Once again, untold thousands of your taxpayer dollars were spent on Tuesday on another hearing involving lawmakers, many with JPMorgan Chase campaign money in their pockets, asking questions of JPMorgan Chase CEO Jamie Dimon.
As you can imagine, much was learned! Not anything specific about JPMorgan Chase's multi-billion-dollar trading loss in credit derivatives, of course. No, no. Questions about that were smacked down with extreme prejudice by Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, on the grounds that we wouldn't want JPMorgan to lose any more precious future campaign donations by giving away secrets to its competitors. JPMorgan plans to reveal more details of the size of its losses, estimated to be as much as $8 billion, in due time, in a presentation to investors scheduled for July 13. Dimon did promise that the losses weren't nearly enough to put a dent in the bank's profits for the quarter.
But we did learn a few things:
Thing One: Jamie Dimon Can't Possibly Be Expected To Know Everything, Can He? In response to a series of hurried questions -- each lawmaker had just five minutes for Q&A -- the famously hands-on and brilliant Dimon confessed to so much ignorance! For example, he has no idea whether it's a good or bad thing for the Commodity Futures Trading Commission, the half-starved regulatory agency overseeing JPMorgan's derivatives trades, to have its funding cut by the House.
On the most important question, of when he knew of the huge and dangerous position his bank had taken, he says he didn't know a gosh darn thing until it was just too late, even when he told a conference call on April 13 that news reports about the trade amounted to a "tempest in a teapot." He said he deeply regrets making that statement, but he believed it to be true at the time because he was just so ignorant, as were his regulators. The (also underfunded) Securities and Exchange Commission is looking into that one.
Thing Two: Regulation Is Like Masturbation, Best Done In Private: Dimon doesn't know much, apparently, but he does know that regulation "should be done in the right way -- in my opinion, in closed rooms." As the Founding Fathers intended it. "You don't make a lot of progress in open hearings like this," he said. To be fair, in this particular open hearing, many of the questions were clown questions, bro.
Thing Threee: Dimon Doesn't Believe Everything He Reads, And He Also Doesn't Read Anything: During the tongue-bath Dimon received from the Senate Banking Committee last week, he excoriated Sen. Jeff Merkley (D-Ore.), who had the gall to ask him to respond to a Bloomberg article that claimed Dimon had pushed the bank's quiet chief investment office to take bigger risks. He said he didn't believe everything he read, and the senator shouldn't either. So he was asked about that article again today. And guess what? He claimed he hadn't read it! That's one way to not have to believe anything.
Thing Four: JPMorgan Gets No Government Subsidies, I Swear: Brad Sherman (D-Calif.) asked Dimon about the Bloomberg report today that said JPMorgan gets a benefit of $14 billion per year in lower funding costs because investors think the bank will be bailed out wholly by the government. Dimon said, "I don't believe that's true," but then really didn't answer the question. He talked about how his borrowing costs were higher than those of other corporations -- which is not the same as having borrowing costs higher than those of other banks, which is the point of the Bloomberg story.
Thing Five: An Earth-Moon Collision Would Cause Large Losses For The Banking Sector: In response to a question by Rep. Sean Duffy (R-Real World), about whether it might be possible for JPMorgan to lose "half a trillion or a trillion dollars," Dimon scoffed and said, "Not unless Earth is hit by the moon." Which was widely interpreted by many on the Twitters as a declaration by Dimon that the bank would only fail in an earth-moon collision type of scenario. Which isn't exactly what he was saying! But it is the sort of statement that always seems to come back to haunt people in finance eventually -- like "Home prices will never fall" and "Alan Greenspan is a genius."