Corporate Governance and JPMorgan Chase

 

An American Fable
An American Fable

Corporate Governance and JPMorgan Chase

Richard (RJ) Eskow: The Price of Evil at JPMorgan Chase

You’d think shareholders would be up in arms at Dimon and the Board of Directors for mismanaging their bank so badly. And yet they’re all still in their seats, thanks in part to the way large corporations are allowed to manipulate their own corporate governance.  Dimon is both CEO and Board Chair, an extraordinarily privileged position he was not asked to give up after the London Whale scandal.

And about that scandal: There are four things worth knowing about the Whale:

  1. The trades were illegal, according to all the evidence.
  2. Despite the bank’s bragging about its risk management model — which it publicized widely as a lure to investors — that model wasn’t followed by the London office.
  3. Jamie Dimon’s publicists and politician friends have burnished his reputation as “America’s best banker” – and he bypassed his bank’s org chart so that the London unit reported directly to him.
  4. His friends and publicists have also burnished his reputation as the country’s most ethical banker. As Henny Youngman used to say, How do ya like me now?

We’ve been all over JPMorgan Chase and Jamie Dimon for a long time. (See below for a partial listing), so we’re glad to see the public tide finally turning against the bank and its leader. One of the triggers for that shift was the Senate’s report on the bank’s trade, which is as damning in its own way as Rosner’s.

Richard (RJ) Eskow: The Price of Evil at JPMorgan Chase

 

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Erskine Bowles, Freeloader?

Since Romney Raised the Issue of Freeloaders, What Is Erskine Bowles? | Beat the Press

Since we seem destined to have a national debate on the topic of government freeloaders in the wake of the Romney fundraising video, it might be worth asking how we think about someone getting hundreds of thousands of dollars a year for sitting on a corporate board for which they did little obvious work. Erskine Bowles, a possible future Treasury Secretary, is of course the poster child for such people.

Mr. Bowles has earned millions of dollars sitting on corporate boards over the last decade. The stock prices of the companies on whose boards he sat have mostly plummeted. Since 2003 the Erskine Bowles stock index has lost more than one third of its value. By comparison, the S&P 500 has risen by more than 50 percent. If Mr. Bowles was trying to serve shareholders, he has not done a very good job.

Since Romney Raised the Issue of Freeloaders, What Is Erskine Bowles? | Beat the Press

 

Dean Baker (from Wikipedia)

Dean Baker writing in his blog, Beat the Press, wonders who the definition of freeloader fits most. It is not flattering to Mr. Bowles.

Beat the Press” is the first web site I read when I get up in the morning. If you are bored with the nonsensical claims of economists who have affiliated themselves with the malefactors of great wealth, Mr. Baker is the man for you. He is independent, intellectual and speaks the language of economics in a way a layman can appreciate.

James Pilant

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CEOs Compensated Correctly, Vast Majority Of Shareholders Say

Nonsense.

They are saying nothing of the kind, and unless the author is dumber than a stone, that author is deliberately coming to a dishonest conclusion.

Shareholders are summoned at intervals usually once a year to vote on the board of directors and any policy changes. These votes are in almost all cases pre-ordained in their outcomes.

Shareholders under American law are almost powerless. Only large shareholders can build substantial building blocks of votes to challenge a current board. So, most shareholders are simply silent or agreeable.

What the vast majority of shareholders said was, “There was nothing that could be done, the board of directors is too entrenched to challenge and they have been almost to a man selected by the CEO. A no vote would be a waste of my time and could make enemies down the road.”

I don’t like this kind of misleading nonsense. “All is well, the money is well earned, compensation follows the free market, etc.”

What the shareholders would do if actually given the power they are supposed to have under the laws of property is unknown but I find it unlikely they would like to see their dividends diminished to reward CEO’s regardless of their performance and far in excess of CEO salaries in other nations.

James Pilant

CEOs Compensated Correctly, Vast Majority Of Shareholders Say

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