As you’ll recall, the film Inside Job (2010) ended with a call for accountability, after highlighting how no senior-level financial executives had been prosecuted for wrongdoing that fueled the housing boom/bust and financial crisis. When we watched the film a couple months ago, that was still the case. But things may be changing as the FBI launches a criminal investigation of JPMorgan Chase, the nation’s largest bank, which lost at least $2 billion in risky derivatives trading.
The link above features an interview by former financial regulator, white-collar criminologist, and University of Missouri-Kansas City Professor William Black, author of The Best Way to Rob a Bank is to Own One. Black traces JPMorgan’s woes to the logic of ‘too big too fail’ — when banks are so big and systemically important, there’s nothing to stop them from taking excessive risks because they expect to be bailed out by taxpayers.
JPMorgan Chase CEO, Jamie Dimon, had long been considered the ‘Golden Boy’ of Wall Street, widely praised for his ‘risk management’ skills. And he’s been a vocal opponent of financial regulation. Despite the revelations, President Obama, speaking recently on ‘The View,’ still had praise for Dimon and his bank: ‘JPMorgan is one of the best-managed banks there is…Jamie Dimon, the head of it, is one of the smartest bankers we got. And they still lost $2 billion and counting.’ Mayor Bloomberg agrees. Asked about the $2 billion loss, the mayor called it a ‘hiccup,’ insisting there’s a ‘general consensus’ that Dimon ‘is one of the smartest people in the financial industry.’ And two days ago, at their annual meeting, JPMorgan Chase shareholders approved a $23 million pay package for CEO Dimon.
Critics say this takes ‘failing up’ to a whole new level and wonder what it will take to actually tarnish the social honor of financial elites. But there are indicators that their status has already taken a hit, e.g., plummeting approval ratings, street protest. And the finance sector is facing recruitment problems for the first time in memory, as the cachet of working on Wall Street is replaced by stigma — at least on college campuses. Overall, though, there doesn’t seem to be much evidence that financial elites have suffered any considerable loss of status in ‘establishment’ political-media-academic circles.
This a useful case for thinking about how social status works, and how status hierarchies change (or resist change). It also relates to debates about America’s ‘two-tiered’ justice system. A white-collar criminologist, William Black, has been particularly critical of the media’s reluctance to even describe fraud and other illegal behavior in the financial sector as ‘crime.’ At the same time, we’ve been witnessing the ‘criminalization‘ of political dissent and economic hardship (e.g., debt, homelessness, poverty in general).