Yves Smith and Matt Taibbi join Bill Moyers to discuss our criminal global financial system.
Rolling Stone editor Matt Taibbi and Yves Smith, creator of the finance and economics blog Naked Capitalism, join Bill to discuss the folly and corruption of both banks and government, and how that tag-team leaves deep wounds in our democracy. Taibbi's latest piece is "The Scam Wall Street Learned from the Mafia." Smith is the author of "ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism."
Bill Moyers: Welcome. This past week, Jamie Dimon, CEO of JP Morgan Chase, was back on Capitol Hill, testifying before the House Financial Services Committee, as he had earlier done before the Senate Banking Committee. He was being questioned on how his bank had lost two billion dollars or more on risky trading. His reception in the House was less fawning than what he got from the senators. Although many of them also are beneficiaries of JP Morgan largesse, House members were more combative.
Barney Frank: You said you have a fortress balance sheet. That assumes there's something special about the way you are that made us have to worry less. But we can't assume that's going to be the case for every financial institution.
Jamie Dimon: But I also said that we'd be solidly profitable this quarter. So relative to earnings.
Barney Frank: That's not the question. Mr. Dimon, please don't filibuster.
Sean Duffy: You didn't know about these trades. You didn't know about these losses. How do you come forward today and say the regulators should have known that what one of the best CEOs in the industry didn't know and couldn't have known?
Michael Capuano: With the regulatory regime that we have today -- we both agree that it's not what we want, but it's what we have. Do you really think it's a smart idea to be cutting the legs out of one of those major regulators? Do you think that's good for America?
Jamie Dimon: I have enough problems. I'm going to leave that to you.
Michael Capuano: Well, Mr. Dimon, the only reason I ask is because you have had no hesitancy whatsoever in expressing opinions on other matters. I thought you might want to take an opportunity to express one today.
Bill Moyers: Coincidentally, just before Dimon's House testimony, Bloomberg News published data indicating that JP Morgan Chase receives a government subsidy worth about 14 billion dollars a year in taxpayer money.
Money, said Bloomberg editors, that "helps the bank pay big salaries and bonuses, and more important, distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy."
With me are two guests who can guide us through the thicket of testimony and beyond. Matt Taibbi, contributing editor at "Rolling Stone" magazine, has investigated the folly and corruption of banks and government with scathing, often profane wit and perception. His book, Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America, described the events leading up to the financial meltdown in 2008. His newest piece for Rolling Stone is a chilling expose called "The Scam Wall Street Learned From the Mafia."
Yves Smith created and runs Naked Capitalism, the popular blog on finance and economics. She once worked for Goldman Sachs, McKinsey & Company, and Sumitomo Bank, and now heads a management consulting firm. You'll want to read her book, ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.
Welcome to both of you.
Yves Smith: Thanks so much.
Matt Taibbi: Thank you.
Bill Moyers: So in this particular case, what is JPMorgan's sin? That's the question Representative David Schweikert raised on the day of the hearing. He asked, "What sin has JPMorgan committed other than being big enough to lose billions of their own money in a quarter and still turn a $4 billion profit?" Want to take a stab at answering?