Crains New York - October 8, 2012 - (Page 11)

AG picks wrong target in JPMorgan ou probably know that last week New York Attorney General Eric Schneiderman sued JPMorgan Chase over all the dishonest ways the bank packaged and sold mortgage securities and created the financial crisis. Finally, you may have thought, someone will be held accountable for causing such an economic disaster. Sorry, but not a single one of the assumptions in the preceding paragraph is accurate. The truth matters here, because it explains why the threat of another financial crisis remains ever present. Start with the inconvenient fact that none of the misdeeds were committed by JPMorgan Chase executives. The miscreants worked at Bear Stearns, the big securities firm that almost touched off the financial crisis in March 2008 when it failed because of its shoddy mortgagebundling practices. You might remember that a meltdown was averted only because Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Hank Paulson arranged for JPMorgan to buy the firm with billions in federal guarantees. Did Chase CEO Jamie Dimon think he would benefit from the deal? Sure. But he also thought he was doing a good deed for the country. The same applies to his acquisition of Washington Mutual, which also committed sins in housing loans and whose legacy continues to bedevil Mr. Dimon, too. Y GREG DAVID The Bear Stearns executives responsible are long gone. Actually, they lost their jobs in 2008. So who will be punished if Mr. Schneiderman wins? JPMorgan shareholders. Why are they responsible? Beats me. By the way, The New York Times deserves kudos for its story on Mr. Schneiderman’s lawsuit. It was one of few media reports to say clear- ly that the suit was filed against Bear Stearns and to keep the focus on the firm. The Times story also helps to pull back the curtain on Mr. Schneiderman’s motivations with a very revealing quote that linked Chase and Bear Stearns: “The government’s actions represent a complete validation of the cases brought by investors who were duped by the fraudulent sale of mortgage-backed securities by JPMorgan, WaMu and Bear Stearns.’’ Who said that? A plaintiff ’s attorney who is suing JPMorgan Chase. Who are Mr. Schneiderman’s biggest allies and a very important source of campaign cash? Plaintiff attorneys. I am sorry that the truth about the financial crisis is complicated. It would be nice if the Schneiderman theory—that it was all Wall Street’s fault—were true. Here is what is really important. Because people like Mr. Schneiderman continue to insist on that simplistic tale, the reforms enacted in the Dodd-Frank act will be mostly inconsequential, ineffective or counterproductive. Of all the big banks, JPMorgan did less of the bad mortgagepackaging than virtually anyone else. Yet it has become so large as a result of the crisis that it is too big to fail. And if it does do something wrong in the future, it will have to be saved. Maybe the culprits will be held accountable, or maybe not. It doesn’t matter. There will be another crisis and another taxpayer bailout. That’s what we should fix—not seeking to score points with pointless lawsuits. CRAIN’S AND PARTNERSHIP FOR NEW YORK CITY PRESENT THE SUSAN LERNER I Bring NY elections into the 21st century n instituting Internet voter registration administratively through the Department of Motor Vehicles, Gov. Andrew Cuomo has come up with a brilliant workaround for an antiquated, ossified registration system that the state Legislature has no desire to change.But the move, while solving one problem, does something more important:It calls attention to the urgent need to modernize the state’s patronage-driven election administration system. The process Mr. Cuomo instituted is a major step forward for individuals who have or are getting driver’s licenses (approximately 50% of New York City residents).It is an improvement in election registration, which we hope will result in faster processing of DMV-related registrations at boards of election around the state. But, in typical fashion, the boards’ archaic procedures are undercutting the advantages of today’s technology. What may not be clear from the newspaper reports about the new system is that, while the interface with voters is completely electronic, the DMV must print and mail every electronically generated registration form. Each form must then be manually entered into each county’s board of elections database, causing delays and data-entry errors. Although the DMV should certainly not be able to just electronically transmit data directly into boards’ databases—that would be a security risk—manually re-entering the information that the voter has already entered electronically is a clear waste of time. More generally, we need broad, systematic, permanent change. The Internet-to-paper registration procedure is merely a symptom of the need for a total reworking of the state’s outmoded, inefficient and wasteful election administration system. For example, in June, the New York City Board of Elections experienced dramatic errors in reporting the results of the primary in the 13th Congressional District, causing widespread confusion. When Common Cause/NY and others testified at the City Council, the critique motivated the board to begrudgingly change its election-night reporting procedure from a comical cut-andpaste methodology to a digital one. But the damage to the candidates and the voters was already done. All too often it seems like our election administration is an adversarial contest between the voters on the one hand,and the politicians and the election administrators they control on the other. It’s time to change all that. The Legislature must act in the best interest of the voters who elect them and completely re-examine how the state administers its elections. Common Cause/NY is eager to work with the Legislature, the bar and others to bring New York’s election law out of the 19th century and fully into the 21st.Although the election in November will likely underscore the need for immediate reform, at the very least voters can feel confident that Mr. Cuomo is on our side. Susan Lerner is the executive director of Common Cause/NY. FUTURE OF NEW YORK CITY THE AGENDA FOR THE NEXT MAYOR Join Crain's New York Business and the Partnership for NYC for the FUTURE OF NEW YORK CITY CONFERENCE and take part in a discussion about the agenda for the next mayor. After 20 years of businessminded administrations, it appears the next mayor of New York City will have a career largely in public service. What does this mean for the business community? DATE: November 28, 2012 TIME: 8:00 a.m. - 2:00 p.m LOCATION: Sheraton New York Hotel &Towers 811 Seventh Ave COST TO ATTEND: $349 for individual ticket(s). $3,490 for table(s) of ten. For more information, please call the Events Hotline at (212) 210-0739. THE AGENDA FOR THE NEXT MAYOR Register Today! crainsnewyork.com/events-future2012 Co-Host: Presenting Sponsors: City Sponsor: City Supporter: October 8, 2012 | Crain’s New York Business | 11 http://www.crainsnewyork.com/events-bestplaces2012 http://www.crainsnewyork.com/events-future2012 http://www.crainsnewyork.com/events-future2012

Table of Contents for the Digital Edition of Crains New York - October 8, 2012

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
FROM AROUND THE CITY
OPINION
GREG DAVID
THE LIST
REAL ESTATE DEALS
CLASSIFIEDS
SMALL BUSINESS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - October 8, 2012