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Go Home Simmer Down, Jamie Dimon

PLANK JUNE 13, 2012

Simmer Down, Jamie Dimon

BY NOAM SCHEIBER

I didn't watch Jamie Dimon's Senate testimony today, but from the Times live blog it looked like this was the most dramatic moment:

Mr. Dimon gets testy for the first time in the hearing. "I think you are misinformed," he told Senator Jeff Merkley, Democrat of Oregon, who said JPMorgan was saved by government bailouts in 2008.

"You're factually wrong," Mr. Dimon said.

The senator responds, "Let's agree to disagree."

No one who's followed Dimon over the years would have been shocked by this response--Dimon is chronically prickly at suggestions that JP Morgan resembled some of its deadbeat rivals during the crisis. And with some justification. But, then again, it's not as though Merkley was so out of line. For one thing, had the government not saved AIG, Citigroup, and Bank of America, there would have been a run on the entire financial system, JP Morgan included. For another, there's stuff like this: 

JPMorgan Chase & Co. CEO Jamie Dimon told shareholders in a March 26, 2010, letter that his bank used the Fed’s Term Auction Facility “at the request of the Federal Reserve to help motivate others to use the system.” He didn’t say that the New York-based bank’s total TAF borrowings were almost twice its cash holdings or that its peak borrowing of $48 billion on Feb. 26, 2009, came more than a year after the program’s creation.

So let's not pretend that tapping Uncle Sam for a little handout is considered declasse in Jamie's corner of Park Avenue.

Follow me on twitter: @noamscheiber

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8 comments

Morgan (and the others) were encouraged to take the government's free money (almost zero interest rate) and use it to make profits by speculating and thereby re-build their balance sheets (i.e., increase their capital). Now they are criticized for doing what the government wanted them to do. I'd be a little prickly too. If Senator Merkley has a problem, tell him to call Geithner. I'm sure he'd be happy to give the Senator a review of his program to save the banks by funneling cash to them so they could engage in proprietary trading and use the profits to increase their capital so the government wouldn't have to take over the banks. It worked! Chait, by the way, was in favor of a government takeover of the banks. That is, he was in favor of it before he was against it.

- rayward

June 13, 2012 at 4:50pm

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didn't have to take the money if he felt so strongly about it...

- Noam Scheiber

June 13, 2012 at 5:01pm

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He was just doing his patriotic duty and wanted to show his support Geithner.

- rayward

June 13, 2012 at 5:20pm

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Not that any of my views matter, but I was against the government takeover of the banks (what would the government do on the day after?). That is, until I was in favor of the government takeover.

- rayward

June 13, 2012 at 5:23pm

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Heads they win, tails we loose. What else is new with Wall Street? And I love how deferential senators with their Wall Street Masters. Shows you who's really in charge. As Ray predicted, Democrats folded like a house of cards in front of King Jamie. If Obama's administration had put guys like that in their place in 2009 he'd (and we) would be in a much better position today but with geniuses like Geithner and Summers there was no chance of that.

- tmmats

June 13, 2012 at 6:06pm

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To get his 'testy' up, Dimon might have taken a cue from Rob Cox's Slate post suggesting that it would be better for Dimon to come out fighting, to prevent nationalizing the banks even more. Here: http://www.slate.com/blogs/breakingviews/2012/06/12/jamie_dimon_should_come_out_swinging_in_senate_.html

- jet

June 13, 2012 at 10:02pm

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I expect our bankers to be publicly respectful to high elected public officials both personally and officially. Although they are, by necessity, generalists, I expect our Senators to be prepared and act like leaders. JP Morgan's recent snafu is proof that nobody, not even Jamie Dimon, can safely manage a 2 trillion-dollar bank. In any organization, there is always a problem somewhere. We can't allow the probability of an organizational failure to endanger the banking system and the economy. Some aggressive loud-mouthed traders at JP Morgan overcame institutional controls and ran amuck. This happened big-time at AIG.

- amidut

June 13, 2012 at 10:03pm

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Amidut, Merkley was being an ass, and Dimon had every right, almost an obligation to tell him to pound salt. JPM lost a measly 2 billion, while carrying 30 billion in loan loss reserves. A nonevent. AIGs counter parties should have taken big haircuts for buying incredibly poorly written insurance. But I doubt AIG would have gotten itself into such a mess had Spitzer not run Greenberg out of AIG.

- ds111

June 13, 2012 at 11:20pm

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