The Mandelson Scandal is about Wall Street Power and Political Deviance

Epstein the paedophile is a sub-plot.

“We’re entirely relaxed about people getting filthy rich”.

Peter Mandelson.

The Epstein papers have generated shock and awe - thanks to Jim Pickard’s scoop in the Financial Times. But this is not just a story of Mandelson’s friendship with a filthy rich paedophile. It is not just the story of a $75,000 cash bribe. Or of Mandelson’s insistence on staying in Epstein’s house while the man served a prison sentence for sex trafficking.

It is a story of a $4 million plus payoff by the powerful Wall Street bank, JPMorgan, as reward for Peter Mandelson’s attempts to use British governmental power (both in his role as UK Business Minister and Alastair Darling’s role as Chancellor ) to challenge and reverse President Obama’s attempts to regulate Wall Street lending practices - after the Great Financial Crisis.

A $4million plus payoff as reward for passing potentially lucrative state secrets - the €500bn EU bailout of the Eurozone; a forthcoming sale of UK government assets and advance notice of Gordon Brown’s resignation as Prime Minister. This intelligence was shared with a powerful Wall Street bank, JPMorgan - with the clear intention the bank should use the information to make speculative capital gains.

A $4million plus payoff for encouraging JP Morgan to “mildly threaten” the British Chancellor, Alastair Darling over his planned tax on bankers’ bonuses.

Darling and Mandelson, despite their best efforts, failed to persuade Obama and his economic adviser, Larry Summers to reverse what came to be known as the ‘Volcker Rule’. But JPMorgan very likely made substantial capital gains from Mandelson’s betrayal. If not, how to explain the later $4million reward to Mandelson - in the form of a $4million consulting contract with his company Global Counsel, and other lucrative banking sector connections?

My bias

On this issue I must admit bias. I worked as an adviser to the Rt. Hon. Margaret Beckett MP when she was made Secretary of State for Trade and Industry in 1997 - the first woman in that post and a portfolio that she, as a trained engineer, had long wanted to occupy. Barely a year later, after much lobbying by Mandelson’s corporate friends - Beckett, always regarded as a “safe pair of hands” by the Blair government -was rudely and unexpectedly ousted, and Mandelson imposed in her place.

It was in that role that Mandelson famously declared that he and the Labour government were “intensely relaxed about people getting filthy rich”.

Gone were the safe pair of hands, and in came a Minister who quickly attracted opprobrium for the Labour government. He lasted just five months before he was forced to quit after failing to declare a home loan from Labour millionaire Geoffrey Robinson to his building society.

It was by then clear, as the Epstein files confirm, that Mandelson suffered from what Keynes called a “morbid obsession” - the love of money.

JPMorgan used Mandelson to undermine Obama, and make easy money

In the interests of greater transparency and accountability, and knowing that many subscribers do not have access to FT stories, I am copying below directly from an FT article published on the 3rd February by the Financial Times’s Jim Pickard.

The key players are Jeffrey Epstein who acts as the go-between and Jes Staley, who had spent 34 years at JPMorgan, and who at the time was head of private banking at the bank, and later was appointed CEO of Barclays Bank. The economist Larry Summers was at the time the head of President Obama’s National Economic Council and had previously served as US Treasury Secretary.

As the FT revealed, Peter Mandelson, using Epstein as a go-between, lobbied the US government on behalf of Jes Staley and JPMorgan in 2010 when he was a UK government minister, using talking points provided by Staley in lobbying Larry Summers with arguments against Obama’s post-financial crisis reforms - the Dodd-Frank legislation.

Mandelson agreed with Epstein that he would urge Larry Summers, then director of Barack Obama’s National Economic Council, to meet JPMorgan executives, including Staley, emails show.

He also sought talking points from Staley ahead of his own conversation with Summers. Mandelson, who was UK business secretary and de facto deputy prime minister at the time, subsequently leaked private government memos about his meeting with Summers to Epstein, according to the documents.

Epstein emailed Mandelson on March 28 2010, saying he wanted the British cabinet minister to lobby Summers to meet JPMorgan figures to discuss banking restrictions known as the Volcker rule, including Staley, the US lender’s head of private banking.

“I would like you to ask Larry Summers if he would meet directly with Jes, and another jpm person, re the proposed volcker rule. I can’t do it directly,” Epstein said. “Larry is getting info third and fourth hand from senators who are getting it from lobbyists.”

Mandelson replied: “I can say this to him.”

The next day, March 29, Mandelson asked Epstein whether Staley could “send me email on issues re Dodds/Volcker”. A later memo from a meeting between Mandelson and Summers indicated that the UK business secretary had brought up a talking point suggested by Epstein during the discussion.

A later memo from a meeting between Mandelson and Summers indicated that the UK business secretary had brought up a talking point suggested by Epstein during the discussion.

The new emails show Mandelson, Epstein and Staley, who went on to be boss of Barclays, discussing the Volcker package of banking reforms that was opposed by American lenders.

The Volcker rule was introduced in the aftermath of the 2008 financial crisis and designed to prevent big banks from using their own money for riskier trading activities.

JPMorgan was among the most fervent opponents of the reforms, named after former US Federal Reserve chair Paul Volcker, arguing they were too stringent and would negatively affect market liquidity.

The Volcker rule was approved by regulators in December 2013 as part of America’s Dodd-Frank banking reforms and came into effect in April 2014.

In late March 2010, Mandelson was preparing for a meeting with Summers, who was also due to speak with Alistair Darling, then UK chancellor.

On March 29, Epstein discussed with Staley the argument they wanted Mandelson to deploy against the Volcker proposals ahead of meetings Summer was due to have with Darling, and then Mandelson.

“We should craft an arg why volcker is bad for europe..Peter can say he has spoken to you. It is bad for europe for the following reasons,” Epstein wrote to Staley.

On March 30 Staley sent Mandelson some “brief speaking points” for him to use when discussing the Volcker plan with Summers. “We can speak to them when we talk tonight,” he added.

Staley’s list of talking points included: “Updating regulation to the reality of global modern markets should not disadvantage US institutions or create structural conflicts in relation to their Asian or European counterparts.”

The memo to Mandelson concluded: “If the Volcker Rule had been in place during the financial crisis, it would no[t] have prevented the bank failures that occurred.”

On March 31, Epstein received a readout drafted by Mandelson’s private secretary of the Darling and Summers meeting that day.

The memo said the chancellor had been “grateful for your [Mandelson’s] intelligence”.