Despite widespread crime of various types across all classes of society, most Americans polled were comfortable trusting their own “moral compass.” Let’s see how we did with that in July.
Bob Diamond, the American CEO of Barclays Bank in Britain, resigned — or, if you prefer, as one Member of Parliament was happy to emphasize in Diamond’s July 4 hearing, he was “sacked” — after it was revealed that a cabal of banks manipulated LIBOR, the London Interbank Offered Rate set by a poll of leading banks to determine the benchmark global interest rate. LIBOR is the reference rate used by many home mortgage loans, commercial loans, floating rate notes, collateralized debt obligations and many other financial instruments.
LIBOR fixing is a global issue and U.S. banks have also been implicated in manipulating LIBOR to their ultimate advantage at the expense of global investors.
Bob Diamond didn’t volunteer to give back any of his deferred compensation at the hearing:
Mr. Andrew Love: On the deferred bonus scheme for senior executives in Barclays bank, anyone who does harm to Barclays’ reputation may be asked to forgo some of those deferred bonuses. Do you think that that is appropriate in your circumstances in that you agree that Barclays’ reputation has been harmed?Bob Diamond: That’s certainly a question for the board.
While Bob Diamond testified in front of Britain’s Members of Parliament, American urban flash mobs engaged in Independence Day mayhem.
The board of Barclays Bank answered Bob Diamond’s question. Diamond “voluntarily decided” to forgo up to $31 million (20 million British pounds) in deferred bonus, but he gets a year’s salary, pension and benefits and tens of millions collected in prior years.
Peregrine Financial Group’s (PFG Best) CEO Russell Wasendorf Sr. was arrested after the United States District Court for the Northern District of Iowa filed a criminal fraud complaint against him. Wasendorf had apparently attempted suicide earlier in the week, although skeptics say it may have been staged to throw investigators off the scent of where he may have stashed ill-gotten gains.
His suicide note stated:
I have committed fraud. For this this I feel constant and intense guilt. I am very remorseful that my greatest transgressions have been to my fellow man. Through a scheme of using false bank statements I have been able to embezzle millions of dollars from customer accounts.
The alleged fraud went on over a period of 20 years, but Wasendorf’s remorse was only revealed after an NFA audit revealed false statements and it was clear that he would be charged.
Jamie Dimon, CEO of JPMorgan Chase, the largest bank by assets in the United States, admitted the bank had “material weakness” in the chief investment office (CIO), a unit that reported directly to Dimon.
In the previous four years the unit had reported $2 billion in profits, but in the first half of 2012 alone, it lost $5.8 billion on trades that Dimon at first claimed were hedges and then later admitted: “It morphed into something that I can’t justify. It was just too risky for our company.” Moreover, these trading losses didn’t morph on their own; the trades required human intervention, and losses continue to mount.
In contrast to Bob Diamond’s hearing before parliament, Dimon’s June 13, 2012 Senate hearing sounded like a cordial celebrity roast. Dimon has not been held accountable for potential Sarbanes-Oxley violations related to his signing corporate documents asserting controls at JPMorgan were adequate when — by any reasonable professional standard — they were not.
The news for Jamie Dimon got even worse after Michael J. Moore and Dawn Kopecki at Bloomberg questioned the veracity of Dimon’s April 13, 2012 disclosures in response to an analyst’s question about media reports that JPMorgan Chase had engaged in enormous derivatives trades and that huge trading losses were imminent.
While JPMorgan booked a $718 million loss on the positions held by its chief investment office in the first quarter, it didn’t publicly specify the loss when releasing the results April 13. When an analyst asked Dimon that day about media coverage of the trades, he dismissed them as a [“tempest in a teapot.”].
(“Dimon Saw $1 Billion Potential Loss When He Made ‘Teapot’ Remark,” July 13, 2012.)
On July 13, 2012, JPMorgan Chase revealed that there are questions that the books may have been mismarked by the traders. In other words, it has raised a question of fraud. (“JPMorgan Disclosed Possible Misconduct to Feds Ahead of Earnings,” Reuters, July 16, 2012.) As for Jamie Dimon, it raised the question of an utter failure of corporate governance and telling the truth too slowly. The bank also materially restated its first quarter 2012 earnings.
Also on July 13, Ocala Florida’s 71 year-old Samuel Williams fought back and saved customers from thugs in Internet cafe. Williams has a concealed weapons permit. After two thugs, one armed with a gun and the other armed with a bat, entered an Internet café to rob and terrorize 30 customers, Williams opened fire. He stopped pursuing and firing after the wounded thugs ran out the door, which Williams then locked behind them.
A flash mob of around 300 teenagers vandalized a Walmart store in Jacksonville, Florida. They robbed the store of around $1,500 of merchandise and threw food at each other. Then one of the group uploaded video of the crime to YouTube.
“You’ve got a large number of people going and coming at the same time they are throwing produce,” Jefferson said. “They are stealing items, they are all over the store. You can imagine how fearful the customers were who were in there at that particular time.” — Ken Jefferson, Crime Analyst, Channel 4.
Also on July 16, a flash mob of around 40 teens ages 13 to 15 invaded an Albertson’s in Troutdale, Oregon to steal.
Security officers chased the thieves out, but no one was captured. They also left employees pretty shaken up, including one woman who was in tears after getting terrorized by the robbers. “They [thieves] were bragging and laughing about how much stuff they stole and what they did in the store,” one witness told KGW.
A heavily armed gunman later alleged to be James Holmes killed at least 12 people and wounded 58 more during an early Friday morning screening of The Dark Knight Rises, the new Batman movie, in Aurora, Colorado. Holmes was later charged with 24 counts of murder — two separate charges for each killing — among other charges. Charges cited his “attitude of universal malice manifesting extreme indifference to the value of human life generally.”
No criminal indictments have yet been issued in connection with the alleged looting of more than $1.2 billion from the customer accounts prior to the October 31, 2011 bankruptcy of MF Global. But Bloomberg News’s Silla Brush reported that a Commodity Futures Trading Commission (CFTC) review found that Jon Corzine, MF Global’s former CEO, wasn’t too close to Gary Gensler, chairman of the CFTC, because (among other things) they didn’t attend each other’s weddings, and Corzine didn’t attend the bat mitzvahs of Gensler’s daughters. Both men worked together at Goldman Sachs for many years, but they apparently hadn’t socialized for around 14 years. Gensler recused himself from the post-bankruptcy investigation into MF Global. Jon Corzine is also a former Senator and former Governor of New Jersey and a top campaign bundler for President Obama.
Also on July 30, Vanity Fair and 60 Minutes released the results of a joint poll. Americans seem to feel their parenting is just fine. When asked if they were as good or better at parenting than their own parents, 59 percent said they were the same, 36 percent said they were better parent, (95 percent said they were the same or better) 3 percent said they were worse. The remaining 2 percent apparently took the Fifth:
Nearly 6 out of 10 parents feel that, as parents, they measure up to their own parents; more than a third think they’re even better than that. And 70 percent of us say we’re comfortable trusting our own moral compass, as opposed to the law or religion or anything/anyone else, to keep us from behaving badly.
The poll also revealed that only 14 percent of Americans correctly identified Jamie Dimon as a New York banker, despite the fact that he’s been all over the news in recent months and is the CEO of JPMorgan Chase, the largest U.S. bank by assets.
I was unable to reach the parents of Bob Diamond (former CEO of Barclays Bank who “resigned” in the wake of the LIBOR fixing scandal), Jamie Dimon (current CEO of JPMorgan Chase, whose CIO unit lost $5.8 billion in risky trades for the first half of 2012 alone — losses that continue to mount — while the bank materially restated first quarter earnings and raised questions of potential fraud), Russell Wasendorf Sr. (former CEO of PFG Best now in custody), and Jon Corzine (former CEO of bankrupt MF Global) for comment.
Endnote: Jane Wollman Rusoff interviewed me for Research Magazine’s May cover story, “Finding the Culprits of the Crisis,” about the deep monetary bi-partisan connections of Wall Street and Washington and the corrosive effect it has had on the economy and the Republic.
Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!