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Raymond J. Learsy

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Jamie Dimon's Malign Influence On The Culture Of American Banking

Posted: 07/13/2012 11:41 am

Compensation clawback of Jaimie Dimon's pay following JP Morgan Chase's massive trading loss is being called for by Sheila Bair ("JPMorgan's Dimon Deserves Clawback" CNBC.com 07.11.12) Bair, former head of the Federal Deposit Insurance Corp. and until her retirement in July 2011 (please see CBS MoneyWatch "Sheila Bair's FDIC Was Hated By Wall Street -And That's High Praise Indeed" 07.15.11) perhaps the only individual in government who could be relied upon to view the financial crisis from the vantage point of Main Street and the pocket book of everyday Americans and not as most of our government officials, besotted by the sway and swagger and political money of Wall Street and its Wall Street plutocrats.

Dimon, prior to his bank's massive trading losses has been Wall Street's biggest proponent of proprietary trading. The fact that JPMorgan had not been taken down and survived without government intercession during the 2008 financial debacle had only convinced Dimon and his directors of the profit potential of prop trading. It encouraged a policy of expending billions to aquire new trading platforms such as the acquisition of the Royal Bank of Scotland's trading division RBS Sempra. Extensively poaching traders and executives from rivals and boosting their trading work force from 125 in 2006 to some 1800 in 2010 (please see "The Jamie Dimon Puppet Show" 06.14.12) and to invest in the banks and in turn depositors funds on such quintessentially non-banking investments as becoming the largest shareholder of the London Metal Exchange. This in order to embellish their trading posture on such massive billion dollar bets as the direction of the copper market and other metals. As though the bank's unscathed results of 2008 gave the bank carte blanche in extending its gambling 'investments' and using the 2008 results as the major talking point in trying denude any regulation to rein in governmental oversight of such flagrant casino undertakings.

Yet, virtually no one focused on the real outrage: Why was JPMorgan sitting at the gambling table to begin with. Just because the spin of the wheel came out well for them in 2008 didn't mean the assets of the bank, its access to massive and cheap funding at the Fed window, with a government bailout assured as being 'too big to fail', and its depositors money (guaranteed in large part by such government agencies as the FDIC) should have ever been placed at risk, viz the recent history of the 'London Whale,' and what more to come?

But it was exactly that, rationalizing playing at the roulette table that has done so much to destroy the nation's trust in banking institutions. Jamie Dimon by his words and deed, through his public persona and with the massive resources of his bank, has become the poster child of such excess and has used his position and the resources of the bank to organize a frontal attack on regulation with massive lobbying efforts to denude the Dodd-Frank bill and emasculate its Volcker Rule provisions doing near irreparable harm to the banking community in helping to destroy the public's trust.

Prop trading, gambling with depositors money which, together with the housing debacle, has focused the anger of the American people at Wall Street. Dimon has made himself the standout of both excesses and has used his position and the resources of the bank to exacerbate both, be it through his frontal attack on regulation trying massively to curtail regulation of the banks as well as JPMorgan Chase's excessively aggressive foreclosure policies toward home owners reaching its apogee when the bank foreclosed on servicemen and their families while serving in the field of operations in Afghanistan and Iraq (please see "It's All About The Money- Jamie Dimon's Big Pay Hike And The Home Foreclosure Of Our Servicemen" 02.19.11).

To show real leadership, this is the moment for Jamie Dimon to take his cue from Bob Diamond, CEO of Barclay's Bank (BBC News "Diamond to Forgo Pounds 20 Million Bonus Amid Libor Scandal" 10.07.12). And lastly, where is the accountability of the JPMorgan Board of Directors to permit Dimon and management to inculcate and permit such an aggressive proprietary trading culture at JPMorgan Chase at the cost of billions?

 

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