BILL MOYERS: Welcome. Where to begin? There’s been so much news this week of giant corporations gaming the system, it makes your head swim. And perhaps that’s the problem, we’re overwhelmed. Just look at some of the headlines: "Apple executives face Senate grilling," "Apple is shifting its tax burden," "Apple’s Web of Tax Shelters Saved It Billions..."

That New York Times story, by the way, went on to report how Apple, America’s most profitable technology company, avoided those taxes “…through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen…”

Just consider this item from the Financial Times. By setting up a subsidiary in Ireland, “…Apple Sales International, paid virtually no taxes on sales of $74 billion between 2009 and 2012.” Furthermore, “In 2011, it paid $10 million in taxes on $22 billion in profits, or a rate of 0.05 per cent…”

As that great newspaper The Onion observed, tongue firmly in cheek, “That must be how they keep their prices so low.”

Now look at these headlines: "Deja Vu on the Hill: Wall Street Lobbyists Roll Back Finance Reform, Again,” “Derivatives Reform on the Ropes,” “Banks Win Big as Regulators Refuse to Rein in $700 Trillion Derivatives Market.”

And on, and on. The banking industry’s all-out campaign to gut the reforms enacted just three years ago to put an end to the financial chicanery that almost destroyed us in 2008.

Which brings us to another finalist for this week’s honor roll of questionable accountability, JPMorgan Chase, the largest bank in the United States. Despite the bank's year of embarrassing behavior, shareholders re-elected their entire board of directors and voted that Chairman and CEO Jamie Dimon could hold onto both his highfalutin job titles.

Back to this table comes someone who keeps a sharp eye on the “animal spirits” of the corporate world, Gretchen Morgenson, one of the foremost business journalists in the country. Pulitzer Prize-winner and assistant editor at The New York Times, where her column appears every Sunday. Her most recent book is Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Created the Worst Financial Crisis of Our Time. It’s a must-read.



BILL MOYERS: So why should anyone watching this right now care whether Jamie Dimon wears two hats at the head of JPMorgan?

GRETCHEN MORGENSON: Well, of course, JPMorgan, as you know, going back, stepping back, was the bank that did not go to the precipice, did not require a bail out, it made it through the financial crisis of 2008 in fairly good stead. And so that presented for Mr. Dimon a sort of bragging right, as it were. I led my bank through this terrible crisis with very little in the way of trouble. So why would you want me to change anything about how I operate this bank? Well, as you know, the problems that came up over the past year involving the trading losses, the $6 billion trading losses that their—

BILL MOYERS: The London Whale.

GRETCHEN MORGENSON: --their Chief Investment Office is what got people a little bit alarmed. Is this bank as well managed as Mr. Dimon says it is? And so the idea among some shareholders was, you really ought to have a check and balance here on this chief executive. We don't want the imperial CEO who also is the Chairman of the Board. Because there was some risk management issues that we really need addressed.

There obviously was not adequate oversight of the Chief Investment Office if you're going to have $6 billion in losses. And yet the shareholders that turned down that proposal to separate the chief executive office from the chairman title, and so Mr. Dimon continues on as both.

BILL MOYERS: Since he wears both hats, does this mean that Jamie Dimon, Chairman of the Board, gets to decide whether Jamie Dimon, CEO is doing a good job?

GRETCHEN MORGENSON: Pretty much. I mean, he is essentially overseeing his own performance. Which, you know, is a conflict of interest. So it's, generally speaking, ideal to have someone overseeing the C.E.O. or a strong board that can oversee and rein in a CEO. Well, this is a board that had people on the risk committee who were obviously not monitoring the risks that were being taken on in the company. And the fact that they were reelected by a majority of shareholders, I think is quite indicative of a very big problem that we have in America today.

And that is that many, many large institutional shareholders who represent you and me, mutual funds, pension funds, the like, vote with management on many of these important issues. And so they're not necessarily voting your opinion or mine.

BILL MOYERS: He's also ultimately responsible for over $2.3 trillion in assets and 256,000 employees. I mean, is it possible for one man to prevent all that happened at JPMorgan Chase last year?

GRETCHEN MORGENSON: This is where we get into the problem of institutions that are too big to manage. And ultimately then, too big to be allowed to fail. Which is the single most, the single largest peril that we have not addressed after the 2008 financial Armageddon. Dodd-Frank was supposed to address that issue, was supposed to eliminate too big to fail, but it hasn't.

And because there's the implicit guarantee by the taxpayer, we are always going to be at peril for some sort of a problem like this. Now the $6 billion loss didn't turn out to be a death knell for the company, it absorbed it.

It was able to do so without any kind of a hiccup financially. But, you know, that was one example. The company has enormous derivatives exposure. Enormous exposures around the world with counterparties. So you really do feel that it's too big to manage. And so therefore, we really must cut these banks down to a smaller size.

BILL MOYERS: You wrote recently about the bill introduced in the Senate by a bipartisan team of Sherrod Brown, Democrat from Ohio and David Vitter, a Republican from Louisiana. And you call that a "smart” bill. What appeals to you about it?

GRETCHEN MORGENSON: Well, what that bill basically does is it requires a far greater capital cushion for these banks, a far greater sort of rainy-day fund for these banks to have on hand in case they get into trouble. In 2008, the capital requirements were far too thin. So the cushion was this big when it should've been this big. And it wasn't liquid. It didn't consist of, you know, cash or treasury securities that you could sell immediately. It was, you know, one of these complex situations set up by this committee in Basel, Switzerland. And, you know, very, you know, Byzantine.

And it wasn't readily available capital. There wasn't enough of it and it wasn't liquid. And so the Sherrod Brown and David Vitter bill is an idea of how to have that pile of cash available, ready if there's a problem. Well, banks don't like this because they want to deploy that cash. They want to earn money on that cash. They want to, you know, take risks with that cash. And so of course they object to that idea.

BILL MOYERS: Do you think there's any chance that an intelligent-sounding, seeming bill, like the Sherrod Brown and David Vitter proposal has a chance of competing against the army of lobbyists that Jamie Dimon and others can send down to Washington?

GRETCHEN MORGENSON: It is a formidable, formidable army. I grant you that. I just hope that people on Main Street will rise up and support this idea, support this bill. Otherwise, we are simply going to have another crisis far sooner than we would otherwise. I mean--


GRETCHEN MORGENSON: --these banks are not getting smaller. They're getting larger. There are now more too-big-to-fail institutions than there were prior to the 2008 crisis--

BILL MOYERS: Dodd-Frank was supposed to prevent that from happening.

GRETCHEN MORGENSON: Dodd-Frank set up a system that is supposed to be in place to unwind troubled institutions when they become troubled. But again, it requires regulators taking a really firm stand against large, politically-interconnected, and powerful companies. And it is extremely, I don't see why if they wouldn't do that in 2008 why they're going to do it the next time around.

I just think it's too easy to put the taxpayer on the hook and bail these people out. And there's just been no penalty for failure in the 2008 crisis. So of course the response from these people is going to be, I'll just do it bigger next time, taxpayer will be there to bail me out, and we'll go on our merry way.

BILL MOYERS: Bloomberg Businessweek had a cover story recently, “Dimon Is Forever: Why Jamie Dimon is Wall Street's Indispensable Man.” Couldn't they have said that about Henry VIII or Louis XVI?

GRETCHEN MORGENSON: Well, you could've said it about John Gutfreund, who was the head of Salomon Brothers before he was made to take leave after the scandal in 1991 where they were found to have rigged the treasury market. I mean, if I were Jamie Dimon, I'd be worried about being called the king of the heap, because when that happens there is often a comeuppance. It hasn't happened to him yet. But, so here is a man that has succeeded because he hasn't failed.

I think that's really what we're talking about here. So the bar is quite low, wouldn't you say? I mean, by comparison to the banks that did require huge bailouts, Bank of America, CitiBank, you know, Wells Fargo, to a lesser degree, perhaps. This was the bank that was better than the rest. And so he gets all of these accolades because of it. Well, maybe that's, some of it is perhaps justified. But I think it's really a little bit much in putting him on a little bit of a pedestal.

BILL MOYERS: Has Wall Street as an institution, has Wall Street as a system of being in the world, learned anything in the last four years?

GRETCHEN MORGENSON: Absolutely not. Learned nothing.


GRETCHEN MORGENSON: You know, I was shocked, Bill, when after the crisis, Wall Street and the large banks continued their lobbying efforts unstopped, right? They didn't even hide in their trenches for one minute after pushing the nation's economy to the brink. And that to me was, it seemed like evidence of, there was just no shame. No shame at all in, among these people that had really created this problem and this crisis.

And they were given slack. They were, you know, allowed to stay in their jobs. They weren't removed. They weren't jailed. They weren't penalized. And so that's the disconnect that I think we really, I was shocked by.

BILL MOYERS: Speaking of putting the taxpayer on the hook. Now, you know, I like my Apple products and I'm sure everybody listening has something kind to say about how technology and Apple in particular has helped their own situation.

However, when I watched those hearings this week, I thought, when Apple is avoiding all the taxes they're paying on all those profits overseas, doesn't it put a burden on the rest of us? And doesn't it, as in fact the Senate Committee says, create a more unjust tax system?

GRETCHEN MORGENSON: Well, I think it does, Bill. Because these are obviously extremely successful companies building a product, as you say, that many, many people enjoy. This is not like Wall Street creating, you know, products that no one needs and that only wind up hurting people, as we saw in the crisis. But it is a cost to the system if you don't have adequate tax rolls coming in from these immensely successful companies. And this is not illegal. Apple has not been accused of doing anything illegal.

It's, you know, being shrewd. It's being smart about the tax code, which is a giant mess, because it has been manipulated to gain these kinds of loopholes.

BILL MOYERS: Let's take a look at an excerpt from the Senate hearings earlier this week. Senator Levin is questioning Apple's CEO, Tim Cook.

SENATOR CARL LEVIN (FROM SENATE HEARING): You point out, and accurately so, Mr. Cook, that 95 percent of the creativity that goes into those products is in California. But two-thirds of the profits are in Ireland. And you've made a decision, which you have a right to do, not to bring that money home.

TIM COOK (FROM SENATE HEARING): Senator, we're proud that all of our R&D, or the vast majority of it is in the United States.

SENATOR CARL LEVIN (FROM SENATE HEARING): I know. But the profits that result from it are sitting in Ireland in corporations that you control that don't pay taxes.



TIM COOK (FROM SENATE HEARING): All of the profits from all of the products we sell in the United States--


TIM COOK (FROM SENATE HEARING): --pay taxes in the United States.


BILL MOYERS: So what is wrong with all of that money sitting in Ireland?

GRETCHEN MORGENSON: If we're not receiving the tax revenues that this company, you know, hypothetically should be paying, then that's an opportunity loss for the government.

BILL MOYERS: It could be the roads and bridges that the--


BILL MOYERS: --employees of Apple out in Cupertino--


BILL MOYERS: --use every day to get to and from home and work.

GRETCHEN MORGENSON: Yes, it could be, you know, the municipal police departments, firefighters. It could be any one of those things. So it really is a matter of fairness, I think. And that's what, it doesn't pass that test. Is it fair that individuals pay, you know, whatever 39 percent, 40 percent of their taxes, have very few, you know, tricks and games to be able to play to get, you know, away from that.

Is that fair when you have massively, you know, rich American corporations paying far, far less? I think also what's interesting about this particular situation is that it's, Apple says it's based in California. But it's stateless. You know, it's one of these kind of, it doesn't really exist in any of these other places. And that, there's something really, really strange about that.

BILL MOYERS: Why do you think the corporate income tax is so easy to evade?

GRETCHEN MORGENSON: Because lobbyists have spent many, many years making sure that these loopholes are put into the tax code. I mean, this is the job of many, many people in Washington on K Street to manipulate the tax code for a particular client or industry. And so we see that just constantly. It's constantly being fiddled with.

BILL MOYERS: So does Cook's argument that Apple is simply playing by the rules of a broken tax system, hold water?

GRETCHEN MORGENSON: Well, it does. It is a broken tax system. And they are, apparently, playing by the rules. But I would like to know if Apple's lobbyists had anything to do with creating the loopholes and rules that they're now benefiting from. It really is a situation where we have large corporations with so much power in Washington able to change legislation, roll it back, as you point out with Dodd-Frank, able to change the tax code to their benefit. I mean, this is really about, this is really about the power and the money in Washington that comes from these behemoth corporations.

BILL MOYERS: You make me realize anew that there is this collusion, I didn't say conspiracy, collusion between the financial elites and the political elites that has widened the gap between everyday citizens, taxpayers, out there.


BILL MOYERS: Isn't that a crisis for democracy?

GRETCHEN MORGENSON: Yes. It's a crisis for democracy. It's also widened the gap, Bill, between small community banks that didn't create the problem. Okay, so they're now operating at an extreme disadvantage to the large behemoths because the large behemoths have the implied taxpayer guarantee, which gives them a lower funding cost, they, you know, when they go out to raise capital, they don't have to pay as much because the investors understand they're going to get bailed out if they get into a problem.

So, community banks don't have those benefits. So not only has this, you know, widened the gulf between Main Street and these, you know, powerful institutions, it's also widened the gap between, you know, smaller institutions that provide a service to, you know, small-town America or medium-sized-town America. And I think that's also troubling, because they're not going to be able to compete and they can't compete.

BILL MOYERS: You ever get frustrated?

GRETCHEN MORGENSON: I get frustrated. I get upset. I think that we're going in the wrong direction. Many times I feel that I'm stuck in this groove of scandal after scandal after scandal. They're coming more and more frequently, they're larger in size, they devastate more people. And I don't see an adequate response from our government. So it's a, it is a very frustrating time, I think. The disconnect I think between Main Street and Washington and the connections that Wall Street and corporate America, I think that disconnect is growing bigger, larger, and more pernicious.

BILL MOYERS: Gretchen Morgenson, thank you very much.


Gretchen Morgenson on Why Banks Are Still Too Big To Fail

Pulitzer Prize-winning New York Times columnist Gretchen Morgenson tells Bill that, five years after the country’s economic near-collapse, banks are still too big to fail, too big to manage, and too big to trust. Stockholders’ reaffirmation of Jamie Dimon as JP Morgan Chase’s chairman and CEO this week — despite a year of accusations and investigations at the bank — is further evidence, she says, of an unchecked system that continues to covet profits and eschew accountability, putting our economy and democracy at risk. Morgenson also discusses how behemoth companies like Apple manipulate the system and avail themselves of the biggest tax loopholes money and influence can buy.

“These banks are not getting smaller; they’re getting larger. There are now more too-big-to-fail institutions than there were prior to the 2008 crisis,” Morgenson tells Bill.

And while the Dodd-Frank Act was supposed to prevent that from happening, Morgenson says the law itself is less powerful than those it hopes to regulate.

“Dodd-Frank set up a system to unwind troubled institutions when they become troubled. But it requires regulators taking a really firm stand against large, politically-interconnected, and powerful companies… I just think it’s too easy to put the taxpayer on the hook and bail these people out. So of course the response from these people is going to be, I’ll just do it bigger next time, the taxpayer will be there to bail me out, and we’ll go on our merry way.”

Producer: Gail Ablow. Editor: Rob Kuhns.
Intro Producer: Robert Booth. Intro Editor: Paul Desjarlais.

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  • Anonymous

    Bankersters understand one thing… NO. they do not feel shame if they get by with their scams, they feel triumphant. If we allow them to ruin our lives… who is to blame? the only answer is… No. cut the do they feel shame crap. Of course they do not feel shame. shame is reserved for those who let it happen as far as banksters are concerned.

  • Pam Isaac

    “fairness” is not a law.

  • William Falberg

    Isn’t it obvious yet? We need a constitutional firewall between business and state. This is how:

    28th Amendment (The Constitutional Emergency Amendment)
    Corporations are not persons and shall be granted only those rights and privileges that Congress deems necessary for the well-being of the People. Congress shall provide legislation defining the terms and conditions of corporate charters according to their purpose; which shall include, but are not limited to:
    1, prohibitions against any corporation;
    a, owning another corporation,
    b, becoming economically indispensable or monopolistic, or
    c, otherwise distorting the general economy;
    2, prohibitions against any form of intervention in the affairs of government by means of;
    a, congressional lobbying
    b, electoral sponsorship or advocacy
    c, educational sponsorship or publication
    d, media news reporting
    3, provisions for;
    a, the auditing of standardized, current, and transparent account books
    b, closing the FRB and the establishment of state-owned banks
    c, civil and criminal penalties to be suffered by corporate executives et al for violation of the terms of a corporate charter.
    Optional: (or possible 29th amendment)
    The 16th Amendment to the United States Constitution is hereby repealed and Congress shall re-write the U.S. Code to reflect the changes embodied herein.

  • Pat Elgee

    What does Elizabeth Warren say? I am sure that she has a solution. Mine would just be to elect a trust buster.

  • Gene Bivins

    Banks will continue to be “too big to fail” until we tell them oh no they’re not. Let one fail. Let two of them fail. When they realize we’re not going to bail them out, they’ll start taking care of themselves, which will take care of all of us.

  • Gene Bivins

    It should be the basis of all law.

  • Steve Ardire

    and this is more fuel to the TBTF fire

    Bill Black: Our System Is So Flawed That Fraud Is Mathematically Guaranteed

  • susanpub

    For Bill Moyers – Has Wall Street learned anything? You bet!
    They’ve learned they can do risky & irresponsible things & get
    away with it.

  • susanpub

    Good luck.

  • Robert Baillie

    Guess what, Wall Street? The American public will NOT bail you out again!

    Anger at the last bailout extended across the political spectrum from left to right.

    Millions of Americans (mostly on the right) are armed and angry, and will not sit idly by if Washington tries to bail out Wall Street again.

  • Dave Morgan

    If they’re not bailed out, we’ll be hunting cats and dogs to eat on the streets of most American cities. If they fail, we go down with them, except they fly to their tropical islands and we’re left to fall into the flaming mouth of Hell. The time to act is now – not wait for them to prove AGAIN how INSANE they are.

  • Dave Morgan

    Pam’s correct. Fairness is in the eyes of the beholder.

  • Len Simpson

    Congress is owned by big money, as it has always been.

  • rain,adustbowlstory

    Another reason to donate to Senator Elizabeth Warren. Let her run for President in ’16 if for no other reason than to raise these issues that all the other candidates are desperate to sweep under the rug.

  • RevPhil Manke

    So……. This article says it is indeed most foul. Gee, that’s helpful…… NOT! …… The question seems to be, “How do we separate money from politics?” One way may be to get rid of PAC’s and lobbiests, and corporate money from elections. Then the question is, “WHO will ‘Bell the Cat”??

  • RevPhil Manke

    Wanna Bet! The Banksters will merely replace their minions with new clones. The policies and procedures must be changed. Get money out of Washington on all levels. A Constitutional Ammendment is a good start. Who will “Bell The Cat”, or call the kettle black?

  • RevPhil Manke

    Dave, Don’t you mean,”If they ARE bailed out”? Their goal is to enslave you. So far, so good!

  • RevPhil Manke

    When a law says “As congress deems necessary” it is toothless. Congress is corrupt! Their are already many appropriations bills that have sharp sounding meanings, but are similarly diffused with post statements like: “as needed”, or “as neccessary”. The corporate lawyers just distort them and destroy them on the spot.

  • RevPhil Manke

    Shame is an illusionary concept at best. It is used by the guilty to project their motivation onto others. Use the “mind of reason” to validate worthy ideas and ideals. Reason appeals to the mind at peace within itself. It is only limited by the unwillingness to go deeper within. This is not a concept the greedy and otherwise insane will enter. If you allow your mind to become angry, you have already decided to not see truthfully. Madness is the opposite of Truth. The opposite of Truth is illusion, of which madness is an extreme part.

  • William Falberg

    It’s a chicken/egg sort of thing. If ratified, it would be the corporate lawyers that were toothless and Congress would be dependent on “the consent of the governed” for their authority. Yes, Congress is corrupt, but so is Wall St. Together they’re unstoppable. This amendment makes it a crime for corporations to “interfere” with government. Past precedent would all have to be re-examined in light of this new standing. It has plenty of “teeth” . I post this repeatedly hoping more people will read it carefully and see how the courts would be forced to interpret it. For instance: legislation that includes but is not “limited” to. Does that not mandate legal action? This amendment would take a generation (or two) to fully implement. I envision a more orderly transition than my revolutionary brothers; and a longer-lasting solution.

  • Anonymous

    There is no point in dragging the CEO of Apple before a Senate committee to hear a homily on the morality of paying its taxes. For it is that very Senate that passed the legislation that makes it legal for Apple to avoid paying any tax at all. In other words, it’s the Senate who are enabling the avoidance of taxes by corporations. And, moreover, who ever said that corporations understand anything about moral obligation. They, in fact, pride themselves on their amorality.

    As for the people who find Apple gadgets handy and affordable, they have to understand that there are many times more people who will never afford those gadgets simply because it’s they who are paying the most for Apple’s ability to offer products affordable to the more economically advantaged. So, what are your gadgets worth to you? A cut in Social Security? Cutbacks to Medicare? The impoverishment of more of your less fortunate fellow citizens?

  • Anonymous

    I’m starting to believe that the best way to protest is to not participate. Already, less than half of the population votes, with the majority of that group being seniors. This system is surviving with less than half the population participating. The same applies to the economy. People pretty much fall in line with what the corporations are pushing. I’m constantly mindful of the Birmingham Bus Boycott and how a population of powerless individuals almost bankrupted an institution, and forced them to the negotiation table. A powerful, (purposefully) long forgotten form of resistance. Can’t have spontaneous economic boycotts. Would hurt the economy and all and job creation.

  • Leinanij

    I’m glad I’ve never bought an Apple product and now never will.

  • Anonymous

    Too big to fail is a ridiculous idea in the first place. All businesses, big banks included run the risk of failure and bankruptcy. It is part of the capitalist system to allow for failure. What these people are doing is nothing short of criminal. They have rigged the system so that all profits are private (theirs) and all losses when they get too big are public. (us taxpayers). Our govt. gets more corrupt by the day. A better rule is, “The bigger they are the harder they fall.”

  • Lori Sandler

    If you’re considering not buying an Apple product because of this segment, you might as well never buy another lightbulb (GE), Cisco-enabled product or gallon of gas (tax subsidies galore), amongst many others. Many, not just Apple, corporations use this loophole in our corrupted tax laws to take advantage and preserve profits. Until we get the corporate lobbyists out of the process of writing laws, nothing will change.

  • AJ

    Didn’t we let Lehman fail? Yep, seem to remember something about that…’d that work out? Any other banks realize that we’d let them fail and suddenly behave? Sure, Merril sold itself to BofA, but then we bailed out AIG and no big bank failures since

  • Anonymous

    I wish people would not blame the lobbyist for the loopholes. The blame rests on the elected official that takes the lobbyist’s recommended language and puts it into a bill. The blame rests with the elected official that votes for these clauses. The real joke comes when you hear elected officials wanting to ‘clean up the tax code’ but have pandered to loophole politics all their careers. At great personal gain.

  • Anne Ashleigh

    In Britain, the Parlimentary Commission on Banking Standards, was set up by Chancellor George Osborne, after several banking scandals occurred there. It attacked the lack of accountability of bankers and said some bonuses should be held up to 10 years. The 571 page report can be accessed by going to