To Fail Too Big
Remember back in 2008, when it was decided by those who decide such things that Lehman Brothers wasn’t too big to fail, and the planet’s financial infrastructure melted down? Remember when the mortgage bubble built from “collateralized debt” burst like cheap balloons?
It’s been five years. Memories fade. You may have already forgotten that the bankers behind the economic collapse were permitted to (re)write the legislation regulating their anarchic industry. And that not one of them went to prison. Or ever faced a trial. Or were even charged with any crimes.
Malfeasance of such obviousness and grotesqueness would shame the normal person. The bankers, though, resorted to a kind of persuasiveness typically found at the end of a gun barrel. The masterminds behind the massive fraud convinced their political assets in both of the parties they control that the banks were too big to fail. The banks go down, America goes down. So, it wasn’t a question of if they were bad guys. They were important guys – and we’d just have to trust them.
We did. And now it’s five years later. All those banks that were Too Big to Fail back in 2008 – well, let’s just say that trusting the financial industry to police itself hasn’t exactly solved the TBtF problem.
+ In 2008, Wells Fargo & Co had assets of $609 billion. In 2013, they have $1.4 trillion.
+ In 2008, Bank of America had $1.7 trillion. Now it’s $2.1 trillion.
+ In 2008, JPMorgan Chase & Co had $1.8 trillion in assets. In 2013, they have $2.4 trillion.
Times have been tough for Citigroup. They used to have $2.1 trillion, now it’s only $1.9 trillion, and they may in fact be getting small enough that they will be allowed to fail the next time they have a bad run at the gambling tables. JPMorgan Chase, currently the richest of the banks, recently pleaded guilty to yet more illegal activity, admitting that it knowingly broke laws and agreeing to pay a $920 million settlement in their “London Whale” case, in which they blew $6 billion gambling on the wrong side of a complex derivatives match. That happened in 2012.
Don’t worry, no one is going to face criminal charges. Jamie Dimon and his henchman run a particularly sanitary mafia. The right people will be paid the right amounts, and the underlying truth of the matter will come to be understood by everyone involved: If you’re too big to fail, the best business strategy is to get even bigger.