Jamie Dimon, famous lover of giant banks, doubled down on that love today, at least in word. But in deed he may be building an escape pod, just in case the whole too-big-to-fail thing doesn't work out.
Dimon's bank, the largest in America with nearly $2.3 trillion in assets, announced a reshuffling of its organizational chart today, which should interest almost no one alive. But the Wall Street Journal sees what Jamie did there: He took what was once six different business lines and lumped them into three.
One line focuses on old-timey retail banking stuff, toasters and checking accounts and such. Another focuses on investment-bank stuff, like selling bonds and buying credit default swaps. A third focuses on just stone-cold managing other people's money.
What this seems to be doing, the WSJ notes, is drawing a much thicker line between investment banking and consumer banking. Which is the sort of thing you would do if you were getting ready to split the bank into two things -- a JPMorgan investment bank and a Chase consumer bank.
Some see this move as knitting the bank even more tightly together, partly because it crams all corporate banking together in one place. But I think the WSJ has the right idea on this one: If JPMorgan Chase ever does decide to split up, peeling off a consumer-y Chase from an investment-bank-y JPMorgan makes the most sense.
It would in a sense be turning the clock back to the days of Glass-Steagall, when commercial and investment banking were split by law. That Depression-era law was repealed, thanks to the vigorous efforts of Sandy Weill, who built Citigroup into a sprawling behemoth, because synergies!
But nobody believes in those synergies any more, including Sandy Weill, who earlier this week recanted his giant-bank religion, shockingly. Certainly bank shareholders aren't buying the big banks. Even JPMorgan, supposedly the most-awesome giant bank in the world, trades at less than the value of its net worth, partly for this reason.
When the WSJ asked Dimon if he was going to join Weill -- formerly Dimon's mentor -- in the small-bank movement, he said they would have to pry his giant bank away from his cold, dead hands.
"Being diversified is a good thing," he said. "When a client calls us up today, 'should we do a bond deal, or should we do a [revolving loan], and do we do it in Thailand or do we do it over here,' they don't care about Glass-Steagall," the law that separated commercial and investment banking until it was repealed in 1999.
So Dimon is apparently not going to break up his big bank without a fight. But the bank is readier today than ever to be broken up.
... is very good at his job.
Something is about to break...
Occupy the SEC
http://www.occupythesec.org
July 25, 2012Financial Services Committee2129 Rayburn House Office BuildingWashington, DC 20515
Re: Hearing entitled “The 10th Anniversary of the Sarbanes-Oxley Act”
Dear Sirs and Madam:Occupy the SEC
1
asks our representatives and regulators to create a safe financial system for allAmericans, not just for the privileged few. Enforcement is a key step towards achieving thisgoal.
It is for this reason that we commend the House Financial Services Committee for conducting a hearing on the tenth anniversary of the passage of the Sarbanes-Oxley (SOX) Act.
The landmark SOX legislation was designed to relegate misrepresentations by corporate officersin financial statements to the ash heap of history.
The tenth anniversary of SOX’s passage is anopportune time to discuss its benefits and shortcomings.
That discussion must include a sober assessment of its enforcement, or lack thereof.
The public has been bombarded with news of massive frauds at both failed financial institutions as well as at going-concern firms that still publish financial statements.
If properly implemented, SOX can serve as a powerful deterrent tothese instances of financial misreporting and fraud.
We urge our representatives to impress uponthe Securities Exchange Commission (SEC) that it has not done enough to pursue SOX violators, particularly in the banking and finance arenas.
didn't we used to have antitrust laws to prevent monoplies?
I remember when ATT was broken up, it unleased a reneaissaince in communication technology that had been stagnant for decades
the big guys tie up resources and stifle creativity and innovation
so not only banks but all mega corps need to be broken up and bring some competition and innovation back
That being said, it WOULD be nice to see new legislation that resembles Glass Steagall in that it breaks up investment banks from commercial banks at a minimum! It would also be nice to see legislation that ends the practice of the US taxpayer's covering the negative balances, while allowing larger banks to purchase smaller banks with clean balance sheets, without the attendant risks.
Oh yeah. Geithner is one of the worst and needs to go down hard right with the rest of his buddies.
I'm talking hard time not Club Fed. Let them taste what life is really like.