I am at the end of my week of Marx Brothers themed posts. As you can tell, I am a huge fan and several of you have asked which is my favorite film. Before answering I must confess that I much prefer their Paramount films to their later MGM work. Their first two films were adaptations of the Broadway shows The Cocoanuts (1929) and Animal Crackers (1930), George S. Kaufman and Morrie Ryskind wrote both. Their third Paramount film, Monkey Business (1931), was their first movie not based on a stage production, and the only one in which Harpo’s voice is heard (singing tenor from inside a barrel in the opening scene). Number four was Horse Feathers (1932), where they brothers satirized the American college system and Prohibition, the amateur status of college football players, and placed them the cover of Time.

But for me it is their final Paramount film, Duck Soup (1933), which was their greatest and my personal favorite. It was directed by the highly regarded Leo McCarey, is the highest rated of the five Marx Brothers films on the American Film Institute’s top 100 years … 100 Movies list. It had slapstick, singing and dancing, atrocious puns and just about every other form of top-notch comedy one can ask for in a movie. The absurdity of the film and the nature of the Marx Brothers comedy seems to me to be summed up in a dispute the film sparked between the Brothers and the village of Fredonia, New York. “Freedonia” was the name of a fictional country of which Groucho was the President and the city fathers wrote to Paramount and asked the studio to remove all references to Freedonia because “it is hurting our town’s image”. Groucho fired back a sarcastic retort asking them to change the name of their town, because “it’s hurting our picture.”

I thought about this comedic phenomenon when I read several articles about JP Morgan Chief Executive Officer (CEO) Jamie Dimon and his whining about how tough regulators have been on him and his poor little bank. An article in the Financial Times (FT) Lex Column, entitled “JPMorgan: comic relief”, said, “A rule of thumb for JPMorgan earnings: the more entertaining chief executive Jamie Dimon is on the conference call, the limper the results. Yesterday, he riffed on [among other things]: what is un-American (the bank being chased by many regulatory bodies rather than just one)”. This was in the face of a report in another FT article by Tom Braithwaite, entitled “High quality global journalism requires investment”, that the bank “said its earnings have been hit by $1.1bn in new legal charges, as it prepares to settle over allegations of foreign exchange manipulation with the Department of Justice. This latest sum takes the total legal charges disclosed by the US’s largest bank since 2010 to more than $25bn, or more than a year’s profits. “Banks are under assault,” said Jamie Dimon, chief executive, as he reported fourth-quarter results on Wednesday.”

Dimon’s seeming insistence that banks following laws is un-American and the attendant cost of doing business in compliance with relevant anti-money laundering (AML) laws still seems to bedevil a fellow mega-bank, HSBC Holdings PLC, which paid a paltry fine of $1.9 billion (paltry that is next to JPMorgan) for its transgressions and violations of that un-American prohibition against money-laundering. In an article in the Wall Street Journal (WSJ) Rachel Louise Ensign and Max Colchester reported that after a two-year monitorship, the independent monitor will issue a report that “will criticize the bank and lay out ways it needs to improve.” This is in the face of the 2014 monitor’s report that HSBC “information-technology systems still lacked ‘integration, coordination and standardization’ and recommending that senior executives have their bonuses docked absent progress.” The monitor also said that “Throwing bodies at it and putting your finger in the dike-that’s not a sustainable system.”

What has been HSBC’s response to this news? Apparently with the same whining as Dimon but rather than focus on the fact they have to follow laws, HSBC focused on the actual doing of compliance. The article said that the new Chief Compliance Officer (CCO) Joe Evan, a former Drug Enforcement Administration official, “surprised some colleagues by spitting tobacco juice into a cup while in the office”; perhaps they are just anti-tobacco. However even such simple messaging techniques as screen savers with the AML reminders to “Ask The Right Question” have been derided at HSBC. Even the head of the bank’s AML compliance was quoted as having said “But money laundering happens in financial institutions. How do you reconcile appetite with reality?”

Now contrast this incessant whining with the recent change in tactics by one of the few remaining financial meltdown enforcement actions left, that being the Department of Justice’s (DOJ) case against Standard & Poor (S&P). In an article in the New York Times (NYT), entitled, “S.&P. Nears Settlement With Justice Over Crisis”, Ben Protess reported that S&P has been accused by the DOJ “of awarding inflated credit rating to mortgage investments that spurred the financial crisis”. S&P initially had aggressively fought the lawsuit, Protess noted, and attacked the government case in the press. S&P had hired noted First Amendment lawyer Floyd Abrams to go on television to claim to link “the federal investigation to S.&P.’s decision in 2011 to cut the United States credit rating below the top grade of triple A.” Unfortunately for S&P they could not prove that defense, even after extensive discovery on the issue. But their tune has recently changed, “After S.&P. mounted a two-year campaign to defeat civil fraud charges — portraying them as retaliation for cutting the credit rating of the United States — the ratings agency is now negotiating with the Justice Department to settle the case, according to people briefed on the matter.”

But the real problem for S&P is that they could have settled two years ago, before suit was filed. Protess said, “The government offered S.&P. roughly the same settlement size, $1 billion plus, before filing suit two years ago. If S.&P. had embraced that offer, instead of fighting accusations that it abused its role as a rating agency, it could have walked away without accumulating tens of millions of dollars in legal fees.” Moreover, by not settling pre-suit, S&P has subjected itself to the new reality of settling suits with an admission of liability, never good for those pesky follow-on shareholder actions. Further, “more than a dozen state attorneys general are demanding that S.&P. pay more than $1 billion to settle the case, the people briefed on the matter said, a penalty large enough to wipe out the rating agency’s entire operating profit for a year.”

Are banks and rating entities inherently arrogant or do they simply face that age-old foe that many people face today, dog excrement? As Dimon said in his earnings call, and was quoted in the FT’s Lex Column, sometimes “even JP Morgan will step into it on occasion”.

If you want to avoid stepping in it this weekend, I suggest you settle in and watch some old Marx Brothers movies.