someone to express our collective frustrations and demand accountability, by golly, he was our guy.
We need someone like that today.
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