Corruption in the Banks: J.P. Morgan
At Via Media Walter Russell Mead draws our attention to corruption in the world of banking.
Bloomberg reports that J.P. Morgan has been sued by the Louisiana Police Pension Plan for securities fraud, and this charge only scratches the surface of the company’s misconduct.
FoxBusiness reports that in a “strictly confidential” report issued last year, J.P. Morgan admitted that underfunded pension liabilities amount to nearly $4 trillion—far worse than most observers believed…
So why did J.P. Morgan hide the report?
But people in senior management worried that the study’s stark analysis about the looming threat of unfunded pensions to state and local finances — and its recommendation on how to fix the problem — would offend the firm’s municipal bond clients, namely those cities and states that tap J.P. Morgan to underwrite their bonds.
With that, the firm decided that it would keep the study largely under wraps, according to people with direct knowledge of the matter. Only its best hedge fund clients and large institutional investors would receive the report. The cities and states at the heart of the analysis wouldn’t be informed, nor would most public investors. . . .
This is why so many people are suspicious of capitalism and the free market. The world of finance and banking is full of people who are more than willing to lie, cheat, and steal in order to advance their own ends. That’s why its so important to crack down harshly on corruption wherever it appears. There are few areas where government’s role is more significant and legitimate: ensuring that businesses and banks operate within the basic confines of law, order, honesty, and transparency.