Cull Your Clients

Hillsdale College has kindly invited me to deliver a talk on Dodd-Frank and its aftermath (November 4–I’ll post a transcript afterwards). An early draft of that speech imagines a dystopia in which government produces sheepish obedience not with storm troopers or a propaganda apparatus but through nominally private banks. I’m glad I discarded that draft—not because it’s paranoid, but because it’s, like, so yesterday.

“J.P. Morgan to Cull Business Clients,” today’s Wall Street Journal informs us. “Bank Reviews Cutbacks in Loans to Pawn Shops, Payday Firms, Others Viewed as Risky to Reputation,” reads the subhead. As for pawn shops and payday firms, no big surprise: the policy of Dodd-Frank is to present consumers with a choice between government-controlled SIFIs and the Cosa Nostra, by mowing down every lender in-between. But what “Others”? “The bank has also ramped up discussions whether it should keep lending to gun companies,” says the article. “[N]o policy has been put in place prohibiting loans to those companies,” we are being told: “So far.”

Also on J.P. Morgan’s client questionnaire:

Are you now, or have you ever been, a member of an organization that promotes sexual abuse, especially the Catholic Church?

If you are a government borrower: is your state/county in full compliance with the Affordable Care Act?

Does your organization/firm/government respect the full dignity and sanctity of gay marriage?

I’m making this up—so far. Come November, it may be old news.

Yes, dear libertarians: J.P. Morgan’s “risky” customers can migrate elsewhere—in your fantasy world. In the actual world, J.P. Morgan’s only real client, and that of any bank of any size, is the government, and every one of them is angling for a first-mover advantage. In completely unrelated news, J.P. Morgan’s commercial banking unit reported 1.73 billion second-quarter revenues.

“It isn’t known if regulators played any role in urging J.P Morgan to examine its relationships” with “risky” clients, the Journal’s intrepid investigators report. They’re missing the point. A mafia don picks up the phone or sends guys with baseball bats to “urge” people to “examine their relationships” and to “cull clients” only when he fears the system might break down. When it works he just sits there, gets a shave, and collects the money. Kind of like the SEC or the Fed, with a vowel at the end.

There comes a point at which you want to send money to Ted Cruz, not to improve things (he can’t and he knows it) but simply to bring the system down. I’m not quite there yet, but I’m getting close.