JP Morgan's Chief Executive Officer, Jamie Dimon, wrote an op-ed piece for Friday (the 13th, very apropos!)'s Washington Post, arguing that the big banks should not be broken up. Whereas Goldman's Lloyd Blankfein invoked the 'divine right' theory ("I am doing God's work") of big banks, Dimon was refreshingly terrestrial:
Scale can create value for shareholders; for consumers who are beneficiaries of better products, delivered more quickly and at less cost; for the businesses that are our customers; and for the economy as a whole. (Washington Post, Op-Ed., Friday, November 13, 2009).
Note that Dimon carefully omits mention that a large company has great financial resources to pay him and his top executives enormous salaries.
Although Mr. Dimon would like nothing better than to engage in a dialogue to defend these assertions, I do not take the bait. I will concede his point, that big banks "can" do these things. They do not always, they need not, but, certainly, they "can."
Let us recall what big banks have actually already done, using Dimon's own style of argument:
Scale has destroyed the entire economy for workers, causing millions of unemployed; for consumers who have had little choice but to pay hidden fees on accounts and credit cards; for taxpayers who have had to bail them out with hundreds of billions of their hard-earned money, and at no cost to the fragile banks; for peoples' retirements and lifesavings; for government that is has pauperized; for bank executives, it has provided unprecedented wealth for creating not much of anything.
Dimon concluded his paragraph above: "Artificially limiting the size of an institution, regardless of the business implications, does not make sense." (Ibid.)
But, juxtaposed against the harm big banks have already and can do again, Dimon's arguments for scale, even if true, are woefully inadequate.
That is, it makes perfect sense to limit your institution's size to ensure that you, Mr. Dimon, cannot destroy me and millions of my fellow citizens again, even if you have no intent to hurt us.
Why should we take that risk?
Even in economics, life is not all efficiency, or supply and demand, or even the lowest cost. Safety, security and stability matter too. Without those, confidence suffers, and without confidence, so does both investment and consumption. Thus, it is arguable that the economy as a whole benefits when it is widely appreciated that the miscalculation, or misfeasance, of a few, can eliminate millions of peoples' entire life's work.
Dimon's article actually proves the point why the big banks must be broken up. Dimon is one of the captains of that industry, and his op-ed piece shows clearly his priorties.
They are, I assure you, not yours.
Go to www.BreakUptheBigBanks.com and join the fight against Jamie Dimon's priorities and Lloyd Blankfein's mission from God. Sign the petition.
Follow Paul Abrams on Twitter: www.twitter.com/pabrams2001