Whose bad news is Cyprus burying?

JPMorgan, SAC Capital, HSBC breathe a sigh of relief.

As CNBC's John Carney points out, it's a great time to bury bad news.  While everyone looks at Cyprus, JPMorgan Chase's story has been dropped by most publications - which is a good thing for them, as their panel hearing on Friday did not go well...

So here it is in brief, via extracts from the New York Times report, during which CEO Douglas Braunstein is berated "for nearly an hour":

For nearly an hour, the executive, Douglas L. Braunstein, was berated for playing down JPMorgan’s risky bets to investors and regulators on a conference call in April, just weeks before the bank disclosed the costly blowup.

“You give this very glowing call,” said Senator Carl Levin, Democrat of Michigan, “instead of telling them what you knew” — that the portfolio “had been losing money and violating risk limits.”

Mr. Braunstein defended his statements in the conference call, saying they were the most “accurate” depiction based on the information at the time.

“You thought that was a balanced presentation?” Mr. Levin asked incredulously, peering over his glasses.

..and during which Ina Drew, the former head of JPMorgan’s chief investment office (which was at the centre of the scandal), also comes under some aggressive over-the-glasses peering:

While Ms. Drew acknowledged that “things went terribly wrong,” she directed virtually all of the blame at lower-level traders in London and other subordinates. She returned to this defense throughout the hearing, deflecting culpability by faulting inaccurate information.

..eventually all this the blame-shifting starts prompting sarky comments from John McCain, the chief Republican on the panel:

“The traders seemed to have more responsibility and authority than the higher-up executives,” he said.

..and even Michael Cavanagh, co-head of the corporate and investment bank, which was more removed from the scandal, is questioned closely and sarcastically:

But Mr. Levin persisted, asking, “How do you possibly justify your process?” Was it a “coincidence,” he asked, that the models shifted just as losses on the trades were ballooning? At one point, he reminded Mr. Cavanagh that he was under oath.

The other pieces of submerged bad news are a money laundering fine for HSBC, and a record insider trading fine for SAC Capital - of $6000m, announced on Friday. This is huge (c.f. the second largest SEC insider trading sanction was $156 m, paid by Galleon Group founder Raj Rajaratnam back in May 2011).

"These settlements call for the imposition of historic penalties," SEC's George Canellos said during a press conference call on Friday.

 

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I am special and I am worthless: inside the mind of a narcissist

There's been a lot of discussion about narcissists this week. But what does the term actually mean?

Since the rise of Donald Trump, the term “narcissistic” has been cropping up with great regularity in certain sections of the media, including the pages of this journal. I wouldn’t want to comment about an individual I’ve never met, but I thought it would be interesting to look at the troubling psychological health problem of narcissistic personality disorder (NPD).

People with NPD (which is estimated to affect about 1 per cent of the population) have a characteristic set of personality traits. First, they have a deeply held sense of specialness and entitlement. Male NPD sufferers frequently present as highly egotistical, with an unshakeable sense of their superiority and importance; female sufferers commonly present as eternal victims on whom the world repeatedly inflicts terrible injustices. In both cases, the affected person believes he or she is deserving of privileged treatment, and expects it as a right from those around them.

Second, NPD sufferers have little or no capacity for empathy, and usually relate to other people as objects (as opposed to thinking, feeling beings) whose sole function is to meet the narcissist’s need for special treatment and admiration – known as “supply”. In order to recruit supply, NPD sufferers become highly skilled at manipulating people’s perceptions of them, acting out what is called a “false self” – the glittering high achiever, the indefatigable do-gooder, the pitiable victim.

The third characteristic is termed “splitting”, where the world is experienced in terms of two rigid categories – either Good or Bad – with no areas of grey. As long as others are meeting the narcissist’s need for supply, they are Good, and they find themselves idealised and showered with reciprocal positive affirmation – a process called “love-bombing”. However, if someone criticises or questions the narcissist’s false self, that person becomes Bad, and is subjected to implacable hostility.

It is not known for certain what triggers the disorder. There is likely to be a genetic component, but in many cases early life experiences are the primary cause. Narcissism is a natural phase of child development (as the parents of many teenagers will testify) and its persistence as adult NPD frequently reflects chronic trauma during childhood. Paradoxically for a condition that often manifests as apparent egotism, all NPD sufferers have virtually non-existent self-esteem. This may arise from ongoing emotional neglect on the part of parents or caregivers, or from sustained psychological or sexual abuse.

The common factor is a failure in the development of a healthy sense of self-worth. It is likely that narcissism becomes entrenched as a defence against the deep-seated shame associated with these experiences of being unworthy and valueless.

When surrounded by supply, the NPD sufferer can anaesthetise this horrible sense of shame with the waves of positive regard washing over them. Equally, when another person destabilises that supply (by criticising or questioning the narcissist’s false self) this is highly threatening, and the NPD sufferer will go to practically any lengths to prevent a destabiliser adversely influencing other people’s perceptions of the narcissist.

One of the many tragic aspects of NPD is the invariable lack of insight. A narcissist’s experience of the world is essentially: “I am special; some people love me for this, and are Good; some people hate me for it, and are Bad.” If people with NPD do present to health services, it is usually because of the negative impacts Bad people are having on their life, rather than because they are able to recognise that they have a psychological health problem.

Far more commonly, health professionals end up helping those who have had the misfortune to enter into a supply relationship with an NPD sufferer. Narcissism is one of the most frequent factors in intimate partner and child abuse, as well as workplace bullying. The narcissist depends on the positive affirmation of others to neutralise their own sense of unworthiness. They use others to shore themselves up, and lash out at those who threaten this precarious balance. And they leave a trail of damaged people in their wake. 

This article first appeared in the 16 February 2017 issue of the New Statesman, The New Times