Did JP Morgan Aid and Abet Bernie Madoff? Time for Jamie Dimon ‘To Put Up or Shut Up'

Just the facts.

A week ago at The World Economic Forum in Davos, Switzerland, Jamie Dimon, chief of JP Morgan, railed on the widespread vilification of bankers by the general public. The Wall Street Journal highlighted Dimon's comment in writing, A Banker's Plaintive Wail:

“A plaintive cry from one of the world's top bankers on behalf of his industry pierced through an otherwise tame Thursday morning panel discussion here in Davos:

“I don't lump all media together,” said Jamie Dimon, chief executive of J.P. Morgan Chase & Co. “There's good and there's bad. There's irresponsible and ignorant and there's really smart media. Well, not all bankers are the same. And I just think this constant refrain ‘bankers, bankers, bankers,'  — it's just a really unproductive and unfair way of treating people. And I just think people should just stop doing that.”

Mr. Dimon argued that J.P. Morgan was one of the good banks..

On one hand, I agree with him. I have worked with many fabulous bankers throughout my career and count many of them as close personal friends. None of them actually run a major banking organization.

If  Mr. Dimon wants to be distinguished as ‘one of the good guys' and JP Morgan as ‘one of the good banks,' he now has his opportunity to ‘put up or shut up.' How so? Let's reenter the world of Bernie Madoff.

Were there a number of individual JP Morgan employees aware or strongly suspicious that Madoff was running a massive Ponzi scheme? Did they remain quiet in light of the millions in fees the bank was accruing from handling Bernie's banking? Did they apprise regulators only to be stonewalled? What did they know? When did they know it?

The public at large is understandably baffled how industry insiders closely engaged and involved with Madoff's operation could NOT have known the nature of Bernie's operation. What about the KYC (Know Your Customer) rule?

Public pressure may now be ratcheting up on JP Morgan and Mr. Dimon given a Madoff related lawsuit unsealed yesterday and highlighted by the WSJ in writing, Trustee: JP Morgan Abetted Madoff:

JP Morgan Chase and Co. ignored or dismissed warning signs about the Madoff fraud even as it earned hundreds of millions of dollars from its relationship with his firm, according to a lawsuit unsealed Thursday.

The $6.4 billion lawsuit, filed in federal bankruptcy court, claims that bankers at J.P. Morgan discussed the possibility that Bernard Madoff was operating a Ponzi scheme, worried that a firm of such size was audited by a storefront accountant and called his returns “too good to be true.”

“While numerous financial institutions enabled Madoff's fraud, JPMC was at the very center of that fraud, and thoroughly complicit in it,” according to the 115-page lawsuit, filed under seal in December by Irving Picard, the trustee seeking to recover money for Mr. Madoff's victims and made public on Thursday.

J.P. Morgan said in a statement that the lawsuit “is meritless and is based on distortions of both the relevant facts and the governing law.” The bank said it “did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff.”

Complicit? WOW!

Ok, Jamie boy, time to ‘put up or shut up.' If you want to be considered one of the good banks, you are compelled to provide a full and total accounting of JP Morgan's engagement with Mr. Madoff. If this lawsuit leads to nothing more than a massive fine but no further exposition of the truth, then I would classify that as ‘hush money.' Good banks and good bankers do NOT pay hush money. Or do they?

America deserves the truth.

What is it going to be Jamie? In the inimitable words of Joe Friday, ”Just the facts…”

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own and not those of Greenwich Investment Management. As President of Greenwich Investment Management, an SEC regulated privately held registered investment adviser, I am merely a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.