In testimony Wednesday before the Senate Banking Committee, J
P Morgan Chase CEO Jamie Dimon apologized for that bank’s $2 billion loss of
its shareholder’s cash in a unit that was created to monitor and reduce the
company’s investment risk, but his mildly toned testimony did little to soothe
the ongoing political wrangling over forthcoming rules enforcing Dodd-Frank
bank regulation legislation. “We made a mistake. I am absolutely responsible.
The buck stops with me,” Dimon said.
However, when questions from Rebuplican Senators attempted to
provoke repetition of Dimon’s often fiery critique of regulatory intervention
in the banking industry, Dimon failed to oblige. He refused to characterize
Dodd-Frank as a “marginal” improvement in banking safety, and to deny that the
legislation has had a lauditory effect on banking practices. Likewise, when New
Jersey Democrat Robert Mendez asked provocatively, “Wouldn’t J P Morgan have
gone down without the massive federal intervention, both directly and indirectly,
in 2008 or 2009?” Dimon’s response didn’t satisfy Democrats. “I think you were
misinformed,” he replied. “and I think that misinformation is leading to a lot
of problems we’re having today.”
While Dimon still opposes the Volcker Rule banning bank
speculation with paid in capital, he did acknowledge that the supposedly
conservative investment strategy in J P Morgan’s $350 billion Chief Investment
Officewas “not carefullt analyzed” and “should have gotten more scrutiny from
both senior management and the firmwide risk control function,” he continued
his attempts to spin $2 billion in losses as a minor problem. “We have let a
lot of people down, and we are sorry for it,” his prepared remarks concluded. “We
will not make light ofthese losses, but they should be put into perspective. We
will lose some of our shareholders’ money – and for that, we feel terrible –
but no client, customer or taxpayer money was impacted by this incident.”
Damon’s remarks reinforce his steadfast refusal to recognize
that a bank’s paid in capital is the only bulwark standing between customer
deposits and the sort of losses which brought about the Great Depression, and
which today threaten the health of FDIC and FSLIC depositor protections.
Despite Dimon’s trumpetinf about no depositor having lost a penny, J P Morgan
customers did lose $2 billion worth of that protective bulwark,
and that is a very, very real loss to them.
