JPMorgan Chase CEO Jamie Dimon made his second appearance on Capitol Hill. This time, though, he faced questions fired at him by both Democrats and Republicans from the House Committee on Financial Services.
Before Dimon found his way to the hot seat, several questions were asked of regulators, including Securities and Exchange Commission chairman Mary Schapiro, U.S. Comptroller of the Currency Thomas Curry, Commodity Futures Trading Commission (CFTC) chairman Gary Gensler, FDIC acting chairman Martin Gruenberg and the Federal Reserve’s general counsel Scott Alvarez. Each took their turns pointing their fingers at JPMorgan Chase for the loss.
Some regulators said the trading loss was due to “serious risk management weakness or failures” at the bank while several others also included statements that they were monitoring the bank with more scrutiny these days.
Dimon Late
Dimon was late to the party and to fill the time, both pubs and dems argued, almost embarrassingly, as to who was more angry about the bank’s losses. Two hours later, Dimon arrives and is prepared to speak. Rep Frank began with questions as to whether his own salary, which totaled $23 million in 2011, would be considered for clawback, to which Dimon replied,
Mine is 100% up to my board…They will do what they see is appropriate. I can’t tell my board what to do.
Spencer Bachus, an Alabama Republican who runs the House Financial Services committee, said his goal was to see if whether the Volcker Rule could have prevented JPMorgan’s massive loss. As soon as he said that, The Fed’s general counsel Alvarez said the Fed is “still working on the Volcker Rule proposal”. Next, the OCC said the massive trading loss at JPMorgan at no time threatened the broader financial system and that the banking giant’s efforts to position itself in no way created an “unusual risk of contagion to other banks.”
Overseas Banks
Later in the morning, the Commodities Future Trading Commission’s chairman Gensler reiterated an earlier statement that Dodd-Frank derivatives rules should also be applied to banks overseas, where the bank’s losses initially came from. Vehemently disagreeing, Dimon argued that the bank wouldn’t be able to compete if it’s held to American rules while its overseas competition is playing by a different rule book.
“We wouldn’t be able to provide the best products and services to our U.S. clients or overseas clients,” said Dimon.
They will go elsewhere if we can’t give them the best possible deal.
His solution, instead of including London and other foreign operations under Dodd-Frank, Dimon said lawmakers should focus on fixing current policies to better regulate U.S. operations.
Fix Dodd-Frank
Dimon was asked what he thinks the solution is for Dodd-Frank.
Regulation is not binary. It’s not left or right, it’s not democratic or republican,
says Dimon. Naturally, and true to form, he then went on to speak his mind about open hearings and how keeping it all out of public view is bad business, even though it’s that public he serves, “These are complex things and should be done the right way, in closed rooms where you can talk about what works and what doesn’t work.” He said it was bad business. He says “we” want a safer system too, referring, one might assume, to the banking industry as a whole. He then said it’s a lot “healthier and safer today”.
Whose Side Are They On?
Instead of this being an effort to discern what happened, it appeared to many to be little more than efforts to bring Dimon on board as “one of the gang”. Some members, by their conversational flow and general attitudes, seemed to want to stand up say,
Sorry, Jamie. I hate doing this to you, but I tried to keep you from having to show up,
as though he were the star football player who had to deal with a group of pesky teachers because his grades fell too low to play at Friday night’s game.
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