"Amazon's breathtaking growth — it has moved into about 2.7 million square feet in South Lake Union and the Denny Triangle since spring 2010 — has spearheaded the downtown office market's recovery from record-high vacancy rates brought on by the recession and Washington Mutual's demise," notes [Eric Pryne of Seattle Times]. "The company's contrarian decision to locate downtown could spur more tech and Internet companies to move in from the suburbs," Downtown Seattle Association President Kate Joncas says.
What caught my attention? "Washington Mutual's demise..." Why? Because it recalled this post from a year ago...
Christmas came early this year for four former executives of Washington Mutual (WaMu), a large US bank that failed in the autumn of 2008. The Federal Deposit Insurance Corporation (FDIC) had brought a lawsuit against the four for actions that included taking huge financial risks while "knowing that the real estate market was in a 'bubble'". The FDIC sought to recover $900m (£575m), but the executives have just settled for $64m, almost all of which will be paid by their insurers; their out-of-pockets costs are estimated at just $400,000.
To be sure, the executives lost their jobs and now must drop claims for additional compensation. But, according to the FDIC, the four still earned more than $95m from January 2005 through September 2008. So they are walking away with a great deal of cash. This is what happens when financial executives are compensated for "return on equity" unadjusted for risk. The executives get the upside when things go well; when the downside risks materialise, they lose nothing (or close to it).
At the same time, their actions – and similar actions by other bankers – are directly responsible for both the run-up in housing prices and the damaging collapse that followed. That collapse has impacted non-bankers in many negative ways, including through the loss of more than 8 million jobs.
It is also leading to austerity – taxes are increasing and government spending is falling at the local and state level around the country. A difficult fiscal conversation still lies ahead at the federal level, but cuts and contractions of various types seem likely.
“The thing that galls me is that I told Heymann the kid was a suicide risk,” [Swartz's former lawyer Andy Good] told the Globe. “His reaction was a standard reaction in that office, not unique to Steve. He said, ‘Fine, we’ll lock him up.’ I’m not saying they made Aaron kill himself. Aaron might have done this anyway. I’m saying they were aware of the risk, and they were heedless.” Elliot Peters, Swartz's lawyer at the time of his death, said he encountered that same hardball attitude when prosecutors refused to negotiate a plea deal that would have resulted in no prison time for the 26-year-old, the Globe reported. Peters says prosecutors demanded that Swartz plead guilty to 13 felonies and spend six months behind bars.
Swartz actually faced over 30 years in prison for the victimless crime of "data theft." Now back to the world of bankers:
JPMorgan Chase & Co.'s approximately $6 billion in losses from risky derivatives bets last year gave a black eye to Chairman and Chief Executive Jamie Dimon, who had emerged from the financial crisis as America's most respected banker.
Now, the losses — made by a trader nicknamed the "London Whale" — are costing Dimon financially.
JPMorgan's board cut Dimon's pay by 50%, citing failures of management that led to losses in the bank's chief investment office.