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TheStreet Open House

JPMorgan and Goldman: Bad Apples

NEW YORK ( TheStreet) -- We rarely punish banks in this country when they do wrong.

When we do punish them, we take away some of their money. But it's not really their money we're taking away. It's the depositors' money. I can't remember the last time I saw a banker being led away in handcuffs, for following bank policy. Not an American banker, anyway.

In other words, if Enron (a case the FBI apparently remembers on its Web site) had been a bank, its officers likely never would have been charged.

Let's remember what Enron was doing. It was creating phony markets in things like electricity, manipulating them, and raising prices paid by people and companies. If companies really are people, you can claim bankruptcy executed Enron.

Which leads me to JPMorgan Chase (JPM). Our Shanthi Bharatwaj writes that the bank is "exploring" the sale of its commodities businesses as regulators "step up scrutiny."

That's one way of putting it.

These "businesses," owned separately by Goldman Sachs (GS) and JPMorgan, were in fact schemes so transparent, The Daily Show was able to explain them in five minutes. What Goldman Sachs was doing with aluminum, JPMorgan Chase was doing with copper and more. They were hoarding supply in order to raise the price.

They were even doing it with energy, which is the market that got Enron into trouble. The Federal Energy Regulatory Commission has just gotten JPMorgan Chase to pay $410 million in penalties for market manipulation in California electricity markets.

The problem with all this isn't just the market manipulation, or the fact that no one is going to jail for engaging in it. The problem is that this undermines public confidence in banking and, by extension, in all business.

When banks act with impunity, when they do things like break into someone's home by accident, steal all that person's stuff, and then think a written apology is sufficient when they discover they foreclosed on the wrong home, as 10TV reports from central Ohio, every banker becomes suspect.

Bank robbers became folk heroes in the 1930s for a reason. It was because people hated bankers even more than they feared robbers.

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