First, let's grant that J. P. Morgan-Chase is a big, wealthy and powerful bank, and that its CEO Jamie Dimon is a smart and well-spoken fellow -- even Obama, who got lots of Morgan/Dimon dimes in his 2008 election, publicly praises him. Last week he charmed the Senate Banking Committee, which largely fell all over itself with admiration. The fact that most if not all members of this committee were recipients of campaign contributions from either Morgan directly, or its employees, should not be lost on us. Thomas Frank (author of "What's the matter with Kansas" and more recently "Pity the Billionaire") talks about this with Bill Moyers: Check it out here.
Anyway, Dimon paid a visit to the House Financial Services Committee yesterday -- home of another Frank, Barney Frank -- where he was not treated quite so royally. Barney said: "To me this hearing is not about JPMorgan Chase. They are an example of the larger issue, which is the effort by my Republican colleagues, with some help from the industry, to re-deregulate derivatives...Mr. Dimon and this bank were taken by surprise and lost so much money [more that $3 billion it seems] so quickly in derivatives, and didn't understand fully what they were doing."
Barney was referring to the emasculation of the so-called "Volcker Rule" which would limit the ability of banks to put up their own money to make high-risk investments. This "rule" was modeled on the old Glass-Steagull Act which was in effect from Roosevelt's time until the late 1990's when it was repealed by a Republican Congress and a very pro-business Democratic President (Bill Clinton) and his Secretary of the Treasury (Robert Rubin). (They also gave us NAFTA.) Unfortunately, this basic, common-sense "rule" was considerably watered down in return for Senator Scott Brown's vote in support of the thereby-weakened Dodd-Frank financial protection bill. Brown, of course, is currently trying to retain his seat against a challenge from Elizabeth Warren.
Getting back to Jamie Dimon: He displayed all sorts of contrition about JPMorgan's big loss. However, he wants no part of Dodd-Frank regulation of the finance industry, and he claims to know nothing of the derivative trades (I think they were Credit Default Swaps) that led to the losses. In terms of his bank's assets, the billions lost were small and, he said, totally localized to the "London offices" where they occurred. In other words, it was a minor and chance event -- nothing like the near total meltdown that happened in 2008, and nothing that regulators should worry their (pretty little) heads about. However, when Rep. Stephen Lynch (D. Mass) asked that Dimon's testimony be under oath, the request was immediately scuttled by committee chair Spencer Bachus (R. Ala).
And now comes reason #8,962 for why Republicans are beneath contempt. Sean Duffy (R. Wis) asked Dimon (rhetorically) "If one of the best CEOs in the industry didn't know about these trades, how can we expect regulators to know about these trades?" (Especially since we Republicans do all we can to prevent regulators from sticking their noses in, he might have added, had he desired to rise to the level of merely contemptible.)