MOTU Jamie Dimon, enduring a high profile US government inquiry as only a supreme narcissist can
You know, being called to testify before a Senate committee on a matter fraught with danger for one’s career, and perhaps one’s very liberty, would usually have the testifier sweating bullets. Not so for the man who has been called Wall Street’s most gifted banker, Master of the Universe, J.P. Morgan Chase CEO, Jamie Dimon.
Dimon, considered to be a master of risk management, was able to steer his financial mega-corporation through the worst of the 2008 Wall Street crash, with a little help from his US taxpayer friends and the Federal Reserve Bank, upon whose board he sits. He’s also the man leading the charge against Congress’s attempt to regulate Wall Street’s cowboy casino so it doesn’t happen again.
Dimon took to The Hill Thursday to testify before the Senate
Fluffing Banking Committee. The occassion was his firm’s recent multi-billion dollar trading loss by its CIO’s investment unit that invoked memories of the kind of high risk trading games that nearly drove the world economy into the Second Great Depression four years ago, prevented only by a multi-trillion dollar government bailout. A trade that could have triggered another systemic meltdown. (J.P Morgan was considered too big to fail in 2008, and is now 50% smaller larger.)
Appearing both contrite and clueless, Dimon was able to exit the Senate building with his ass thoroughly kissed, his knob thoroughly shined.
Sen. Bob Corker (R-TN): “You’re obviously renowned, rightfully so i think, as being one of the most, you know, one of the best CEOs in the country for financial institutions. You missed this, it’s a blip on the radar screen.”
Sen. Michael Bennet (D-CO): “I think you’re well aware of my concern about the fiscal condition of this country. I wonder if you could take the last couple minutes of this time to talk about how you see our relative position with Europe and other places, the political risk of our not accomplishing what we need to do in the fiscal side, and the upside if we could actually come together in a comprehensive way to address the long-term fiscal condition of the United States.”
Sen. Jim DeMint (R-SC): “I really appreciate you voluntarily coming in to talk with us. It is important that we talk about things happening in the industry. It helps us as we look forward and, hopefully, it will contribute to best practice scenarios in industry. I appreciate your emphasis on continuous quality improvement. We can hardly sit in judgment of your losing $2 billion. We lose twice that every day in Washington.”
Sen. Jerry Moran (R-KS): ...[Your] behavior really matters in our ability to be an advocate for a free-market that creates jobs and economic opportunity and allows Americans to pursue the American dream.”
Two notable exceptions were Oregon Sen. Jeff Merckley and New Jersey Sen. Robert Menendez. Merkley didn’t like the way Dimon responded to his question about TARP and the taxpayer bailout:
“Sir, this is not your hearing…I think a lot of experts would say that without federal aid, JPMorgan would have gone down, and that you would have been out of a job.”
And Menendez wasn’t buying the spin that the loss was just a normal hedging position gone bad but a blatant example of gambling (evidenced by the huge amount of very illiquid swaps involved):
Menendez: “When you reduce a hedge, or hedge a hedge, isn’t that gambling?”
Menendez: “You said the hedge morphed. What did it morph into, Russian roulette?”
Jon Stewart, as usual, has the post-mortem mashup.
Job interviews by Senators currently on the government’s side of Washington’s Revolving Door.
But the real take away here is the potential damage done to the Wall Street Banksters’ attempt to castrate the so-called Volcker Rule, a key component of the The Dodd–Frank Wall Street Reform and Consumer Protection Act, passed in 2010 as a means to prevent another catastrophic financial system meltdown. Dimon, a large campaign contributor to the 2008 Obama presidential campaign, has been the leading proponent of the Bankster’s resistance to new, effective regulation. Needless to say, he has now lost a huge amount of personal capital to wage that fight and may be relegated to the bullpen.
The last systemic financial meltdown, known as the Great Depression, resulted in a very effective package of regulatory controls that lasted for nearly six decades. These included the Glass-Steagall Act of 1933, which regulated the banks; the Commodity Exchange Act of 1936, which was given the oversight function of all commodities and futures trading activities; and the creation of the SEC in 1934, charged with overseeing the stock market. The first two were done away with in the latter years of the Clinton Administration, setting in motion the events underlying the 2008 Crash. And while the SEC is still around, it is an integral part of the Revolving Door between Wall Street and Washington, and continues to be underfunded by Congress.
All of which is business as usual in Washington. Said Illinois Sen. Dick Durbin during the early days of the Dodd-Frank maneuverings:
“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.“
And that, as they say, is that.
[Image credit: The NY Times]