Jeffrey Snider makes a darned good argument that the biggest U. S. banks are, in fact, zombies:
To end 2017, JP Morgan says it’s fortress totaled $2.5 trillion in assets. When Dimon was talking about it in 2011, the bank reported $2.3 trillion in assets. To close out 2008, JPM held $2.2 trillion.
This was, obviously, a stark departure from the bank’s prior operating paradigm. It had begun the 21st century as JP Morgan Chase with fewer than $400 billion in assets. Rapid growth predominated, through organic wholesale efforts as well as frenzied merger deals, up until late 2007 you got bigger at any cost. That’s what banks did.
JPM was and is no outlier. All the major firms on Wall Street and beyond trace the same pattern in their quarterly filings. Parabolic growth is observed for all of them – until 2007 or 2008. What has followed afterward has been a curious sideways condition, almost like a once vibrantly beating heart was stopped and never truly revived. It is the pattern of the undead, the zombie.
Jamie Dimon is paid $28 million per year. Why?
Because his compensation committee, board and ultimately shareholders approve it. Its a private deal between those parties.
Who are we to say? Entertainers of various flavors all make more: Leonardo DiCaprio, Tom Brady, Kanye West, Tiger Woods and so on. That’s a negotiation between entertainers, agents, producers, advertisers and ultimately the buying public. So be it. I know you have commented that subsidy is the rationale for not paying someone like Dimon, but sports stadiums are subsidized. I doubt anyone here would be a supporter of subsidy. But don’t conflate bad public policy with the market for executive talent. Fix public policy errors and let compensation markets settle down.
JP Morgan produced $23-24 billion in profit and distributed $22 billion in capital. And most of Dimon’s compensation came from restricted, performance based stock. It was at risk compensation. What do other’s produce? How much of it is at risk in any given year? You may not like these pay numbers. I may not like these pay numbers. I’m sure any critics who feel Dimon is paid too much for his services, or think they can do better, can submit their resumes for consideration.
I think the big big banks have been in particularly hard environment the last few years. Their shareholders and others expect them to keep their trillion dollar sizes. But if the grow noticeably, that would probably annoy a good many Democrats and even some Republicans, who might start mumbling about laws to restrain big banks, Also it would complicate the important task of convincing Republicans that Democrat-passed laws and regulations are doing serious injury to all American financial institutions.
Now that we’re in a Republican-governed nation, I’m sure the banks will return to form. No more Zombies! Dracula will be back.
Entertainers of various flavors all make more: Leonardo DiCaprio, Tom Brady, Kanye West, Tiger Woods and so on.
All of those guys have had much better careers, objectively, than Jamie Dimon, especially Tiger and Tom, although Kanye is the one most likely to become President.
…
As for his compensation being at risk, did he owe JPM a shit-tonne of money when he fucked up massively and they had to be bailed out to the tune of $25,000,000,000 directly, and who could even quantify how much indirectly through various QE measures and other governmental & quasi-governmental actions? (And if he took the ceremonial dollar as compensation, as did Vikram Pandit, then big whoop. )
I’m not actually against big executive compensation, if there is some way to show that what the executive does is actually working. What is Dimon doing that is so effective? He’s at a bank that the US government has basically stated will NOT be allowed to fail, no matter how badly they fuck up. How well would he being doing without the safety net? Oh, wait, he did so well the government had to bail his dumbass out to the tune of 25 followed by nine freakin’ zeroes.
PS Damn, the Jags look like the better team. It’s early yet, and I still expect NE to win (they’ll run over Fournette with a snow plow if it comes to that), but up 14-3 is impressive in NE during the AFC Championship Game.