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Giving Chase: Egypt, OK – But What About America’s Oligarchs?

With all the attention on crowds of ordinary people rising up and asserting themselves against corruption and self-dealing by an oligarchy, we’re missing what the oligarchs are doing right at home. Take, for example, the activities of one of our biggest banks, JPMorgan Chase.

Newly released documents show that high officials of the bank knew for a long time that Bernard Madoff was running a Ponzi scheme, but did nothing to protect his investors—though they did protect their own investments tied to him. As reported in The New York Times in an article that, unfortunately, was missed by many with all the other recent headlines:

Senior executives at JPMorgan Chase expressed serious doubts about the legitimacy of Bernard L. Madoff’s investment business more than 18 months before his Ponzi scheme collapsed but continued to do business with him, according to internal bank documents made public in a lawsuit on Thursday.

On June 15, 2007, an evidently high-level risk management officer for Chase’s investment bank sent a lunchtime e-mail to colleagues to report that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.”

Even before that, a top private banking executive had been consistently steering clients away from investments linked to Mr. Madoff because his “Oz-like signals” were “too difficult to ignore.” And the first Chase risk analyst to look at a Madoff feeder fund, in February 2006, reported to his superiors that its returns did not make sense because it did far better than the securities that were supposedly in its portfolio.

Despite those suspicions and many more, the bank allowed Mr. Madoff to move billions of dollars of investors’ cash in and out of his Chase bank accounts right until the day of his arrest in December 2008 — although by then, the bank had withdrawn all but $35 million of the $276 million it had invested in Madoff-linked hedge funds, according to the litigation…..

This is not the only recent example of practices that are, to put it kindly, ethically dubious. In another blog post, I recount how the American operations of Deutsche Bank improperly foreclosed on an American soldier while he was away serving his country. And in yet another, I noted how JPMorgan Chase (them again) were overcharging thousands of military families for their mortgages—and had improperly foreclosed on more than a dozen such families.

So there we have President Obama expressing guarded support for the Egyptian people in their uprising against those corrupt, entrenched interests, while at home, he’s unable to do terribly much about interests like Morgan. For one thing, they’ve got the government pretty well sewn up. Not bad to have an executive from your bank (Bill Daley) recently appointed as the president’s Chief of Staff, and to have your bank’s CEO (Jamie Dimon) on particularly friendly terms with the Treasury Secretary.

It’s not just Chase. Above, I mentioned Deutsche Bank. Yet another bank mentioned as having known about and done nothing about Madoff is UBS. That bank is so close with Obama it goes on vacation with him. See this exclusive investigation we did at www.whowhatwhy.com.

If we’re going to stop being hypocrites, we have to apply the same standards to rotten institutions wherever they are. That doesn’t mean we have to necessarily stop dealing with Morgan, which is pretty ubiquitous, but we do have to demand better scrutiny of their underlying practices, and much more aggressive action to limit their potential for harm.

By the way, when I searched for a story on JPMorgan’s Madoff dealings on the NY Times’ website, I also got this “sponsored link”:

JP Morgan Sponsored Ad

That’s one reason real change is so difficult. Everything is woven into everything else. Mubarak could have learned a lesson in this. Get everyone to have some stake in the problem institutions, and watch your worries melt away.


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  • http://civilizingtheeconomy.com Marvin Brown

    We have just seen what can be called a “civic revolution” in Egypt. It is not driven by religious fundamentalists, socialists, or capitalists, but by the desire to be active citizens in determining their lives together. We also need a civic revolution, but one directed toward our economy, so its foundation is not longer property and controlled by large property owners, but is civic and controlled by citizens. This is not socialism or capitalism, but civic.

    • David

      I’m intrigued, what do you think that could/would look like? How do you remove property/wealth as the currency of power?

      • http://civilizingtheeconomy.com Marvin Brown

        My hope is that the people in cities across the United States will become involved in electoral politics. I believe a majority of Americans are more progressive than our current government. If they will become engaged in politics, we can have a government that can change the current systems that allow a few to gain at the expense of many.

        As long as governments make the laws and enforce them, governments can control corporations, but first we have to move our government away from its corporate base and toward a civic (citizen)base. In this sense, our task is much less dangerous than the situation in Egypt. The use of social media may be the same.

        The task, I think, is not only one of organization, but of education and persuasion. In Civilizing the Economy I built a new framework for economic thinking. Instead of the current framework, which is based on property relations and property values, I construct a framework based on civic relations and human rights. This turns the purpose of the economy into making provisions for all instead of making profits for property owners. This new economic model of different systems of provision would be guided by civic conversations among citizens in cities, at work, and in governments. Millions of individuals and groups are already engaged in such activities. Civilizing the Economy provides a framework for understanding and promoting their work.

        • Bronx

          “Instead of the current framework, which is based on property relations and property values, I construct a framework based on civic relations and human rights. This turns the purpose of the economy into making provisions for all instead of making profits for property owners.”

          This sounds like a dressed up Socialist / Communist paradigm. Private property is one of the foundations of liberty. Using pejoratives to malign “profits for property owners” – what does that mean? I have to give the equity of my apt. away? My horrid “profits” from my labor go to ‘the greater good’? According to whom? At what cost? Is there evidence that such a system could work?

          These questions rarely get answered in the Progressive Leftist Corporate Educational Complex. I hear this kind of rhetoric all of the time – civics textbook platitudes disconnected to reality. It’s as odious as the constant Neocon warmongering dressed up as ‘keeping us safe’.

        • http://civilizingtheeconomy.com Marvin Brown

          A comment about property. The right to property is a legal right. One has control over one’s assets because one has a title to them. Property rights, in other words, depends on the law, not nature.

          So to say that the civic rather than property should be the foundation for our economy is actually closer to the way things work than the Lockean idea of property as a natural right. Still, a smart civic government will continue to provide property rights for citizens.

          On the other hand, “wages” would be based on reciprocity and other civic norms rather than solely on price. A full days work, in other words, should be returned with a full day’s pay, which would be enough pay to provide for one’s family. Some cities have already moved in this direction in terms of a “living wage.”

          I would argue that human freedom should be based on human dignity, not on the ownership of property. I think that was the point of the Egyptian uprising.

        • Bronx

          I disagree with property as a legal right. These rights depend on the law now because the power elite, through centralization, enjoy taking your property from you via the FED, inflation, the Kelo decision, and thousands of other vehicles. A smart civic government will provide…. – do you have an example of such a thing? Swift would have put such terminology in a satirical article. How can a learned person have blind faith in gov’t ‘providing’ anything? Are we serfs who are provided wages and rights via the ‘smart civic gov’t’? And if they provide them, can’t they be taken away? You don’t see the inherent tyranny in such a system?

          “Smart” according to whom?
          “Provide property rights” – whose definition of ‘rights’ or ‘property’?

        • Bronx

          —Cont’d
          “enough pay to provide for one’s family.” Who determines ‘enough’? You? Me?

          This is dangerous thinking, relying on a ‘smart civic gov’t’.

          I’d rather have my rights provided to me by my creator, not some civics idea so easily bastardized by the impossibly flawed people in the smart civic gov’t. Can you see what the US Gov’t has become? All in the name of public service of course, and keeping us safe.
          What you describe is a Utopia that has been tried and failed throughout history. Parents and villages and communities need to teach and foster dignity. Human freedom should be based on human freedom, nothing else. A tether to anything else makes it able to be usurped, as we see in the US beginning primarily with the Wilson administration, if not the Lincoln administration.

      • Olivia

        Catherine Austin Fitts has some good ideas on how to have a civic revolution: http://www.realecontv.com/videos/post-collapse/re-wiring-the-financial-system.html

  • http://www.ProsperityAgenda.US Kevin Zeese

    There are many common issues comparing U.S. and Egypt — corruption at the highest levels of government and big business, wide wealth divide (indeed U.S. is wider than Egypt), control of governments by oligarchs, dysfunctional democracy that does not respond to the people.

    There are also differences. One of the most challenging is that rather than a one person dictatorship we have a two party corporate duopoly. As a result people can get angry at Bush for 8 years, and then angry at Obama for 4 or 8 years, and then the next oligarch leader can takes her/his turn. This tweedle-dumb/tweedle-dee approach is very effective at relieving pressure and keeping the oligarchs in power. People are seeing through the fraud of U.S. elections and how the manipulate voters to vote against their interest but it is a very effective gimmick.

    • http://whowhatwhy.com Russ Baker

      Well put, Kevin. “Corporate duopoly” indeed

  • http://lesliegriffith.org leslie

    In the United States, just substitute “government” for “corporation” and we have every bit as much corruption of power as Egypt.

    We’ve seen through the fraud in the last decade. I’m waiting with my cup for some trickle down, but that one percent of the richest just wants more, always more…nothing trickles down except contempt for the American people. So, what to do?

    I sure hope American Politicians, the Supreme Court and abusive corporations are paying attention to what happens when people get tired of rampant dishonesty at the expense of CITIZENS.

  • Bruce Blevins

    It is not easy to imagine a street protest in this country that would carry any weight.There have been some this year in D.C., but they were not seen as serious dissent. The protesters at the RNC in 2008 were invisible unless you saw them in person. Tear gas, cops beating reporters, crowds throwing objects or running in fear. yet it did not even make the local news in MN, much less make a ripple in the msm. Maybe if “house” got cancelled, people might take to the streets, but beat them over the head with class warfare for 30 years and not a peep.

    • Thomas

      The protest in Egypt was made up of probably 90% Egyptians. Possibly more than that. We in the USA have such a Hodge-podge of citizenry, all with their own ethnic agenda, making it almost impossible to protest by mass demonstration. You can bet Capitol Hill, the industrial complexes of the military, big corporations and the banking industries are well aware of that.

  • http://www.minormusings.com Linda Minor

    If we click on the above sponsored JP Morgan link, will you get credit for it or will someone else? I’m assuming it will cost Morgan Bank a couple of cents.

    • http://whowhatwhy.com Russ Baker

      I think if you click, they get your first-born ;-)

  • Planck

    Yes yes yes! SCOTUS and their errant interpretations based on outdated Madisonian Principles in the Constitution are to blame for this Corporatist Government.

    The real culprits are the Prosecutors and Courts who failed to Prosecute those banks…and the SEC appointees under Bush who ignored the warnings about Madoff from reputable Wall St sources for years. Could that have been because those Texans knew the Jewish community would be hardest hit by this unchecked fraud?

    The Pols are merely the front of curtain players. And they are constrained not only by money, but also by evidence of spying and blackmail using even Alphabet Agency personnel on our dime. And the Loyd Jowers case suggests real conspiracy against democracy and our leaders can arise up unchecked from those agencies and a complicit privately owned media.

    The real players remain hidden from view on whose behalf all these tools really work, although we’re catching sight of them finally at Rancho Mirage! Aptly named…like Jekyll’s Island!

    “Pay know attention to the men at Rancho Mirage…they are a mirage…they don’t really exist…class warfare with middle class families and the poor as profits and fodder doesn’t exist in America either.”

    The rest of the world has always known about these people. Our European cousins saw the damage by the equivalent Hohenzollern/Hapsburg/Romanov/Saxe-Coburg cousins playing the same games and they have legislated against them with post-war Constitutional protections. They’ve had their Shahs/Saddams/Mubaraks/Sauds/etc etc. in the oil world , but haven’t been able to get those constitutions largely because ours are still in control of their worlds using our military and unsupervised alphabet agencies.

    We’re the only ones still in the dark about all this cause and effect…

  • Brond

    ‘Corporate duopoly’ – yes, very well phrased.

    JPMorgan Chase, also getting a few bucks for each transaction via food stamps – a truly morally bankrupt company.

    Here’s a better story – Harry Markopolos gave the SEC Madoff multiple times over 10 years and they did nothing. Actually, they did worse than nothing – they applied pressure on Markopolos.

    “We” certainly need to stop being hypocrites. You, Mr. Baker, are the closest journalist I’ve seen yet, but when you break the mainstream Obama chains, you’ll truly have made the break.

    Great site as always. It got to Rockwell’s site, which brought me here.

    • Budinski

      Let’s not forget that it was JP Morgan who pulled the funding of Nicola Tesla when he announced he would provide the world with free wireless electricity. JP Morgan said “where does the meter go?”. Think it’s safe to say that this institution is one of the most immoral in the history of our existence.

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  • Trevor

    Ya so Obama sucks cuz he’s in the toils of the banks, but look at wat the alternative was ! Wait I was thinkin of that stooge from the southwest who claims POW status – maybe the alternative really was Hillary Clinton – would she have been in the banks’ pockets?

    • Budinski

      if she wasn’t I would give her about 3 minutes after inauguration.

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