Nobody knows why Friday the 13th is considered unlucky. There is no written mention of it in Western literature before 1869. Italians find Friday the 17th to be unlucky. Greece and some parts of Spain suspect Tuesday the 13th is unlucky. And, on Wall Street, it is still called Black Friday by the superstitious.
Hopefully, the CEO Jamie Dimon won't feel unlucky today when he announces the second quarter earnings of gigantic JP Morgan. One of the strongest opponents of financial regulation, he was embarrassed with last month's disclosure they lost $2 billion selling credit default swaps. Now, we find out they actually lost $4.4 billion instead. I do believe they were engaged in "gambling" with taxpayer dollars instead of "hedging" their loan portfolio.
More troublesome is the recent disclosure that Barclay's and other big banks were colluding to set the price of money by fixing the London Interbank Offered Rate or LIBOR. Bob Diamond was the CEO of Barclay's and was forced to resign. The implications of this "price-fixing" are larger that it first appears. We'll be hearing about it for a long time. By the way, Diamond was also one of leading opponents of financial regulation.
Together, Dimon and Diamond have been called the "carbon brothers," hardened by their opposition to financial regulation, which is like the tide. It went out during the Bush administration and is coming back in during the Obama administration.
It is a characteristic of nations run by lawyers that we address problems with more regulation, rather than more punishment. Admittedly, it is difficult to prove a financial malfeasance case, but that means those who are convicted should receive real punishment, i.e., Bernie Madoff style punishment. Would Dimon and Diamond have run their banks differently if they faced hard-time in prison rather than merely losing their jobs? Would the carbon brothers have run their banks differently if they were paid only in bank stock that vested over a ten-year period, instead of getting millions in cash now?
It may be Friday the 13th, but the futures market predicts the Dow will gain about 40 points when it opens. Jamie Dimon will be glad when the day is over. Without a job, Bob Diamond will probably just be busy spending his millions.
The carbon brothers are right -- we don't need more financial regulation! But, if we justify the over-payment of bankers by calling it an incentive, then maybe we need to create a disincentive as well? America would be a better place . . . maybe even lucky . . . everyday!
Hopefully, the CEO Jamie Dimon won't feel unlucky today when he announces the second quarter earnings of gigantic JP Morgan. One of the strongest opponents of financial regulation, he was embarrassed with last month's disclosure they lost $2 billion selling credit default swaps. Now, we find out they actually lost $4.4 billion instead. I do believe they were engaged in "gambling" with taxpayer dollars instead of "hedging" their loan portfolio.
More troublesome is the recent disclosure that Barclay's and other big banks were colluding to set the price of money by fixing the London Interbank Offered Rate or LIBOR. Bob Diamond was the CEO of Barclay's and was forced to resign. The implications of this "price-fixing" are larger that it first appears. We'll be hearing about it for a long time. By the way, Diamond was also one of leading opponents of financial regulation.
Together, Dimon and Diamond have been called the "carbon brothers," hardened by their opposition to financial regulation, which is like the tide. It went out during the Bush administration and is coming back in during the Obama administration.
It is a characteristic of nations run by lawyers that we address problems with more regulation, rather than more punishment. Admittedly, it is difficult to prove a financial malfeasance case, but that means those who are convicted should receive real punishment, i.e., Bernie Madoff style punishment. Would Dimon and Diamond have run their banks differently if they faced hard-time in prison rather than merely losing their jobs? Would the carbon brothers have run their banks differently if they were paid only in bank stock that vested over a ten-year period, instead of getting millions in cash now?
It may be Friday the 13th, but the futures market predicts the Dow will gain about 40 points when it opens. Jamie Dimon will be glad when the day is over. Without a job, Bob Diamond will probably just be busy spending his millions.
The carbon brothers are right -- we don't need more financial regulation! But, if we justify the over-payment of bankers by calling it an incentive, then maybe we need to create a disincentive as well? America would be a better place . . . maybe even lucky . . . everyday!
