Thursday, August 25, 2016

Dimon is Forever

A power has risen up in the government greater than the people themselves, consisting of many and various and powerful interests . . . and held together by the cohesive power of the vast surplus in the banks.
— John Calhoun, May 27, 1836 Speech

The purpose of this column is to try to help Morgan Chase credit card holders understand the reasons for the recent correspondence from that institution advising them of the increases in interest rates being imposed on them when they use their cards for cash advances as defined in the agreements they signed when obtaining the cards.

The notice that was sent out by the bank to many, if not all, its credit card holders, informs them that pursuant to the agreement they signed when they applied for their credit cards, the annual percentage rate they were being charged for things identified as cash advances that include, among other things, wire transfers, purchase of travelers checks, foreign currency, and similar transactions, will incur a new annual percentage rate that is approximately 5% higher than the old rate. Whereas the old rate was calculated by adding only 15.99% to the prime rate as published in the Wall Street Journal, the new rate will be calculated by adding 21.74% to the prime rate.

A number of you has inquired whether increasing the interest rate is an attempt by the bank to compensate for the fines and penalties the bank has regularly been paying for its assorted misdeeds since 2009. During that period Morgan Chase has paid $38 billion in penalties and fines as a result of 22 settlements it entered into with bank regulators.

Readers may wonder why a bank that has paid such enormous sums of money in fines and penalties is still in business. The reason it is still in business is that the fines it has paid since 2009 are, in the bank’s overall scheme of things, a mere pittance. In July 2015, for example, Morgan Chase paid $136 million to settle claims that it illegally used robo-signing of documents without verifying what was being signed and for providing inaccurate information to buyers of accounts it was selling. Notwithstanding the penalty paid in 2015, Morgan Chase had net income of $5.4 billion that year, an increase of 10% from 2014, and net revenue of $23.7 billion, an increase of 1% from 2014. (Some readers may also wonder why such enormous fines and penalties have not resulted in anyone at the bank going to jail. The answer is that often the matters settled are not criminal in nature though they might seem so to victims of the bank’s behavior. And even when criminal, corporations, although persons for purposes of sophisticated United States Supreme Court analysis, understood by only the authors of the Court’s opinion, are not persons when it comes to going to jail.

As the foregoing shows, the penalties and fines imposed on the bank for its misconduct do not explain the need for the rise in interest rates since the bank continued to be hugely profitable, those fines and penalties notwithstanding. Hence, the only other obvious explanation for the correspondence from the bank announcing the increase in interest rates, would be that the bank is taking steps to increase the bank’s income in order to help pay for Jamie Dimon’s salary. Mr. Dimon is president and CEO of Morgan Chase, dual roles he has held since 2006, and retained following a stockholders’ effort to force him to relinquish one of those roles in 2013. Followers of Mr. Dimon’s salary will recall that in 2007 his annual compensation was $30 million, in 2009 it was $15.2 million and in 2010 and 2011 it had risen to $23 million. In 2012 the board of the bank reduced his compensation to $11.5 million, believing he was partially responsible for the trading debacle known as the London Whale case. That one-year salary reduction was believed by the board to be adequate punishment, and in 2013 and 2014 his compensation was increased to $20 million and in 2015 to $27.5 million. Since his increased salary was announced in January 2016, it is unlikely that the July notice of increased interest rates on cash advances made using credit cards was needed to help pay for Jamie Dimon’s increased salary.

Since neither poor earnings by the bank nor a need to find the money with which to pay Mr. Dimon his $27.5 million annual compensation explains why the interest rate on credit card cash advances has increased, there has to be some other explanation and, in fact, there is. Morgan Chase raised the interest rate on those credit cards because it could.

Thursday, August 18, 2016

Marcos Redux

But the father answered never a word,
A frozen corpse was he.
— Henry Wadsworth Longfellow,

The Wreck of the Hesperus

We interrupt election news just long enough to bring you breaking news of Ferdinand Marcos, deceased. As corpses’ sojourns go, his has been one of the most enduring, due in large part to the devoted attention of his wife, Imelda. To long time readers of this column, apologies are in order since some of what is described today was reported ten years ago in this very space.

Ferdinand moved to Hawaii in 1986, having been overthrown as president of the Philippines in a People Power Revolution. His move was assisted by President Ronald Reagan who arranged for the United States Air Force to provide two U.S. Air Force C-141s to carry the Marcos family, its retainers and belongings to Hawaii. Sadly, Mr. Marcos’s sojourn there was cut short by his death on September 28, 1989. His death marked the end of one adventure but the beginning of another, an adventure that will end on September 18, 2016, when he will come to rest in the Heroes Cemetery in Manila.

The question that was presented to the family, following Ferdie’s death in 1989, was what to do with his corpse. Imelda wanted him buried in the Philippines, but the government there would not permit the family or the corpse to return to the country. Barred from returning Ferdie to the Philippines, Imelda bought a refrigerated casket into which he was placed. In order to provide him with amusement, Imelda arranged for Handel’s Messiah to be played inside the casket 24 hours a day. Ever thoughtful, in 1990, on the occasion of Ferdie’s birthday, Imelda arranged for a birthday party and Ferdie was wheeled into the party to a rousing rendition of “Happy Birthday” sung by the guests in attendance at the festivities. Notwithstanding the pleasant surroundings and the musical casket, Imelda wanted to return to the Philippines with Ferdie so that he could be given a proper burial. In 1990 she was permitted to return in and 1992, the frozen corpse followed her.

Once he was back in the Philippines, Imelda wanted Ferdie buried in the Heroes Cemetery in Manilla but the country’s president refused the request, saying Ferdie could only be buried in his hometown of Batac. Accordingly, Ferdie was taken to Batac, and placed in a glass coffin beneath the Seal of the Presidency in front of an eternal flame. According to reports at the time, Handel’s Messiah was replaced by an unidentified piece by Mozart, a welcome substitution, one assumes, irrespective of how fond one is of Handel’s Messiah. For the ceremony in Batac, Ferdinand was wearing a white Barong long-sleeved shirt and a rainbow colored chest sash bearing medals from World War II. According to a report in the Los Angeles Times, Imelda said that the burial was only temporary. When, in the future, permission was granted for a burial in the Heroes Cemetery, she, ever the optimist said: “We’ll dig him up and move him down and bury him again. We do that all the time.” Following the Batac burial, the saga continued.

In March 1997, a dispute arose between the Marcos family and the Ilocos Norte Electric Cooperative that was keeping Ferdie cold and providing his musical entertainment. Ilocos was upset that there were $214,500 in unpaid electric bills for cooling and Mozart. The word on the street was that without cooling, Ferdie would last at most seven days. A utility company spokesman said after that, things would become, to use his words, “messy.” The dispute over the unpaid bill was resolved before that happened.

Following the dispute over cooling the family chilled out until September 12, 2006 when it was reported that Imelda had given up trying to put Ferdie in the Heroes Cemetery in Manila and was going to place him, instead, in a plot on the family property in his hometown. That, everyone thought, was that. But Ferdie’s peregrinations were not yet over.

On August 13, 2016, it was announced that Ferdie would once again be on the move. His new final resting place is to be in the Heroes Cemetery in Manila. This came about because on July 11, 2016, Philippines President, Rodrigo Duterte, said that Ferdie could be buried in the Heroes Cemetery. According to the announcement, the military is to provide “all necessary military honors that are accorded Presidents of the Philippines. . . .” The announcement further states that the Army is to provide: “vigil, bugler/drummer, firing party, military host/pall bearers, escort and transportation, and arrival and departure honors.” The “arrival and departure” honors are probably superfluous since Ferdie is, by anyone’s calculations, long gone. The rest of the ceremony, however, is certainly going to be a ceremony to behold. He will be buried in a solid bronze casket purchased from a company in the United States. Ferdie’s son expressed the hope that the burial would bring the saga of the corpse to an end. That would seem to be a reasonable thing to hope and expect. There is no better place left to send Ferdinand.

Thursday, August 11, 2016


When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean- neither more nor less.”

—Lewis Carroll, Through the Looking Glass

From time to time presidential campaigns present didactic moments and this is such a time. It presents us with familiar words to which completely new meanings have been affixed by the candidates. In Mr. Trump’s case, the most recent addition to our collective vocabularies is the word “sacrifice.” In Ms. Clinton’s case, the words are “short circuit.” We begin our scholarly, if that it be, examination of the use of those words with Mr. Trump’s use of the word “sacrifice.”

Sacrifice was often used in connection with offering the life of an animal or person to a god in hopes of gaining favor of the god for whom the sacrifice was made. Another meaning is giving up something in order to help someone else. A person who gives up his life to protect someone else, for example, is commonly said to have sacrificed his life. A good example of this use was sadly offered at the Democratic National Convention when Khizr Khan spoke from the podium with his wife standing beside him. Mr. Khan was describing the heroic act of his son who acted to save the lives of men under his command. An American Muslim, and a Captain in the United States Army, he posthumously received the Bronze Star for his brave action. Mr. Khan criticized Mr. Trump for his comments about Muslims and immigrants saying: “Go look at the graves of brave patriots who died defending the United states of America. . . . You have sacrificed nothing and no one.”

Understandably Mr. Trump took umbrage at the suggestion he had sacrificed nothing, and to prove his point, gave us all a new understanding of the word “sacrifice.” Mr. Trump said: “I think I’ve made a lot of sacrifices. I work very, very hard. I’ve created thousands and thousands of job. . . built great structures. I’ve had tremendous success. I think I’ve done a lot.” Thus, the new meaning for sacrifice is being very successful in whatever you undertake.

Hillary Clinton has imparted new meaning to words that were commonly associated with things electrical. The words are “Short Circuit.” “Short circuit” first entered the lexicon in its new incarnation when Ms. Clinton was discussing her use of email while serving as Secretary of State. Although the use or misuse of her email is of no substantive importance, her attempts to consistently explain her email procedures, while serving as Secretary of State, has given the question a life of its own that far overshadows any substantive concerns over her practices.

A report in Politico describes the various things Ms. Clinton has said over the past year with respect to her e mail usage while serving as Secretary of State. It then contrasts her statements with FBI Director, James Comey’s testimony before the House Benghazi Committee in early July. Among other things, Mr. Comey contradicted Ms. Clinton’s assertion (a) that while serving as Secretary of State she used only one device (he said she used four), (b) that she returned all work-related e mails to the state department (he said thousands were not returned), and© that she did not e mail “any classified material to anyone on my email” (Comey said “there was classified material emailed.”)

When Ms. Clinton was speaking to a convention of black and Hispanic journalists in Washington on August 5 2016, the e mail question once again presented itself. Ms. Clinton asserted that she did not lie to the FBI (which no one has disputed since no one knows what she said to the FBI) but then made a convoluted explanation that introduces us to the new use of the word “short circuit.” She told the assembled journalists: “What I told the FBI-which he [Comey] said was truthful-is consistent with what I have said publicly.” That, of course, seems to be untrue when considered in the context of Mr. Comey’s testimony before the Congressional Subcommittee. Continuing her explanation to the assembled journalists she said: “I may have short circuited, and for that, I will try to clarify.” Here follows an example of how those two words can be used in common situations in which readers may, from time to time, find themselves.

Mother walks into the kitchen and her six-year-old son is standing next to a glass of spilled milk that is on the floor. When confronted by mother, son denies responsibility for the spill. Mother is very angry with son’s denial and reports it to father when father comes home from work. Father then confronts son and asks: “Did you lie to your mother?” Son, who is precocious and a young news junkie has been keeping up with the election news. He responds: “I short circuited, and for that I will try to clarify.” To that father replies: “I am greatly relieved to hear that son. I was afraid you had lied to your mother.”
Christopher Brauchli can be emailed at For political commentary see his web page at