Commentaries
Now raising intellectual capital
Jamie vs. Lloyd
Depending on your point of view, Jamie Dimon is the saint of Wall Street and Lloyd Blankfein is Wall Street’s biggest villain. Or vice-a-versa. Or maybe they’re both villains.
I suppose some might even argue that Dimon, the top honcho at JPMorgan Chase and Blankfein, the top gun at Goldman Sachs, are both saints. But the people in the pro-sainthood camp are keeping their thoughts to themselves these days.
But if charitable giving is one way to measure a person’s generosity and human spirit, Blankfein comes in slightly ahead of Dimon. Based on the most recent tax records for their respective charitable foundations, Blankfein distributed $643,850 to various groups in 2007 to Dimon’s charitable gift giving of $440,383.
Blankfein spread his money around between 38 charitable groups, many of them Jewish organizations. Dimon contributed to 16 different groups, of which a third are based in Chicago. Dimon, of course, lived in Chicago when he headed up Bank One, which eventually merged with JPMorgan.
Dimon’s single biggest donation was a $265,401 grant to Duke University, where one of his daughters goes to school. In 2005, he was a featured speaker at conference at Duke’s business school.
Other charities Dimon contributed to include: the Chicago Public Education Fund, the New York Historical Society and Access Living–a Chicago-based group that works with the disabled.
As for Blankfein, his single biggest contribution was a $100,005 grant to Prep for Prep, a New York-based that helps high-achieving minority students prepare for life at boarding schools. He also gave $100,000 each to New York Cornell Medical Center and the United Jewish Appeal Federation.
Repaying TARP….not so fast
The Obama administration is on the verge of letting a number of financial institutions–think Goldman Sachs and JPMorgan Chase–to begin paying back tens of billions in bailout money. That may sound like a good idea, especially with the federal deficit continuing to balloon. But what’s the rush?
It’s obvious why the banks want to get out from under the Troubled Asset Relief Program: they want to be free of government meddling and prove they can operate without government support. But Sandy Lewis and William Cohan, in a long op-ed in The New York Times on Sunday, make a good case for the administration going slow in allowing banks to repay the bailout money.
I particularly like their suggestion that bank executives be forced to testify under oath about the causes of the financial crisis before any institution can repay TARP money. It brings to mind that infamous hearing when Congress hauled the CEOs of the tobacco companies to Capitol Hill and forced them to testify under oath about whether or not cigarettes caused cancer. Let’s force the bank executives to testify then whether they really believed a bundle of subprime mortgages could be turned into a Triple A security by waving some credit-agency pixie dust over it. Or whether it made sense to operate their firms with leverage ratios of 30 to 1.
Lewis and Cohan also rightly argue that the banking system is far from fixed. The recent surge in the stock market and a slight slowdown in the pace of job losses should not lull anyone into believing that the economy is on the fast road to repair. If all the talk about economic green shoots is just some mirage, the banks could be in for a lot more trouble if there’s a new spike in mortgage defaults or corporate bankruptcies. And given the current public mood, it will be impossible to provide any struggling bank with a new round of financial aid.
So why not wait a few more quarters, to make sure that the first quarter’s relatively strong bank results are sustainable. There’s a lot of reason to believe those results won’t be repeated in the second and third quarters. A good deal of the strong numbers posted by the banks came from trading gains fueled by bnormally big spreads between the yields on Treasuries and corporate bonds. Banks also got the benefit of a last minute accounting gift from FASB, which made it easier to value some hard-to-value assets.
Another thing the Obama administration should do is force the banks to rid themselves of some of the toxic assets clogging their balance sheets before they can repay any TARP money. Why not force the banks to take-up an idea I suggested last week, which would permit banks to donate ailing CDOs and other rotting securities to charitable trusts. That way, the banks could get a tax write-off to offset some of their losses and cash-starved charities would get these asssets for free. If CDOs and other ailing assets ever recover in value, the charities would be looking at some instant cash.
The truth is, until the banks get rid of the bad debts on their balance they never really will be healthy again.
Russ said: “Matthew, you suggest that we should count on the United States government to enforce financial accountability? The United States government? Is this the Twilight Zone?”
In response, I agree with the sentiment that we should never trust that any government can completely enforce financial accountability. But on the other hand, it is from the government that the financial accountability must come. Between trusting the government or trusting financial institutions, I will never trust the bankers. Banks make money for watching other people’s money move around.
-
The Wall
Both of these men are evil. They can give money to all kinds of groups but it is nothing compared to what they have taken from the American Saver and Taxpayer. Dimon sells his 600,000 shares last week and I can only find three stories about it? Compare this to the 11 I found fomr January when he bought them. This is just Internate, forget about how gushing they were back in January on CNBC, FoxBIZ, et al.
They are market manipulators and one day they will face the relaity of who they are, if they have not already.