Something Scary

When JPMorgan lost $6.2 billion in what is now called the “ London Whale” it was in the context of world news, a beep, mentioned but not much talked about. Now that the report from the Senate inquiry into the trading loss has been released, the beep is a bit louder but so far doesn’t seem it will be given the weight it ought to have. Here is a “too big to fail” institution being able to engage in an operation that to an outsider like me seems bizarre. According to the Senate report, high placed executives went along with what Floyd Norris of the NYT called gibberish, possibly an explanation no one wanted to pull the curtain on, evoking in a reader the sense that the tale of the emperor’s new clothes had come to life. What is even more distressing is that if the Senate committee refers the matter for criminal prosecution, not much is likely to happen. Justice Department officials have suggested that big banks are too big to prosecute, apparently meaning that a prosecution of such a huge institution would harm the financial system. That does and ought to scare us—Criminality being sheltered because of size!