JPMorgan CEO: Banks Too Complex For You To Understand
Since 2007 the United States and the world has been entangled in a deep financial crisis. This crisis was spurred by insanely low interest rates that encouraged misallocated investments. People could make virtually nothing in a savings account, but could get loans to “invest” in their houses. The housing boom that resulted from these interest rates, coupled with destructive policies designed to get “everyone” into their own home, spawned a great deal of financial weirdness and almost certainly crimes that have yet to be taken seriously. All the main suspects are “too big to jail.”
And speaking of suspects, Jamey Dimon, recently made sure to inform us that, even though our world remains devastated by the housing boom and bust and the games bankers play, it is not our place to question any of it.
“Business can’t be opaque; they’re complex. You don’t know how aircraft engines work either… We provide a service to you. We make a little bit of money every time we do it; that’s what happens.”
Right. I seem to recall in 2008 that the government had to shell out more than “a little bit of money” to support JPMorgan and others. Furthermore, there is credible testimony (that will never see the inside of a courtroom, sadly) that some of these investment houses were actually selling their clients investments and then investing in a way to make money when their clients failed. If an airline started taking out life insurance on passengers so that they would make money on every plane crash, then I think we might all suddenly start demanding to know more about “how aircraft engines work.”
In some ways, this demand for secrecy is old news. Bill Clinton spoke highly of his professor at Georgetown University, Carroll Quigley. Quigley was indeed brilliant (even if wrong in some ways) as can be seen by his huge history of the modern world, Tragedy and Hope. In setting the background for the time he was covering, Quigley pointed out that banking has always been run by people intent on secrecy of how they do business. Thus:
“The Operations of Banking and Finance Were Concealed So They Appeared Difficult to Master”
“The problems which inevitably arose could be solved and the system reformed only by reference to the system as a whole. Unfortunately, however, three parts of the system, concerned with the production, transfer, and consumption of goods, were concrete and clearly visible so that almost anyone could grasp them simply by examining them, while the operations of banking and finance were concealed, scattered, and abstract so that they appeared to many to be difficult. To add to this, bankers themselves did everything they could to make their activities more secret and more esoteric” (emphasis added).
There is a great deal more like this in Quigley’s history. He writes that bankers were “devoted to secrecy and the secret use of financial influence in political life.” Not much has changed.
These people have each made millions while the economy has plummeted. They are basically still holding the economy hostage, and yet are treated as if they, not the people who grow and make things, are the key to economic prosperity. Is it any wonder that Jamey Dimon and his friends are constantly called “fraudsters” and “banksters”?
Mark Horne has been studying the intersection of ethics and the economy since high school. He was raised in Liberia, West Africa and Kwajalein, Marshall Islands, as well as on the Atlantic coast of Florida. He graduated from Houghton College in 1989 and from Covenant Theological Seminary in 1998. He was ordained in the Presbyterian Church in America and has pastored churches in Washington state and Oklahoma, as well as serving as an assistant pastor in St. Louis.