Wednesday, November 9, 2016

Uber: First Class Business in a First Class Way

Unfortunately No Longer Watching or Investigating

If you know your financial history, you’ll recognize the riff on JP Morgan’s famous quote (later appropriated by David Ogilvy) before the 1933 Senate Banking Sub Committee hearings, immortalized here at JPMC’s website.  
Here’s another:

“Some bankers are not as observant of this code as they should be; but if, in the exercise of his profession, the banker disregards this code – which could never be expressed in legislation, but has a force far greater than any law – he will sacrifice his credit. This credit is his most valuable possession; it is the result of years of fair and honorable dealing and, while it may be quickly lost, once lost cannot be restored for a long time, if ever. The banker must at all times conduct himself so as to justify the confidence of his clients in him and thus preserve it for his successors.”
A powerful statement on bankers’ ethics and sober behavior. 
A reconfirmation, even though none is needed, of the imaginary power of the market to self-regulate.
Assuming you know the reasons for the 1933 hearings, you might be forgiven for thinking that there was a lack of sincerity in these words.  AA certainly forgives you.  
If you take them at face value, then I’d suggest perusing the Sub Committee’s report.
In a related story, 7 November Bloomberg reported  that two banks declined to participate in Uber's IPO.  Boldface courtesy of AA.   
“The potential fees and reputation boost that could come from working on Uber Technologies Inc.’s initial public offering are the stuff of bankers’ dreams.
Yet at least two investment banks passed on selling shares of Uber to their high-net worth clients -- shares eventually sold by other banks in January -- because the ride-share company wasn’t willing to provide financial details about its business, people with knowledge of the matter said.

JPMorgan Chase & Co. and Deutsche Bank AG both turned down the opportunity to offer their wealthiest clients the option to invest in Uber, said the people, who asked not to be identified because the information is private.

Bank of America Corp. and Morgan Stanley ended up selling the shares earlier this year through those firms’ private wealth divisions.”


Imagine thinking that investors should be given financial information if they are being asked to give money to a company. 

What ever happened to trust? 

Does this mean that the participating banks in the IPO would be happy to lend Uber money without financial information? 

Or is it only their customers who are expected to part with their money without information like some investors in at least one UAE bank? 

In any case kudos to JPMC and DB.  

千里之行,始於足下   (A journey of 1,000 li begins with a single step). 
But no matter how auspicious the beginning, it takes more than one step to reach the goal.  

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