Superbanks - too large to fail, and too large to manage?

Bank managements often argue that losses in far-away subsidiaries could not easily have been foreseen by top management. Such may be the case when Citigroup tries to explain loan losses that may have occurred in its business in Mexico. But is this really a valid excuse? A loss of $ 400 million is quite substantial, even when measured against the bank's total assets of approximately $1.9 trillion. The loss/exposure admittedly is only 0.2 percent of total assets but seen in a different way this would mean that the bank has about 4500 loans (if they would all be the same size). Any organisation should be able to set up a management structure that can cope with this number of transactions. The management pyramid would only about three layers if each senior loan officer is in charge of about 50 loans. Impossible in this age of instant communication? Not in my opinion, one would not even need (expensive) MBA's or PhD's, just honest hardworking employees with a good pinch of common sense.

J.P. Morgan to pay $2 billion over Madoff case

Not sure if one should cry or laugh when reading headlines such as this one. How did the parties to this shameful deal arrive at the number? Did it get picked out of thin air? Is there any real proof of culpability? Since when is it a crime to conduct one's business prudently? If the regulators did not spot the Madoff fraud have they received any punishment? And why is JP Morgan management agreeing to this 'settlement' (which leaves the question where the money goes, is it just used to plug the hole in the government's budget?)

P.S.: it is gratifying to read that a 'portion' of the $2 billion penalty will be earmarked for victims of the Madoff fraud. How generous, and the state appropriates the majority of the loot for itself. Why don't the regulators make a contribution to the victims as well? I guess the only reason why regulators do not throw the book at specific JP Morgan executives is that they want to avoid questions over why they are spared jail after such a major cock-up as the failure to detect the Madoff fraud in good time.

Nothing can surprise me with respect to the ever-increasing reach that the 'authorities' give the interpretation of the ill-fated and useless money laundering laws. Soon the £5 loan that a schoolchild receives from a granny will have to be reported as 'suspicious' by anyone who has knowledge of it, for who but the 'regulators' can (with hindsight) determine what is suspicious or not? Already anyone trying to open a bank account (or even access a long-forgotten one) is basically treated as a potential criminal these days. And all this wasteful effort is expended in order to undo the results of bad laws imposed by an undemocratic process.