Jamie Dimon, JPMorgan Chase CEO: Mega-Banks Should Be Allowed To Fail -- The Right Way

washingtonpost.com:

Our company, J.P. Morgan Chase, employs more than 220,000 people, serves well over 100 million customers, lends hundreds of millions of dollars each day and has operations in nearly 100 countries. And if some unforeseen circumstance should put this firm at risk of collapse, I believe we should be allowed to fail. As Treasury Secretary Timothy Geithner recently put it, "No financial system can operate efficiently if financial institutions and investors assume that government will protect them from the consequences of failure." The term "too big to fail" must be excised from our vocabulary.

Read the whole story: washingtonpost.com

Comments

[Siebenstein]

02:08 AM on 11/17/2009

...and yours should be the first...

Worst bank I ever dealt with, worse than WAMU

[DiogenesOfAlaska]

08:18 PM on 11/15/2009

If the living wills and resolution authorities are done right, it may indeed become possible to let financial giants fail in the future. And any legislation making that possible is highly desirable.

But there's no doubt that the competitive environment is tilted when a small number of players dominates an entire market. To get anywhere near a situation where it would be even possible to meaningfully raise that question and measure it in a quantitatively explicit manner requires A LOT more transparency. Unless it is possible to determine whether rent-extraction exceeds economies of scale for clients and shareholders (or really: the economy on the whole) there's no point in pointing out economies of scale. Because without the transparency it sounds like a salesman's argument. (Probably, because it is.)

[DiogenesOfAlaska]

08:17 PM on 11/15/2009

Those are sound and admirable principles and views. However, there are two things missing, if you ask me:

(1) that the 'too big to fail' doctrine has become part of the practice of regulators is only half of the problem, and to tell the truth, it is the 'wrong' half: the problem is that banks have excessive bargaining power facing regulators when they grow too big. Not just that regulators are running out of ideas. They are running out of ideas in the presence of too big to fail firms FOR A REASON - which is bargaining power.

(2) dto. wrt pricing power and oligopoly. Of course there are some benefits to be reaped for shareholders and clients from size. But there are also excessive rents extracted based on size and market share. So size is always at least ambiguous.

[mtt04]

07:13 PM on 11/14/2009

I'm from Canada and our banks are the safest and the most profitable based on size in the world. You on't need gargantuan bank - don't listen to him - he's full of it.

What you need is bank that does what it is supposed to - provide a reasonable return to shareholders and don't bet the farm on smoke.

These execs are the crookedest bunch around, they only big and bigger so they can get fat bonuses nothing more.

Listen to me- small is beautiful. You people need to live within your means and it starts with getting rid of that ego and the banks you have.

Before you become house keepers to the Chinese I hope.

[NoMoreBail2]

01:00 PM on 11/14/2009

We, the American people, dug ourselves into this hold for which there is no escape.a

hat tip to: http://financeopinionss.blogspot.com

[we must be aware]

02:04 AM on 11/14/2009

Sorry Jamie but you stole Washigton Mutual Bank and have to give it back!

[PS9]

08:46 AM on 11/14/2009

No. Washington Mutual blew itself up and Dimon stepped in and bought it and saved millions of depositors by doing so.

[hopefull252]

12:19 AM on 11/14/2009

His firm has the most Derivatives or as I call it Counterfeit money made by the banks out of thin air.

JPM has assets of 2Trillion and 80Trillion of banker Dollars this is the most of any Bank

The Top 5 Banks has assets of 7.5Trillion and 278Trillion on banker Dollars

The question is how did the Federal Reserve allow this to happen? For more info on Deriv's
Office of the Comptroller of the Currency
http://www.occ.gov/deriv/deriv.htm

The answer is they allowed it and reinforced it with zero interest to these firms and high interest to consumers.

This inflated prices on just about everything without Monetary Policy change. Since The government can't review these policies the Fed allow the banks to create money out of thin air. The Treasury should have stop it before it got started, but Rubin and Paulson wanted this to happen. They were making their friends Billions of real Dollars most of which went overseas.

The Fed will not allow Congress of anyone else to see what money is transferred to other Governments or Central banks.

Ron Paul and others want to see these transactions, but are being denied. The people need to know the truth and it will take an audit and investigation of the Fed to get the answers.

Ike and JFK both worried more or infiltration then invasion. Here's a JFK speech that talks about this.
http://www.youtube.com/watch?v=xhZk8ronces

[Havingfun100]

10:49 AM on 11/14/2009

Why dont you present a full understanding of the situation instead of picking at pieces. JP Morgan is an incredibly strong bank. They did not go to the govt for bailout funds. If you knew anything about Jamie Dimon you would know he runs a tight ship. He is very demanding.

[Siebenstein]

03:07 AM on 12/05/2009

so was Gotti

[Havingfun100]

10:51 AM on 11/14/2009

ps I love hearing Kennedy talk about "secrets".....bit of the pot calling the kettle black.

[autumncolors]

08:49 PM on 11/13/2009

{{A manufacturer of "real goods" could not stay in business without a financial intermediary.}]

By financial intermediary do you mean business loan or a derivative? Please explain.

[PS9]

12:09 AM on 11/14/2009

Any lender of money.

[Hank007]

07:09 PM on 11/13/2009

So if this guy and his peers are so brilliant, why did he drive their bank and our economy off a cliff? Beuhler?

[Havingfun100]

11:50 PM on 11/13/2009

He didn't. He was one of the good guys. His bank was forced to take the bailout money at a time when they didnt want to target certain banks for fear they would collapse. JPM has paid back all of the money with interest.

COntrary to opinions on this site....all banks and bankers are not bad.

[autumncolors]

06:12 PM on 11/13/2009

Until consumers start to take action, these "business leaders" will continue to steal and gouge the public by whatever means they can. All the talk and comments here and elsewhere will have no impact on them}}

I agree.

[autumncolors]

06:10 PM on 11/13/2009

{[These global enterprises need financial-services partners in China, India, Brazil, South Africa and Russia: partners that can efficiently execute diverse and large-scale transactions; that offer the full range of products and services from loan underwriting and risk management to providing local lines of credit; that can process terabytes of financial data; that can provide financing in the billions."}}

By products they mean financial products like derivatives etc NOT a meaningful product or service.

Why do the rest of the world including us should be on hook so that investors can make money from money?

[PS9]

06:38 PM on 11/13/2009

A manufacturer of "real goods" could not stay in business without a financial intermediary.

[autumncolors]

06:07 PM on 11/13/2009

{{Why then is it, that the first thing companies do when they combine is lay off a third of their work force. Lean and mean or big employer?]]

because their books have to look good so investors can invest and they can trade on Wall Street.

[nukepicnic]

05:28 PM on 11/13/2009

I loved his ridiculous notion that regulations set in the depression era were closer to the Civil War than today... hmmm.... weird argument...

the truth is Glass-steagall was enacted to prevent EXACTLY what happened to the economy recently... obviously that's not some arcane idea whose time has passed. the arcane idea is that these banks can be trusted to regulate themselves... that notion is PRE Depression era thinking that OBVIOUSLY doesn't work. reinstate Glass-steagall and let the financial institutions that choose risky investments fail as they may... but keep standard deposit banks safe from these losses.

and under these terms JP Morgan and Chase should be separated... JP Morgan should have gone down in flames and Chase should be left standing--and this joker should be out of a job.

[PS9]

05:59 PM on 11/13/2009

You've got it all wrong.

The JPMorgan side of the business is doing much better in the recession than the Chase side despite losses on loan defaults and credit card losses.

Dimon has managed the organization admirably.

[mbondr1]

05:27 PM on 11/13/2009

"While the strategy of artificial limits may sound simple, it would undermine the goals of economic stability, job creation and consumer service that lawmakers are trying to promote."

Why then is it, that the first thing companies do when they combine is lay off a third of their work force. Lean and mean or big employer?

"These global enterprises need financial-services partners in China, India, Brazil, South Africa and Russia: partners that can efficiently execute diverse and large-scale transactions; that offer the full range of products and services from loan underwriting and risk management to providing local lines of credit; that can process terabytes of financial data; that can provide financing in the billions."

A good argument for diversity, but not big.

The fact is that you have lied so much and so often, bribed and misrepresented, said one thing and done another, that no one in their right mind would trust anything you say. You are a scoundrel, a pillager of our country. Chase needs to be broken up so new banks can form and free enterprise can reassert itself.

[hellboundtrain]

05:09 PM on 11/13/2009

I wouldn't go to a doctor who was also an undertaker.