The Dimon of Banksters Basks in "Suite" Deal

So many goodies tucked into this package to make JPM fatter and happier than ever!

Yesterday, I wrote about how the buyout/bailout of First Republic Bank followed the utterly predictable, tread-worn Fed pattern of weekend deals that make too-big-to-fail banks bigger than ever. These banks should NEVER be allowed to even enter the bidding, regardless of what hits that means investors and major depositors have to take. They should, instead, be broken up like Ma Bell was decades ago so that we can finally stop bailing out and “fixing” too-big-to-fail banks, which First Republic was, being the second largest bank failure in US history, and which its purchaser, JPMorgan Chase, has been for decades. JPM has been made even more so with every one of these hot deals that have been packaged up by the government for it.

It turns out nearly everyone agrees today: Headlines everywhere are commenting on what I’ll call the “suite” deal that Jamie Dimon got from the FDIC, which bloated JPMorgan Chase and Dimon’s ego even more. One video interview even mentions how predictable it was that this deal would happen over a weekend when the news cycle is not as active and most government agencies are closed, etc. Always the secret midnight deal suddenly announced on Monday by agencies praising themselves over how life-saving and beneficial the deal was for the nation!

While the FDIC boasted that the deal cut its cost of insuring depositors from 20-billion to about 13-billion, that is only true if it insured (as it did) depositors in amounts far greater than its falsely claimed $250,000 limit. The cost, in other words, would never have been $20-billion in the first place if the FDIC had kept to its stated limits. Once again, the FDIC bailed out all depositors, regardless of size, and regardless of the fact that First Republic never paid a premium that would merit this level of insurance in a real-world insurance environment. That means the bank and its depositors got what they never paid for; so did Dimon who reaps the benefits of all these deposits arriving fully intact at his bank.

The FDIC, of course, claims the suite deal saved America, even though “our banking system is fundamentally sound,” which should mean America does not need this repetitious saving from disaster banks. (Speaking of that mantra, a number of people are now starting to make fun of that, too, as I have all along. The more you hear it said, the more it becomes obvious it is a LIE or they wouldn’t need to keep saying it.) The only upside of the deal was that the shareholders in the bank lost everything, or so we are told. Let’s hope it is true because they certainly deserve to.

And while Jamie, the Demon (oops) of the big-bankster universe, basked in bloated self praise over how his strong bank was able to help save the banking world once again, another way in which the FDIC is distorting the truth about how much this Dimon of a deal saved the FDIC is that it presumes it will never have to make good on its pledge to cover every loan that was packaged into the deal if said loan defaults. (More free insurance!) Well, in a world where we have been warned again and again about the enormous overhang of bad debt in commercial real-estate mortgages, that could be a lot of free coverage down the road for Dimon who is actually now boasting quite plainly about how sweet this suite of protections and discounts was for Dimon & Co.