"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right."
John Kenneth Galbraith
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
Upton Sinclair
Among the policy changes that the Clinton Democrats enabled, in bipartisan partnership with the corporate stooge Republicans who were amassing private fortunes, was to go along with the financial sector's long campaign for financial deregulation and the overturning of the Glass-Steagall Act.
There were also plenty of useful idiots who climbed aboard. Independent thinking is a difficult burden and a rarity, especially when it runs counter to your own career self-interests.
But as 'populist Democrats' the Wall Street Democrats were able to provide a cover for legislation promoted by the financial class, along with the other courtiers to power and money in politics, universities, and the media, for the benefit of a wealthy few. In retrospect, one might think of about several hundred million reasons why this happened.
And also why the complicity has continued even until today, almost to the point of absurdly low approval ratings and the implosion of the Democratic party.
After enormous bailouts and a near collapse of the global financial system, the Banks are back at it again. They are once more funding a clever campaign, with the help of the silent acquiescence of the mainstream media and those in the disgraced professions, who are more than willing to provide high sounding justifications and willing silence in return for money, access, and position.
When this all goes wrong, the professional elite will claim benign ignorance, again. And then the conversation will quickly shift to blame the public, whom they hold in utter contempt. They are particularly cynical with regard to their vocal minority of supporters, who are easily swayed by negative misdirection and cynical ideology into blaming other, weaker victims.
The people are starting to become aware of this. And the wealthy few and their professional elite are resisting reform and change for the better. They like things just the way they are.
The Volcker Rule and the London Whale
By Chris Whalen
...Ina Drew was essentially running a hedge fund directed by Dimon and other senior managers, a fund that was largely kept outside of the bank’s risk management and reporting procedures. Consider the bizarre situation in 2011-2012 when counterparties of Iksil facing the JPM commercial bank were unable to make margin calls, but the JPM investment bank was making margin calls on these same counterparties for positions in the very same indexed credit derivatives.
Bruno Iksil has waited for the proverbial concrete to harden over the past few years before coming forward with his latest accusations. This makes it difficult or impossible for Dimon and his lieutenants to change their story now. It will be very interesting indeed to see if anyone from the financial media or even the regulatory community picks up the new trail illuminated by Iksil’s statements.
The episode involving the London Whale illustrates how difficult it is to learn the truth about the inner working of large banks. Big banks profit by exploiting information and conflicts found between the world of credit and the world of securities. Indeed, the CIO's office generated big returns for JPM over the decade or so that Iksil was with the bank.
But the London Whale episode also shows in graphic terms why the Volcker Rule prohibitions against banks trading for their own account need to be preserved and strengthened. There is a fundamental conflict between a bank acting as a lender and trading credit derivatives.
More, if the CEO of a bank – any bank – can short circuit the internal controls of his institution in order to enhance returns with a bet at the credit derivative roulette table, then by definition that bank cannot be safe and sound."
To read the entire article click here.
