Jamie Dimon, smug symbol of all that’s wrong with American finance, went before the House Finance Committee today to explain JP Morgan Chase's $3 billion dollar losses. Needless to say, he didn’t come off well, but he also didn't get the grilling he deserved.
Although he apologized for the losses, Dimon didn’t admit to anything else. He repeatedly insisted that regulation has not helped make the market less risky and avoided saying anything specific about what happened to contribute to the $3 billion dollar losses. Whenever asked about the Volcker Rule, the section of Obama’s financial regulation that attempts to limit speculative investing, Dimon dismissed it as unnecessary. To make his case, he claimed that "no one can adjudicate between all the various regulatory agencies and it’s not clear to me who has regulatory authority."
JPMorgan’s trouble came at the hands of a trader nicknamed the London Whale or "Voldemort." (You read that right. They call one of their traders Voldemort and still expect us not to think they’re evil.) This trader engaged in an outrageous amount of speculative trades, ostensibly without the oversight from Dimon or any other top brass.
But for a group of lawmakers holding an interrogation, the House Finance Committee members didn't seem keen on asking Dimon tough questions. There were no questions about whether JPMorgan Chase remains too big to fail, or about whether Dimon should be fired, or whether it was obscene to maintain his $6 million dollar yearly salary.
That may be because the House Finance Committee is firmly in their pocket. A ProPublica investigation reveals a complex web of money and favors to members of the House Finance Committee. Further, OpenSecrets reports that JP Morgan has given $168,000 dollars to Finance Committee members, heavily favoring Republicans. On top of that, the committee chairman, Spencer Bachus (R-AL) has two home mortgages worth anywhere from $300,000 to $600,000 dollars. That's a lot of scratch, Congressman.
There's a reason Dimon is so cocky: Congressional hearings don't accomplish anything. Investigations and regulation do. Various government agencies have begun investigating JPMorgan's recent losses, including the Securities and Exchange Commission and the Department of Justice. But where are our elected representatives? Irritatingly enough, JP Morgan’s stock has risen 2.3% as Dimon went before Congress; Dimon has the House Finance Committee so under control that the markets are confident that there will be no forthcoming regulation from Congress.
The House Finance Committee should be investigating JPMorgan's losses, not asking politely for Dimon to answer. But Dimon made it clear today that he thinks he's above accountability, while boasting that the current regulatory structure is inadequate and should be gutted. He's half-right. The regulatory structure IS too complex. The solution, however, isn't to weaken regulation. It's to make it stronger and more streamlined.
It’s time we harpoon the London Whale. No one makes that argument better then Jamie Dimon.
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