Normally, I shudder every time I read a new layoff announcement, but I took the news that J.P. Morgan was going to drop 2,000 people with only qualified gloom. According to the papers, many of the dumpees are those merger-and-acquisition types, those hugely overpaid buckos who work the initial-public-offering scams.
Since I can no longer be sure that outfits like J.P. Morgan are not criminal enterprises as defined under the RICO statute, the news that Morgan is laying off people called forth in me the same reaction I might have if I’d read that the Mafia was laying off capos after six straight quarters in which earnings had not lived up to the dons’ expectations.
We are confronted on every side with the spectacle of overpaid, underperforming people. They’re most obvious, of course, in entertainment and sports, but leaving the atrocious and out-of-condition bums on the Mets’ payroll aside, they only irk, they do not hurt. The same cannot be said for the not-so-good people at places like J.P. Morgan
All have suffered damage at the hands of the brokers, lawyers and accountants of Wall Street. Be they investors or noninvestors, every manner of person has been injured by those whose use of their monopoly grip on the nation’s capital markets may result in years of trouble and stagnation for the whole society.
As per usual, the top guy at J.P. Morgan, a chappie named William B. Harrison, has not been thrown out on his keister. He isn’t getting laid off. Bosses get to keep their jobs until the cops show up, handcuffs in hand, à la Dennis Kozlowski over at Tyco. All of which might cause a person to wonder how Diogenes, the old curmudgeon who had problems in ancient Athens finding an honest man, would fare seeking one in the canyons of lower Manhattan. So let us, tra-la, take what satisfaction may be offered and gloat that perhaps some of the lesser malefactors of great wealth have been thrown overboard-where, possibly, they may have to worry about how to come up with the grocery money, as do so many of us.
But any gloating should be highly focused. Probably thousands of those losing their jobs at J.P. Morgan are ordinary, non-crooked working people. It may be a source of some comfort to the innocent firees to remember that only last September, Mr. Harrison-his shoulders squared on the advice of his public-relations counsel-told the company’s stockholders that he took full responsibility for the mess. Big shots are always “taking full responsibility,” but what that verbal formula means is beyond me. It doesn’t mean a pay cut, it doesn’t mean demotion, and it certainly doesn’t mean getting canned. So there is Mr. Harrison, his company’s name ruined by association with the Enron scandal and his stock down more than 50 percent, taking full responsibility.
Before we even had time to digest the news of the thousands of layoffs, The Wall Street Journal found out that J.P. Morgan has been able to stop important reforms to accounting rules. The new rules might have made some of the Enron frauds more difficult to perpetrate. Moreover, the changes-had they gone through-might have shown hundreds of millions of dollars’ worth of shenanigans on J.P. Morgan’s own books. Morgan is thus able to control the rules by which accountants audit its books because of its influence over the Financial Accounting Standards Board, the legislative body for the industry.
Day after day, men like Mr. Harrison and his company continue to sabotage people’s faith in the whole financial industry. Apparently, these men don’t care if outsiders-and that’s the rest of us-think of them as thieves and highwaymen. Seemingly, they are indifferent to the growing conviction that they have stolen the retirement money of millions of peoples, no small percentage of whom will never buy a share of stock again. Do they think they’re invisible? Do they have no idea that millions of eyes are watching them?
The original J.P. Morgan (1837-1913), who gave his name to the bank that Mr. Harrison and his associates have so sullied, was called a robber baron when he was, in fact, a businessman of real probity. Morgan made his share of mistakes and let his proud overestimation of himself lead him into some disastrous business decisions, but on more than one occasion, he put the public ahead of his profit-and never, never, never did he lie, dissemble, mislead or cheat his bank’s customers. Morgan’s heirs ought to demand that the bank scrub the family name from the company escutcheon. Who is the robber baron here, Morgan (who, incidentally, did so much for this city) or Mr. Harrison?
But is Mr. Harrison exceptional? Even if the whole industry isn’t dirty-and even now I don’t think all of it is-its largest and most famous names are. Citigroup, Merrill Lynch, Goldman Sachs, Credit Suisse First Boston and more are all tarnished to one extent or another. They don’t seem to notice, though they’ve been told that kicking one or another of their executives out of the moving car to be ground to bits in the criminal-law courts is not going to cut it. As the number of people who’ve been swindled out of their kids’ college money or their own futures grows, so does the anger. Already there must be millions who hunger to see executives doing the perp walk, executives in orange jumpsuits, executives in manacles, executives doing long stretches of time in non-country-club prisons. But if the bankers and brokers think that feeding the mob a few mouthfuls of red executive meat is going to bring us back to the status quo ante, they are mistaken.
We now have a ruined small-S social-security system. The old-time pension is gone for all but a few workers and rip-off C.E.O.’s with obedient poodles on their boards of directors; the 401(k) worker-investment system is destroyed because its businessmen custodians-who were well paid to look after it and their small-investor clients-plundered their own customers. The sheepdogs joined the wolves, the C.I.A. hooked up with Al Qaeda. And as for the government’s Social Security system, private business has, for two generations, run a nonstop propaganda campaign against it-although, as events have shown, it has nothing as good to put in its place.
Free-market business doctrine has always had it that there should be no social-safety net, that social insecurity spurs people to work harder, longer and more desperately, so that’s pretty much what we’re left with. Save yourself if you can.
You might have thought, under the circumstances, that changes to re-establish the integrity of the financial industries would have passed Congress and be in the process of implementation. That’s not the way it has worked. An anemic bill was enacted, and Harvey (the Ho) Pitt, chairman of the Securities and Exchange Commission and boy toy of the accounting industry, has distinguished himself by delay and inaction. He’s still running around Wall Street in his white plastic calf-length boots, thong, nipple rings and blue wig, looking in the back windows of the chauffeured limos. Meanwhile, every day brings fresh evidence of how the market is rigged against ordinary investors. Thank God for State Attorney General Elliot Spitzer, who reminds us that not every politician is bought and paid for-just 85 percent of them.
Some large portion of those thousands Mr. Harrison has kicked out on the sidewalks are ordinary middle-class workers, probably heavily in debt (as most middle-class people are) with no safety net, no savings to fall back on, and relatives and friends better off only to the extent that they still have jobs. The least jar or jiggle and half the middle class, with its equity loans and its credit-card debt, will be out there dangling. And then what happens? Does Mr. Harrison or George W. Bush step forward to take full responsibility?