Matt Taibbi and Yves Smith: How the Wall Street Mafia Holds America -- and the World -- Hostage
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Yves Smith: Million dollar, yeah, yeah, yeah. What got to be $2.9 billion deal in the end. And on top of that, my mother happens to live in Jefferson County.
Bill Moyers: Oh, I didn't know that.
Yves Smith: You have the average person in-- basically you cannot have access to the sewage system and not pay more than-- and not pay less than 50 bucks a month. So there are people in the poor areas who are deciding what they're going to have: electricity, water, or sewer. I mean, you can't-- they can't afford all three.
Bill Moyers: Why is that JPMorgan's fault that they have to make that choice?
Matt Taibbi: They basically got them into these onerous toxic swap deals that were poorly understood by the local politicians. And they bribed the local politicians to accept the swap deals. They did it through middleman companies that bribed the--
Yves Smith: The consultant on the deal is in jail. The former mayor was involved in other improprieties, too. But the former mayor's in prison. You know, this is--
Matt Taibbi: For signing off on these deals.
Bill Moyers: Is there a question you would have asked Dimon if you had been on either of those committees that was not asked?
Matt Taibbi: The question I wanted to ask is, was, really more about the criminality. I mean, none of the members in either the House or the Senate really got into the issue of all the different offenses that these banks have committed in the last few years. You know, or, an ordinary person, if he commits welfare fraud, never gets a food stamp again in his life.
So given that these banks have systematically and repeatedly committed fraud, repeatedly been caught, you know, in situations like Jefferson County, municipal bid rigging, why should we still give them billions and billions of dollars in emergency lending from the Fed, bailouts, all of this aid from the government? How come there's no consequences for them and there are consequences for ordinary people?
Yves Smith: I would have asked questions more having to do with what's the justification for complex banking at all? That why do we need, why shouldn't banks be run on the utility basis? Why should we have people like Dimon and his, the members of the CIO unit, most of which he's fired, what the justification for literally that hundreds of millions of bonuses were paid collectively to those people.
And now he says they didn't know what they were doing. There's no justification for this, the sort of level of compensation that we generally have on Wall Street. And I would like to see that myth starting to be punctured in more public places.
Bill Moyers: What do you mean when you say banks should be more like a utility?
Yves Smith: Banks, more than any other business, more than military contractors, live off the government. They depend on government backstopping. They exist only by way of government issued licenses, which if you had open entry you'd see much lower fees. And they get some confidence from the public from the fact that they are regulated. Oh, and the most important thing is they have access to--
Matt Taibbi: The Federal Reserve.
Yves Smith: --the Federal Reserve.
Matt Taibbi: They're getting huge amounts of free money.
Yves Smith: Well, not just the free money. The Federal Reserve basically guarantees the payment system. You know, that's the really critical architecture that banks control is that, you know, we write checks to each other. We have credit cards. They clear through banks.