Last Wednesday, around 10:36 in the morning I threw up a little in my mouth.
It was a few minutes after Senator Richard Shelby, Ranking Member of the Senate Banking Committee, asked JPMorgan CEO Jamie Dimon -- one of his largest donors -- if he would prefer to go into a closed session to give his testimony to the committee privately. That's right. Three years after a financial crisis that cost this country $7 trillion by some measures, the Ranking Member of the Senate Banking Committee asked one of the most vocal opponents of financial reform if he would prefer to air the dirty laundry about his recent $2-5 billion trading loss away from the snooping eyes of the public.
This molly coddling came on the heels of the Senator asking Mr. Dimon to please, if he wouldn't mind, explain exactly what he meant by "synthetic credit portfolio." When Mr. Dimon used big words like 'swap' in his answer, Shelby stared back wide-eyed and bewildered. It is apparently too much to ask the Ranking Member of the Senate Banking Committee to actually know anything about what he is supposed to oversee. Shelby finished his allotted time with a question every teenager knows means 'you're off the hook.' To the Senator's credit, he tried to look stern as he asked Mr. Dimon what he had learned from this experience. Seriously. Barf.
The nausea didn't end with Senator Shelby. Nor did the stupidity and the blatant ass-kissing.
Sen. Bob Corker told Dimon: "You're obviously renowned, rightfully so I think, as being one of the most, you know, one of the best CEOs in the country for financial institutions." FYI, Sen. Bob Corker has, you know, received $61,000 in contributions from JPMorgan since 2007. Corker later called the $2-5 billion and counting trading loss a "blip on the radar screen." It is worth noting that the Right's favorite whipping boy -- the Corporation for Public Broadcasting -- has an annual budget of around $440 million. I guess the next time the Tea Party starts bitching about NPR, we can all just remind them that the organization's budget is less than a 1/4th of a blip. That should settle them down.
Sen. Mike Johanns (who's received $147,204 from the financial services industry since 2007) gushed to Dimon, "your enterprise (is) big and powerful... you've got a lot of firepower. You're just huge." The words might as well have been 'OMG, do you like totally work out and stuff?'
"I really appreciate you voluntarily coming in to talk with us," said Sen. Jim DeMint, apparently forgetting for the moment that Mr. Dimon received about $400 billion from the Federal Reserve and that the deposits he holds are guaranteed by the FDIC. "We can hardly sit in judgment of your losing $2 billion," said the de-minty ass-kissing senator, "We lose twice that every day in Washington."
Republicans weren't the only suck-ups in the room though. "You guys know the industry better than anybody sitting up here," said Sen. Jon Tester, who received $45,000 from JPMorgan from 2007 to 2012.
Senator Reed asked, "How do we build in rules that prevent well-intentioned people from doing detrimental things?" By this line of reasoning, the Milwaukee police should have asked Jeffrey Dahmer how to keep serial killers from eating people. How the hell do you think he's going to answer? A little less salt?
Dimon returned the Committee's adoration with warm words: "Me and lots of other folks, we'll do whatever you want, we'll even get apartments down here."
FYI, Dimon is from NYC. People from New York do not say 'folks.' Many of Dimon's lines were as transparent as this one -- and just as transparent as he pretends his bank's balance sheet is.
Dimon: "There are some negatives to size... Greed, arrogance, hubris."
Translation: There are some negatives to me... I am greedy, arrogant, and proud of it.
Dimon: "We have to get rid of anything that looks like too big to fail."
Translation: Unless it looks like the biggest bank in the world, like JPMorgan.
Dimon: "We shouldn't prop them up."
Translation: But as long as I'm on the Board of the NY Fed, I'm going to make damn sure we do.
Dimon: "I'd fire the management."
Translation: Sounded good when I practiced it in front of the mirror.
With Jamie Dimon at the helm, this 'Too Big to Fail' institution was able to weather much of the political fallout faced by the other big banks. Perhaps it is because Mr. Dimon really believes that he didn't say/do what other people know he said/did. There was a great exchange with Senator Menendez which went something like this:
Menendez: "You said the requirement that banks hold more money is un-American."
Dimon: "I did not."
Menendez: "Did too."
Dimon: "Did not."
Menendez: "Did too."
Dimon: "Did not infinity."
JPMorgan's stunning multi-billionaire dollar loss gave an opening for public officials to drive through effective financial reform. Unfortunately, they aren't going to do it. At least not yet.
You see, some people actually do know what a synthetic credit derivative is -- and they are closely watching Mr. Dimon.
Here's what some of the top financial sector experts had to say about the testimony.
S&L investigator Dr. Bill Black said: "After this hearing, we have no answers for virtually anything. He refused to say what they did or when they did it. When the story keeps changing and contradicting itself, it's probably not true.. Shelby asked if Dimon would prefer a closed session. We make the CIA or FBI disclose sensitive information if people's lives are on the line. But with the big banks, no problem."
Dr. Robert Johnson, former chief economist for the U.S. Senate Banking Committee, said the senators basically asked Dimon, "How may we help you?" He also had predictions for the aftermath: "There is an illusion of precision, and they are behind that curtain working furiously. I would imagine given the size of the bank that over the next quarter they will evoke a tremendous amount of accounting ingenuity to try and create offsets, create derivatives to bring revenue forward and look profitable."
Professor of Economics Stephanie Kelton said the Senate testimony was like "watching a slow pitch softball game... they really pulled out the kid gloves."
"Perhaps," former Chief Economist of the IMF Simon Johnson wrote recently, it's "because JPMorgan Chase is a major donor to some members of the committee."
If the Senate wanted to prove they actually had the desire to prevent another crisis like the one that ripped this country apart three years ago, they would hold a hearing in which we would see Black, Johnson and the rest question Mr. Dimon.
But with a Senate Committee bought and paid for by JPMorgan and the other 'Too Big to Fail' institutions, who not only adore their financial backer but clearly fail to grasp the basic concepts of his industry, it seems unlikely.
On June 30th, when senators must disclose their political contributions to the SEC, I'll be interested to see how the Committee's groveling and fawning paid off.
Tomorrow morning, Dimon will again face questioning, this time from the House Financial Services Committee. Whether we hear as much praise and kowtowing remains to be seen, but given last week's sham, I wouldn't hold my breath.
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