JPMorgan CEO Jamie Dimon Takes On Washington
Jamie Dimon, the CEO of JPMorgan, has decided that battling financial regulation is now one of his prime responsibilities. That, at least, is the picture that emerges from a piece the Wall Street Journal ran this morning on Dimon's dealings with Washington since 2008.
While Dimon has endorsed some of the administration's reform sentiments -- he argued in favor of ending too-big-to-fail in a Washington
Post op-ed last year, writing that if JPMorgan were "at risk of collapse, I believe we should be allowed to fail" -- he balked at the government's attempts to restrict executive pay and coerce banks to increase lending. He also reportedly railed against a new rule that would make it more difficult for firms to hire skilled workers from abroad, which he called "un-American."
Now, with the Senate reform bill in play, Dimon has organized an aggressive and very expensive lobbying effort -- JPM spent $6.2 million lobbying Washington officials last year, more than any other bank, the WSJ notes -- to fight new regulations that would curb the bank's profits.
And indeed, JPMorgan has a lot to lose from proposed reforms. As the WSJ points out, JPM expects to take a $1.25 billion annual hit from new credit-card and checking-account reforms that have already passed. But the Senate legislation, which would require financial institutions to pay into a communal "bailout fund," increase capital reserves and potentially wind down certain trading operations, could cost the firm billions more.
But not all of the officials with whom Dimon meets are entirely assuaged by Dimon's argument, which stresses the firm's contributions in terms of jobs and taxes. Here's the WSJ:
A number of political insiders say they've grown weary of Mr. Dimon's protestations, viewing him as just another elite New York banker out to protect his turf. Some note that the bank profited handsomely during the financial crisis, when it scooped up securities firm Bear Stearns Cos. Inc. and Washington Mutual Inc.'s failed banking operations at bargain prices.
Still, Dimon's approach tends to highlight the economic benefits he says the
firm brings the country and the extent to which JPMorgan's financial health is intertwined with the well-being of the entire economic system. According to the WSJ, after JPMorgan accepted $25 billion in government funds in 2008, Dimon argued that JPMorgan participated in TARP because it was "good for the system, which means it's also good for J.P. Morgan."
But -- and this is putting it lightly -- Dimon could very well be wrong about the connection between the U.S. economy and JPMorgan's fiscal health. Or he could be merely talking his book. As Simon Johnson notes:
"Dimon fully understands -- although he can't concede in public -- the private advantages (i.e., to him and his colleagues) of a big bank getting bigger. Being too big to fail - and having cheaper access to funding as a result -- may seem unfair, unreasonable, and dangerous to you and me. But to Jamie Dimon, it's a business model -- and he is only doing his job, which is to make money for his shareholders (and for himself and his colleagues)."