New column: Too much profit?

By Justin Fox | July 24, 2009 | +

My column in the new TIME addresses the Goldman Sachs/JPMorgan profitathon. My argument is that they’re making so much money because they’re better at what they do than their peers are. Which doesn’t necessarily mean we need to keep letting them make so much money.

This will probably be it for blogging from me today. We’re off to pick Curious Capitalist Jr. up from summer camp!

Related Topics: Wall Street & Markets

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pneogy

“In the past, Goldman and JPMorgan — and the rest of the financial industry — put their highly talented employees to work dismantling any regulation that might get in the way of higher profits. If they try that again, maybe “swine” and “vampire squid” will prove too kind.”

You can bet they will. As they will explain it to you, it is their fiduciary duty to their shareholders (read self-aggrandizing selves).
http://www.124monkeys.com Sean DeCoursey forgot his password

Justin, I can’t believe you wrote that column. You’re a lot smarter than this.

I mean how can you write something like this sentence: “The teams at Goldman Sachs and JPMorgan Chase avoided giant missteps in the lead-up to last fall’s panic and are now wresting market share from wounded competitors and raking in billions.” and not throw up a little in your mouth?

The big misstep Goldman and JPMorgan “avoided” was getting the government to pay out 100 cents on the dollar through the AIG counterparty payments. And taking market share from wounded rivals? What, like the gift wrapped Bear Stearns buyout? Or the pickup of business from companies that didn’t extort bailouts from the Fed, like CIT?

Goldman and JPMorgan also haven’t paid back all of, or even the majority of their bailout funds, because most of those came indirectly from the counterparty payments.

I know I’m somewhat unfairly compartmentalizing part of your article, but literally the only reason these companies are in a position to profit now is because of government aid. I also really wish you’d address the Larry Summers/Revolution Credit situation in some form. Big investment banks don’t invest millions in sketchy startup companies as part of their normal business practices. They just don’t.
nranger7

Why did your story not even bother to mention the thousands of former WaMu customers who have just been dumped without warning??? Chase promised few changes to account holders when they took over WaMu. Go to the Chase site online and you’ll see that they still pretend to welcome WaMu customers. However, Chase has been anything but welcoming.

First, WaMu credit card holders found a drastic increase in APR. Then earlier this month, Chase closed former WaMu credit card accounts WITHOUT WARNING. Chase even had the audacity to send out the EXACT SAME LETTER to these customers using IDENTICAL reasons for the closure! They claim they based their decision to close ALL of these accounts based on information from Experian. CHASE DID NOT SUBMIT INQUIRIES TO EXPERIAN REGARDING ANY OF THESE ACCOUNTS!

Are we really supposed to believe that every single WaMu customer had identical credit issues? I can attest that the reasons given to close my account can NOT be found in any of my credit reports. Chase blatantly lied and is using Experian as a scapegoat. Thousands of innocent people with good credit histories are being negatively affected only because they once had their accounts with WaMu.

And may I also ask: Why has this not been reported by any news agency???? I thought a mistake had been made with my account until I read online posts from other victims on consumer websites. Instead of reading about their underhanded and fraudulent business practices, I keep finding glowing articles about JP Morgan Chase’s ability to ride out this economic storm. It is disgusting. How much bailout money is being used by Chase to attempt to keep this story under wraps???
tc125231

What Sean DeCoursey said does it for me.
bryanfromhouston

I must join in with S. DeC. AIG should have gone under and at the very least, it should not have been a 100 cents on the dollar payout. It implicitly set up a de facto implied government backing….just like with Fannie and Freddie.

How many times must our government policy makers keep making the same mistakes? Reflating bubbles? Socializing the losses and privatizing the gains? Continuing failed regulatory policies on derivatives? Seriously, Justin, where does this all end?
dadfox

I think Bernanke had it right in his PBS interview yesterday. We need some new regulations so that we can fail an IAG without crashing the whole credit system. Let’s look ahead and set up a set of regulations that keep outfits like JP Morgan Chase and Goldman Sachs in their proper place.