Jamie Dimon, CEO of megabank JP Morgan Chase, has a bit of a problem on his hands. No, his problem isn’t as monumental as deciding whether one’s fortune should be spent on adding an elevatored-garage to a beachfront home, nor is it as burdensome as determining how many lobbyists are needed to find congressional members willing to sell their souls. His particular problem is about image; it’s about how he looks in the aftermath of his firm suffering over $2 billion in trading losses at the hands of a ‘rogue trader‘. How will he explain this latest episode of ‘Wall Street Behaving Badly‘ and still manage to come out of this mess smelling like a rose?
Ever since the beginning of the recession, Mr. Dimon has used his reputation as a risk manager to fight efforts towards real banking reform. While other Wall Street firms’ gambles with other people’s money resulted in flushing themselves down the loo, as a display of strength Mr. Dimon’s firm flexed its muscles by purchasing a couple of all but dead banks.
Bully for him. That was then.
This mess is now.
Though Jamie Dimon has admitted that this recent loss — one that is expected to grow larger — is the result of “errors, sloppiness and bad judgement,” during the financial crisis and all subsequent attempts to keep the nation’s economy from spiraling into a global depression, he whined that Wall Street and its masters-of-the-universe-job-creators shouldn’t be punished with something as pesky and non-sensical as regulation and oversight.
How’s that working for ya now, Jamie? And, more importantly, how’s that supposed to work for us?
The American people have bailed all of your arrogant ‘too-big-to-fail’ arses out with no guarantee that these boom-and-bust events that occur due to negligence wouldn’t happen again. All we got was a patronising pat on the head and a condescending shoo-away telling us that we ‘don’t understand your world’ and that real reform would result in more of your kind being so put off by burdensom rules that ‘talent’ wouldn’t flow to The Street. It really doesn’t take much skill to lose $2 billion; all it takes is carelessness and, as you said, a “flawed, complex, poorly reviewed, poorly executed and poorly monitored” trading strategy.
Mr. Dimon and his fellow lords of the manor pushed what became the party line that regulatory oversight would be bad for business and, therefore, would thwart economic growth.
And the store-bought-and-paid-for weaklings in Congress agreed.
They dismissed any hint of talk about reconsideration of the Glass-Steagall Act to separate commercial banking from investment banking and insurance activities. There’s no such thing as a bank that’s just too darn big, is there?
They blocked the Dodd-Frank Act to try to ensure that what ended up passing had not much more strength than a sickly, toothless dog that can’t hunt. And the Volcker Rule that proposed that banks should be restricted from making risky speculative investments? Well, let’s see what happens on July 21st when it’s actually supposed to go into effect. Can you say ‘BLOCK and GRIDLOCK’, boys and girls?
By Mr. Dimon’s own admission, we can’t be assured that JP Morgan’s losses will stop at even $3 billion, and hearing him say that his firm made “mistakes” isn’t enough; we can see that mistakes were made. Actually, everyone with a retirement plan, 401K or savings account can see and feel that. DUH!
It’s clear that Wall Street cannot be trusted to police itself — that’s what Congress is supposed to be for. And given their ties to Wall Street, it’s clear most of them can’t be trusted to do what’s right.
But, these are different times and we should have learned a few lessons by now, right? So, GOP, in the face of such a staggering loss, do you STILL think reform is a bad idea?
We’re waiting for an answer…or will your response be what it has been all along: more blocking of any oversight law that makes sense.
For those who don’t want to wait, contact your US Senators, especially those on the Senate Banking Committee, to let them know that you think the least of Wall Street’s problems is ‘too much regulation’.
Mr. Dimon is scheduled to meet with shareholders to do some explaining.