Jamie Dimon: Wall St Titan and major dick

Macho man and JP Morgan Chase Chairman, President and CEO Jamie Dimon is regarded as a titan on Wall St, and a dick by pretty much everyone else. Dimon is a balls-to-the-wall capitalist and unapologetic advocate of the system that makes people like him rich, and brought the global economy to its knees in 2008.

In April 2o12, JP Morgan reported a loss in a London-based division, first calculated to be $2 billion. The estimates then kept going up, finally reaching over $6 billion. Dimon dismissed the incident initially, calling it a “tempest in a teapot”, then embarrassingly had to walk back his statement and accept his bank screwed up big time.

Thankfully, Dimon might get dealt a small dose of humility tomorrow as shareholder groups are calling for the bank to strip him of his chairman job. At the bank’s annual meeting in Florida, several groups including the union AFSCME, the NYCCO (New York City Comptroller’s Office) will ask bank shareholders to approve a proposal that splits the roles of chairman and CEO, giving the chairman job to someone outside the bank. This would essentially strip Dimon of much of his power and ensure he faced far more scrutiny in his job.

But of course Dimon wants none of this, claiming the event is a “sideshow” orchestrated by unions. Dimon wants everyone to understand just how how vital rich bankers are to the survival of America.  ”I am not embarrassed to be a banker” Dimon once told a roomful of corporate clients in response to attacks on his industry.

Quite the claim given the public had to put up $12.8 trillion to keep his industry from collapsing.

Dimon, described by the New Yorker “as an overgrown frat boy” has a long history of making dick statements, making his impending comeuppance all the more gratifying.

Here’s 9 quotes from the Wall St mogul that definitively prove that he is in fact, a giant dick:

1. “That’s why I’m richer than you.”

- Jamie Dimon Speaking to Mike Mayo CLSA analyst when asked whether he agrees that customers should feel safer with banks that have higher capital ratios (like JP Morgan).

2. “I have gotten disturbed at… some of the Democrats’ anti-business behavior, the sentiment, the attacks on work ethic and successful people. I think it’s very counter-productive.”

- Jamie Dimon on Meet the Press in 2012 forgetting that his industry almost wrecked the entire global economy.

3. “You read constantly that banks are lobbying regulators and elected officials as if this is inappropriate. We don’t look at it that way.”

-Jamie Dimon in his annual shareholder letter arguing that banks have the right to corrupt the political system with money (JP Morgan spent $7.5 million on lobbying in 2011).

4. “I am not embarrassed to be a banker. I am not embarrassed to be in business.”

Jamie Dimon defending the business of taking tax payers money and lending it back to them at extortionate rates.

5. “The term ‘too big to fail’ must be excised from our vocabulary.”

- Jamie Dimon forgetting that the public bailed out the banks because the were indeed, too big to fail (and still are).

6. “Giving debt relief to people that really need it, that’s what foreclosure is.”

-Jamie Dimon arguing that banks taking people’s houses and kicking them onto the streets was in fact, a good thing for people ruined by debt.

7. ”JPMorgan would be fine if we stopped talking about the damn nationalization of banks. We’ve got plenty of capital. To policymakers, I say where were they? … They approved all these banks. Now they’re beating up on everyone, saying look at all these mistakes, and we’re going to come and fix it.”

— Jamie Dimon in 2009 at Davos speaking about the financial crisis, forgetting that his own bank required nearly $100 billion in taxpayer help to fill its own lack of capital during the meltdown.

8. “Just because we’re stupid doesn’t mean everybody else was.”

— Jamie Dimon on the losses incurred by JP Morgan in 2012, rejecting the notion that more regulation is needed to prevent them happening again.

9. “We don’t think there are cases where people were evicted out of homes when they shouldn’t have been.”

— Jamie Dimon in 2010 responding to the investigation led by 49 state attorney generals into bank foreclosure practices. Along with several other banks, JP Morgan settled with regulators after widespread mortgage abuse was found and paid out a combined $9.2 billion to those it foreclosed on illegally.

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Anger, British style

By Ben Cohen: The banking crisis in 2008 should have resulted in prison sentences for hundreds of Wall St executive and regulators responsible for decimating the global economy. Thus far, no major executive or government official has been carted of to jail – a horrifying indicator of just how corrupt the US government is. Both political parties in America refused to punish banks for their extraordinary behavior, and Wall St wields as much power today as it did in 2007. While there was enormous public outrage over the crisis, elected officials essentially pretended to get angry, then did nothing. The crisis exposed the truth about who runs the world – and it isn’t national governments working for the public interest.

In Britain, another serious  banking scandal has been uncovered, and given the public’s reaction to it, the consequences could actually mean something this time around. Matt Taibbi provides the background:

The furor is over revelations that Barclays, the Royal Bank of Scotland, and other banks were monkeying with at least $10 trillion in loans (The Wall Street Journal is calculating that that LIBOR affects $800 trillion worth of contracts).

The banks gamed LIBOR for two semi-overlapping reasons. As noted here last week, there were instances of Barclays traders badgering the LIBOR submitters to “push down” rates in order to fatten their immediate bottom lines, depending on what they were trading or holding that day. They also apparently rigged LIBOR downward in order to produce a general appearance of better health, essentially tweaking their credit scores a few ticks upward.

Most intriguingly, or perhaps disturbingly, there were revelations last week that Bank of England deputy Governor Paul Tucker had a conversation with Diamond at the peak of the crisis in 2008. The conversation reportedly left Diamond, and subsequently his traders, with the impression that the bank had carte blanche to rig LIBOR downward in order to help allay spiraling public fears about the banks’ poor financial health.

The British public is taking the Barclay’s/Libor banking scandal extremely seriously. The press is all over it, and with a criminal investigation underway, it could lead to some very high profile heads rolling. Here was Mervyn King, Governor of the Bank of England’s take:

It is time to do something about the banking system…Many people in the banking industry are hardworking and feel badly let down by some of their colleagues and leaders. It goes to the culture and the structure of banks: the excessive compensation, the shoddy treatment of customers, the deceitful manipulation of a key interest rate, and today, news of yet another mis-selling scandal.

As Taibbi writes, King “Responded the way a real public official should (i.e. not like Ben Bernanke), blasting the banks.”

What’s interesting about the scandal is that the story has barely made the headlines in the US, despite it having extremely serious ramifications. Writes Robert Reich in the Guardian:

It’s becoming apparent that Barclays’ reach extends far into the US financial sector, as evidenced by its $453m settlement with American as well as British bank regulators, and the US justice department’s active engagement in the case. Even by American standards, the Barclays traders’ emails are eyepopping, offering a particularly a chilling picture of how easily they got their colleagues to rig interest rates in order to make big bucks. (Bob Diamond, the former Barclays CEO, says the emails made him “physically ill” – perhaps because they so patently reveal the corruption.)Most importantly, Wall Street will almost surely be implicated in the scandal. The biggest Wall Street banks – including the giants JP Morgan Chase, Citigroup and Bank of America – are likely to have been involved in similar manoeuvres. Barclay’s couldn’t have rigged the Libor without their witting involvement.

The difference in the reaction to the scandal between Britain and America – two countries where the financial sector wields more power than anywhere else in the world – is quite revealing. As Yves Smith notes, both major political parties in Britain are not beholden to banks, meaning politicians actually ask serious questions and can force government to act:

The Labor party in England really does represent different interests than the Tories, and is willing to go after the Tories and their allies in a much more persistent manner than our Dems, who ultimately depend on the same funding sources as Republicans. In England, as the News International scandal showed, there is the possibility of real amplification: of media discoveries being fed into political investigations, which in turn lead to more media ferreting. The fact that someone who seemed to have such a lock on power as Rupert Murdoch could be cut down is no doubt a bracing message to the British press, that they have infuence that for the most part they have failed to exercise effectively. So, ironically, a country where banking is a much larger percentage of GDP than the US may be the one where banking misconduct is finally unearthed and at least some of the perps suffer. And that would show our own officials’ failure to act to be the disgrace that it is.

In Britain, there is still a belief that government should, and can act on the behalf of the public, and that is reflected in the political dialogue that seems completely alien to Americans. Here was Ed Miliband, leader of the Labour Party on the scandal today:

“Last September I said to the Labour party conference that Britain needed a different kind of economy. An economy based not on the short-term, fast buck, take-what-you-can culture we see too much of in our banks today. But on long-termism, patient investment, and responsibility shared by all.

“Today I am going to tell you what a better banking system would look like. I will describe the first steps towards moving from the casino banking we have to the stewardship banking we need.

“It will mean root-and-branch change for our banks if we are to deliver real change for Britain”

While Obama has scolded banks on occasion, there has never been a promise to fundamentally change how they operate. Americans have long given up on the idea that the government works in their interest and simply moves on when astonishing corruption is unearthed. The media knows that attacking major power centers like the financial sector can have serious ramifications, so they rarely move unless the scandal is so blatant it has no choice. The British press go out of their way to uncover corruption whereas the US press simply reacts as events unfold (anyone remember a major scandal Fox News or MSNBC uncovered in recent times?). This culture pervades public, political and media circles and it leads to dangerous apathy that severely harms public policy. With an apathetic media comes an apathetic public, and with an apathetic public, there is no pressure on government to behave responsibly. It’s a vicious cycle that feeds itself, and only a real sense of public anger will change the status quo. While the Brits could learn a thing or two about fixing their economy from the US, Americans could learn a thing or two about getting angry from their Trans-Atlantic cousins.

It’s time to get mad America, British style.

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In a great article about the anti-capitalist nature of big banks, James Kwak sums up the different rules medium sized business and giant financial institutions are subjected to:

In general, the mechanism that breaks up inefficient conglomerates is the market for corporate control: takeovers. But the megabanks are virtually immune to takeover (except by each other, which would only make the problem worse). For one thing, the banking regulators wouldn’t let a private equity firm take over a systemically important megabank. For another, the banks are already leveraged to the hilt, so you couldn’t issue any new debt to fund a takeover. So to buy JPMorgan, you’d basically have to come up with $150 billion in cash, which isn’t going to happen…..

In other words, CEOs and directors of midsize retail companies have to worry about being taken over by Bain Capital. But Jamie Dimon, Brian Moynihan, and Vikram Pandit have no one to fear. The basic rules of capitalism don’t apply to them.

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JP Morgan's CEO Jamie Dimon in the hot seat

From the HuffPost:

At least some of the billions of dollars that JPMorgan Chase lost gambling on credit derivatives once belonged to you.

Last week, Senator Jeff Merkley (D-Ore.) had the gall to spoil the Senate Banking Committee’s gentle grooming of JPMorgan CEO Jamie Dimon by pointing out that his bank would not still be in existence without taxpayer assistance.

Outraged by Merkley’s impunity, Dimon roared that his bank only took the government’s lousy bailout money and only borrowed at rock-bottom interest rates from the Federal Reserve because the government insisted that it do so, for the sake of appearances and the good of the country. And JPMorgan is the country’s greatest hero, so it had no choice but to accept all of this free money the government was handing out. It certainly did not need it.

What Dimon did not say, however, was that JPMorgan Chase continues to get loads of free government money — probably $14 billion per year, according to number-crunching by Bloomberg, based on an International Monetary Fund study.

Bloomberg’s editors write:

The money helps the bank pay big salaries and bonuses. More important, it distorts markets, fueling crises such as the recent subprime-lending disaster and the sovereign-debt debacle that is now threatening to destroy the euro and sink the global economy.Fourteen billion dollars? That’s a lot of cufflinks! The number is based on an IMF estimate of the benefit JPMorgan gets in the bond market from the assumption that the government will make JPMorgan’s creditors whole in the event of another financial catastrophe.

The IMF figures that big banks pay about 0.8 percentage points less in interest to borrow, compared with ordinary mortal banks that have the misfortune of not being too big to fail. That lower interest rate translates into about $76 billion per year for the 18 biggest U.S. banks, Bloomberg writes, of which JPMorgan’s share is $14 billion.

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Matt Taibbi on the laughable questioning of J.P. Morgan Chase CEO Jamie Dimon’s at a Senate hearing last Thursday:

The senators could have used the hearing as an opportunity to grill Dimon in detail about the entire history of the Chief Investment Office, the unit of Chase that recently copped to unexpected multibillion-dollar derivative trading losses. This was an opportunity to show Americans how a too-big-to-fail commercial bank like Chase – supported by vast amounts of public treasure, from Fed loans to bailouts to less obvious subsidies like GSE purchases of mortgages and implicit guarantees of bank debt – uses the crutch of government support to gamble recklessly in search of huge profits, with the public on the hook for any potential downside.

The senators should have interrogated Dimon about his role in moving toward that reckless gambling strategy. Instead, they mostly cowered and cringed and sat mute with thumbs in their mouths, while Dimon evaded, patted himself on the back, and blew the whole derivative losses episode off as an irrelevant accident caused by moron subordinates.

I’ll say this again – thank God for reporters like Taibbi. There are few people out there providing serious commentary on these topics, and his take on Wall St and the state of the American financial industry should be required reading.

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JP Morgan's CEO Jamie Dimon in the hot seat

The US justice department opened an investigation into how JP Morgan lost more than $2bn in poorly managed trading at its London office as the bank’s embattled boss, Jamie Dimon, saw off attempts by shareholders to strip him of his role as chairman.

The justice department inquiry is at a preliminary stage and as yet there appears to be no evidence of criminal wrongdoing at the bank. The Securities and Exchange Commission has already launched a separate investigation and as political pressure for greater regulation of Wall Street banks begins to mount.

President Barack Obama appeared on the daytime talk show The View on Tuesday to call for Wall Street reform. “JP Morgan is the best, or one of the best managed, banks. You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we might have had to step in. That’s exactly why Wall Street reform’s so important,” he said.

He said Dimon, the chairman and chief executive officer of JP Morgan, was “one of the smartest bankers we’ve got – and they still lost $2bn and counting.”

At the bank’s annual meeting, held at a tightly secured facility seven miles outside Tampa, Florida, shareholders quizzed Dimon on what went wrong. He said the losses “never should have happened” and that “all corrective actions” were being taken.

Forty-one percent of shareholders voted for a proposal by the American Federation of State, County and Municipal Employees (AFSCME) to appoint an independent chairman. Dimon also received 94.8% approval from shareholders on his $23m pay package from last year.

Lisa Lindsley, a AFSCME director, said the vote on splitting chairman and CEO was “pretty high” in favour considering most of the votes were in before the losses were announced last week. A similar proposal last year for an independent lead director got only 11.9% of the vote.

“We’re not saying he should be fired as CEO,” said Lindsley. But the “stakes were too high to continue business as usual,” she told shareholders. “An all-powerful CEO is his own boss,” she said. “Looking for an infallible CEO is a fool’s errand.”

Read more at the Guardian…

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CEO of JP Morgan Jamie Dimon: Not doing such a good job (Photo credit: Wikipedia)

By Ben Cohen: The news that JP Morgan Chase lost $2 billion this quarter due to what CEO Jamie Dimon called ‘errors, sloppiness and bad judgment” should come as no surprise given the state of regulation on Wall St. While regulators are trying to ensure these ‘sloppy’ investments don’t blow up and bring the financial system down, the banks are fighting them all the way claiming that government interference would harm their productivity.

The losses incurred by JP Morgan were the result of an an extremely complicated and risky hedging strategy that involved derivative trading  – a practice that regulators have tried unsuccessfully to either ban or severely curtail (thanks to pressure from Wall St).  The New York Times has done a good job of summarizing what went down:

JPMorgan likely structured the trade in such a way that effectively magnified losses. Specifically, the bank bought insurance against losses on corporate debt through credit derivatives that increase in value if the underlying creditworthiness of companies is perceived to have deteriorated. But JPMorgan stumbled when it tried to modify that trade by also making an opposite bet with credit derivatives.

This type of trading where a bank essentially sells customers incredibly risky financial products then bet they will fail almost took the global economy down four years ago.  JP Morgan is still bullish on this risky financial practice and Dimon has refused to budge despite calling the trade “poorly constructed and poorly monitored”. Dimon has a reputation for speaking his mind, and given his successful stewardship of the banking giant thus far (it survived the financial crisis in 2008) he holds considerable sway in political circles.  From the Sydney Morning Herald:

In the words of Britain’s former PM Tony Blair, who has drawn pounds 1m a year as an adviser to JPMorgan: ‘‘He’s [Jamie Dimon] somebody who’s direct. He’s not somebody who’ll sit in a meeting when someone says something he disagrees with quietly. He’ll get up and speak.’’

Nowhere has he demonstrated this more than in his attacks on the post-crisis regulatory crackdown. ‘‘Dodd Frankenstein’’ is Dimon’s phrase for the Dodd Frank Act that has increased the oversight of banks and hit them with stricter capital requirements.

‘‘I think market participants are overwhelmed by all the amount of regulation and change being imposed at one time,’’ said Dimon last year, fulminating over the ‘‘anti-American’’ behaviour of regulators, while claiming the new rules were ‘‘hamstringing economic growth’’.

As Matt Taibbi writes, this would be fine if JP Morgan’s risky trading practices only hurt itself:

If you’re wondering why you should care if some idiot trader (who apparently has been making $100 million a year at Chase, a company that has been the recipient of at least $390 billion in emergency Fed loans) loses $2 billion for Jamie Dimon, here’s why: because J.P. Morgan Chase is a federally-insured depository institution that has been and will continue to be the recipient of massive amounts of public assistance. If the bank fails, someone will reach into your pocket to pay for the cleanup. So when they gamble like drunken sailors, it’s everyone’s problem.

Activity like this is exactly what the Volcker rule, which effectively banned risky proprietary trading by federally insured institutions, was designed to prevent.

This system of socialized risk and privatized profit makes a complete mockery of capitalism and free markets. This blatantly obvious contradiction seems to be lost on people like Dimon who confidently denounce the ‘anti American’ government then take billions of dollars from it without batting an eyelid. JP Morgan’s losses this quarter may not cripple the bank, but it definitely puts a big dent in Dimon’s argument. Writes Felix Salmon:

JP Morgan more or less invented risk management. If they can’t do it, no bank can. And no sensible regulator can ever trust the banks to self-regulate.

JP Morgan is now in damage limitation mode and busily getting rid of senior management, but it is losing the long term PR war because at the end of the day its ability to make money matters most, and it clearly isn’t doing that very well.

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JPMorgan Chase is expected to accept the resignation of one of the highest-ranking women on Wall Street after the bank lost $2 billion in a trading blunder, a person familiar with the matter said Sunday.

The bank will accept the resignation of Ina Drew, its chief investment officer, the person told The Associated Press, speaking on condition of anonymity because the person was not authorized to discuss the decision publicly.

Drew, 55, one of the highest-paid officials at JPMorgan Chase, had offered to resign several times since CEO Jamie Dimon disclosed the trading loss on Thursday, the person said. Pressure built on the bank over the weekend to accept.

At least two other executives at the bank will be held accountable for the mistake, the person said.

The casualties come as JPMorgan, the largest bank in the United States, seeks to minimize the damage caused by the $2 billion loss. Investors shaved almost 10 percent off JPMorgan’s stock price on Friday.

Dimon has said the mistake will complicate the efforts of banks to fight certain regulatory changes three years after the financial crisis.

JPMorgan’s disclosure has led lawmakers and critics of the banking industry to call for stricter regulation of Wall Street. Many post-crisis rules governing risk-taking by banks are still being written.

Drew oversaw the division of the bank responsible for the loss. She was paid $15.5 million last year and almost $16 million in 2010, making her one of the highest-paid officials at JPMorgan, according to a regulatory filing.

Drew declined comment through a bank spokeswoman. Kristin Lemkau, a spokeswoman for JPMorgan Chase, also declined comment. The Wall Street Journal reported earlier Sunday that Drew and two other executives were expected to resign soon.

Read more at Business Week….

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Matt Taibbi on Republican Financial Services Committee Chairman Spencer Bacchus's new found populist approach to financial regulation:

Spencer Bachus to positioning himself as a champion of Wall Steeet reform is, of course, hilarious. Not only was he one of the leaders of the opposition to even the very mild Dodd-Frank reform, he went out of his way to stall changes to the rules governing derivative trades that would have prevented abuses like JP Morgan Chase's rape of Jefferson County, Alabama. This was particularly egregious because Bachus, who was the House's third-biggest recipient of Wall Street money and a heavy beneficiary of donations from Chase, happened to be Jefferson County's congressman.

So this guy is no enemy of the banks. What yesterday's move does show, however, is that politicians are listening to the specific complaints of OWS. A year ago, we would never have even seen hearings like this coming from the likes of Bachus and Barney Frank, who also supported them move. But now, everybody is trying to find a way to ride the wave. It's too early to celebrate any of this, but it can't be a bad thing.

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