WASHINGTON -- Some of the toughest questions for JPMorgan Chase CEO Jamie Dimon during Tuesday's House Financial Services Committee hearing came from lawmakers who will either not be returning to Congress next year or will face steep hurdles to reelection.
The House panel is already known on Capitol Hill as the "cash committee" due to its members' penchant for Wall Street fundraising, but it will have even fewer critics of the financial establishment next year.
Rep. Barney Frank (D-Mass.), the ranking Democrat on the committee, provided some of the harshest questioning of Dimon early in the hearing, accusing Dimon of a "filibuster" and of deliberately misconstruing Frank's questions.
"I'm disappointed," said Frank, who is retiring at the end of the year.
Rep. Brad Miller (D-N.C.) pressed Dimon on a potential securities law violation, forcing him to dodge questions and resort to legally open-ended language about his "knowledge at the time." Miller has been redistricted out of his seat.
Later in the hearing, Rep. Brad Sherman (D-Calif.) bluntly declared that Dimon's bank is "too big to fail," and criticized Dimon for sending billions to London for risky derivatives trades, instead of lending the money to companies at home.
"You put forward the idea that ... there weren't small- and medium-sized businesses in the United States that were creditworthy that wanted the money," Sherman said. "And I assure you, there isn't a member of this panel that couldn't bring you 100 small- and medium-sized businesses, creditworthy, in need of loans from you. And instead, you took the $350 billion to London."
Sherman is embroiled in a bruising campaign against Rep. Howard Berman (D-Calif.), a contest prompted by a separate redistricting plan.
Although the Dodd-Frank financial reform bill bears Frank's name, Sherman and Miller have been more critical of the Wall Street establishment during their tenure in Washington, and are almost certainly paying for that vocal opposition with their seats. Sherman has been out-fundraised by Berman, a favorite of Hollywood and the entertainment industry. Miller wrote the major consumer protection rules on mortgage lending for the 2010 Wall Street overhaul, and like Frank, was a critical legislative negotiator who shepherded the bill through Congress. That effort earned him the ire of a host of bank-affiliated business groups in North Carolina, where two of the most active subprime lenders of the past decade, Bank of America and Wells Fargo, have a major presence.
The Tuesday hearing followed Dimon's appearance before the Senate Banking Committee last week. House lawmakers were at times more aggressive than their Senate counterparts, who inspired a battery of criticism for their deferential treatment of Dimon. Freshman Rep. Sean Duffy (R-Wis.) pushed Dimon on whether his bank was "too big to manage" or "too big to regulate," while Rep. Maxine Waters (D-Calif.) hammered away at JPMorgan's reliance on flawed risk-modeling techniques.
But the committee's efforts in general this year have been overwhelmingly acquiescent to the preferences of big banks. Its official website lists nine pieces of bank deregulation that cleared the committee in 2011, plus one bill limiting debt issuance by Fannie Mae and Freddie Mac (even though, as wards of the state, Fannie and Freddie do not need to issue debt).
Historically, that deference to finance is a bipartisan phenomenon. For years, both political parties have packed the Financial Services Committee and its Senate counterpart with vulnerable lawmakers who can use their perch on the panel to leverage campaign contributions from Wall Street. And the major focus of the committees' efforts over the past three decades has been to deregulate Wall Street, with the Riegle-Neil Act of 1994, the Gramm-Leach-Bliley Act of 1999, and the Commodity Futures Modernization Act of 2000. Dodd-Frank, passed nearly two years after the financial crash of 2008, was pilloried by loopholes imposed by members of the House and Senate banking committees.
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