For Jamie Dimon and all of Wall Street, it's time to wake up and step up.
They lost on their biggest bets in a long time: defeating President Obama, defeating Elizabeth Warren in Massachusetts and, more important to them, defeating financial reform. They went all in. Spent hundreds of millions of dollars directly and indirectly. They had a presidential candidate expressly vowing to repeal the Dodd-Frank financial reform and Wall Street re-regulation law. All their efforts were for naught. The loss was total.
The question now is whether or not they will learn anything. If past is prologue, they won't, but they have a moment to seize an opportunity, rehabilitate themselves, and do what's right for the country, which will also turn out to be what's right for Wall Street.
So, the question is, will Jamie Dimon allow himself to continue to be the pretty face behind which the ugly business of Wall Street gets done? Or will he, against all evidence, become a statesman that rises above his parochial economic interests and ego and genuinely and truly take on a role that promotes the greater good? (I've written about the total lack of statesmanship on Wall Street before here.)
Reflexive hostility if not hatred, unrelenting opposition to the most modest financial reform, and an inexplicable inability to take even an occasional mild criticism has turned Wall Street into a caricature of itself. Will it move on? Will Jamie see how self-defeating such an approach and attitude ultimately is? Will Wall Street move even lower in the opinion of the American people? Those are the questions confronting Jamie and Wall Street at this electoral cross roads.
What should Jamie do? First, he has to realize that using his influence to address the fiscal cliff and related issues isn't going to do him any good. Actually, it reflects shallow thinking and useless conventional wisdom. Yes, Wall Street and American business have to try to influence the rigid, ideological, right wing who are still opposed to all-things Obama and think compromise is akin to surrendering to the devil. But, doing that is just trying to restore a little sanity into the debate skewed due to unyielding right wing ideologues. Trying to get people to be responsible is not leadership, is not being brave or, frankly, doing more than what should be done as a routine matter anyway. It is also, unquestionably, in their obvious immediate self-interest.
What Jamie and other adults on Wall Street need to do is show real, meaningful leadership. That means call off their war on financial regulation and Obama/Democrats more broadly. Call off the thousands of lobbyists and lawyers; reach out to those fighting for financial reform; give up on those things that help their short-term profits and support those things that promote long-term growth and market confidence.
Just one big example: Jamie has often said he is against too-big-to-fail banks and firms. He has gone so far as to testify recently that if any such firm requires government assistance that it should be "dismantled" and "the name should be buried in disgrace." But, as is so often with Wall Street, what Jamie says isn't what Jamie's lawyers, lobbyists, allies, front groups, purchased academics, political fundraisers and other fellow travelers directly and indirectly on his payroll fight for and against. His bank, JP Morgan Chase, is the biggest of the too-big-to-fail banks in the U.S. and the world. Jamie Dimon alone has the singular and unilateral ability to dramatically and meaningfully change that entire debate by aligning his bank's actions with his words. That would be leadership. That would be a statesman.
This isn't asking Jamie or Wall Street to become public servants or even to act against their own real best interests. The war on financial regulation is not only wrong; it is not even in Wall Street's best interests. For 70 years after the Great Depression Wall Street and the U.S. financial industry was more heavily regulated than any time in history. Yet, our country prospered; we built the largest and most broad-based middle class in the history of the world; American business thrived and Wall Street dominated finance worldwide. All under the heaviest regulation ever, as recently presented at a symposium.
What happened? Deregulation and non-regulation resulted in the biggest financial collapse since the Great Crash of 1929 and has caused the worst economy since the Great Depression, all in just seven years or so. That is going to cost our country no less than $12.8 trillion dollars. It has cost Wall Street as well in terms of prestige, confidence, status, revenue, profits and influence, as so dramatically proved in this election and in the opinion polls.
This all proves the value of Goldman's old in-artful slogan: long-term greedy. A key problem is that Wall Street and its enablers have all become super-short-term super-greedy. That caused the financial collapse and is destroying Wall Street as well as rotting and corrupting the country's political system and culture. Nothing wrong with making money, including lots of it, but it must be done in the service of open, fair and competitive financial markets and a growing real economy rather than just grabbing the biggest bonus as fast as possible.
Decision time, Jamie: Statesman or continue to shill for a discredited Wall Street?