WE SHOULD ALL FEEL BAD FOR JAMIE DIMON
Jamie Dimon is upset. And rightfully so. After all, his bank was saved from the brink of disaster in 2008. The US government took extraordinary measures to ensure that he did not go down as one of the greatest bank failures of all-time. In fact, the US government did him a huge favor by making his bank the linchpin in the US economy. Of course, this was done by making Mr. Dimon’s already too big to fail bank too bigger to fail. But none of this is enough. Saving someone’s career and ensuring that their bank is now an instrumental portion of the US economy is not enough. And in a fit of rage Mr. Dimon went and rewarded himself with a monstrous $16MM pay package last year. After all, he deserved it.
But this is not enough. It’s not enough to pay yourself outrageous sums of money when your company should be in a hole in the ground. It’s not enough to have the government by the throat and know that the taxpayers can never let your company fail. It’s not enough to have been a key player in helping the US banking system become the gigantic leach on the world’s largest economy. It’s not enough that you help pull our best and brightest minds out of productive fields and into finance where they will do nothing but think of new ways to help separate the middle class from their savings. It’s not enough that you helped build a banking system that nearly crashed a $15 trillion economy.
No none of this is enough. And when we pass an incredibly weak regulatory bill that does nothing to actually fix what caused the crisis you go and complain that the government is doing too much. Well, you’re right. The government did do too much. The government should have let you and your friends fail. They should have let you become the poster child of the greatest banking collapse in the history of the world. But you know what? They didn’t do that. They saved you. They saved your career. They saved your reputation. And they saved your precious multi-million dollar income. So, rather than complain that the government has done too much why don’t you just say thank you for what they did do, take a seat in the back of the room, thank your lucky stars and shut up.
Source: CNBC
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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79 Comments
AMEN!
Amen!
Amen, Cullen, Amen!
Let’s see,
http://www.theatlantic.com/business/archive/2011/06/did-fed-nominee-diamond-get-borked/239983/
http://thehill.com/opinion/columnists/juan-williams/164809-opinion-warren-thrills-left-frightens-the-gop
Yup, the TBTF banks still run all 3 branches of the US government…, but particularly the US House of Representatives…
Exactly. Boo fricking hoo….
Very well said Cullen!
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Way cool! CR thanks! This adds explicit support to too my earlier Comment in the BB post: BERNANKE: I DIDN’T DO IT! http://pragcap.com/bernanke-i-didnt-do-it
It is a pity we’ll never know if a different path, letting banks fail (i.e. wipe out equity holders and nationalized them) and letting bond holders take a hair cut; would have gotten us out of the mess sooner. Instead, the same guys who broke the country are still running these institutions without learning from their mistakes. Actually, they were rewarded for their mistakes and now make more money than before! In the mean time, Benny, Obi and his cronies keep brain washing the masses telling people that bailing out banksters was the only way to save the nation.
exactly.
but to try to justify your 16MIL to your board or to keep your sorry a$$ in the limelight or to try to burn your name into the minds of your next possible hire-ers —> you shoot your mouth off when given the chance, especially to complain to someone about something,that ‘that someone’ did not do…… on a very national stage.
vanity thy name is rescued banker.
Dallas FED CEO Fisher
http://watch.bnn.ca/#clip481255
http://watch.bnn.ca/#clip481256
http://watch.bnn.ca/#clip481258
Does not appear to have any concept of MMT
The first part of part 3 I could barely beleive.
“We were not responsible for Lehman, ML, AIG?
Huh?
Wouldn’t it have been great if the Bernank jumped up in anger and said, “Dimon, sit down and shut up! I’m sick of the bulls%&t!! You ain’t seen nothing yet!!”
I know it’s a pipe dream.
Get the horse and a rope!
Be careful with JPM. They are part of the “club”. They have taken “too big to fail” truly to a whole new level. if that bank goes down, it all goes down, worldwide.
Anyone look at their derivative book. 50$T+++ sheesh.
the world as we know it ends when JPM ends.
Despite all the appearance of financial stability that the government bailout has provided, it is not the governments responsibility to provide life support to private enterprise UNLESS it is providing seed capital to entrepreneurs.
JPM’s demise should be as it is with Lehman’s, an event in the past. As is typical of the current generation we will do all we can to delay the debt washout cycle beyond our lifetime so as to prevent any interruption to the baby boomers opulent lifestyle.
Good luck!
I would suggest you study the actual man (to wit, JP Morgan) and the Panic of 1907, and then get back to me.
Who has bailed out whom and how often.
Then study the history and true purpose of the Fed.
And then, come back and we can have this debate.
In no way I am advocating TBTF, it just is what it is.
I enjoyed reading the “House of Morgan” years ago. Clearly the laws of this nation were still in their infancy. White color ‘ethnic cleansing’ seemed to be popular in 1908, monopolies were the norm of the day, titans of industry consolidated power and did what they could to crush their opponents, legally or illegally.
Then like now there were no rules or regulations to reign in greed. Market manipulation by cornering any market an individual thinks advantageous in order to extract as much wealth for the individual and screw the fact that the distortion to the market puts the nation at risk of a depression.
The unrelenting greed and insatiable grabbing of industrial power stifling out competition is exactly why Teddy Roosevelt went after the trusts in his infamous trust busting era and the continual euphoric rise and crashing of markets rushed in the Glass-Steagall act in order to reign in the unethical financial practices that were the rule of the day when financial power was concentrated in the hands of greedy men.
“I would suggest you study the actual man (to wit, JP Morgan) and the Panic of 1907, and then get back to me. ”
Then get back to you…nice. Perhaps you should dig a bit deeper.
“Who has bailed out whom and how often.”
Before there were laws and a more organized central authority, yes the men of extreme wealth did come in to provide liquidity during the multiple panic episodes that plagued our nations economy. It was of course in their own interest as well as the markets. These men ran railroads, banks, shipping, mining interests all of which depend on a healthy economy. They of course could have taken their money to another country but they did not.
So you favor “trust-busting” eh? I am a big fan of TR, but Mr. Sherman, not so much.
You do realize that it was that clown Sherman who almost bankrupted us, don’t you. Check out a law he had setting the price of a certain PM at a certain ratio, and then see what happened.
Dimon is right, these clowns regulate things to death. The big boys get away with murder, but it kills the small guy.
down with overregulation.
While Teddy Roosevelt used it as a tool…it lost favor with the Supreme court in the 1920′s…history speaks for itself on the result. One could presume that without these laws AT&T would not have been broken up and the internet would still be the sole domain of the government and used exclusively by DARPA and you and I would still be using tone dialing.
No doubt we need to be vigilant against over regulation but Dimon failed, plain and simple and the government bailed his ass out. That in my view is over regulation.
not sure JPM failed. if anything they expanded and profited greatly, ala BSC and WM.
Guaranteed takeovers were fantastic for JPM…
Come on. If AIG had gone under the whole roof would have caved in. JPM included.
If that was the case, then the bailout of AIG was good and proper.
However, if they could have gotten something less than par for the swaps and everybody take the haircut, then that should have happened.
How much direct exposure did JPM have to AIG??
Mr. Roche,
Why can’t the Fed just stop paying interest on bank reserves?? I don’t understand the logic behind this policy ??
They could, but paying int on reserves allows them to raise rates without selling off the portfolio. It’s pretty smart actually.
This one’s for ‘unemployed reader’ – something I wrote the other day (unfortunately we didn’t get Bernanke to bite):
The Fed’s unnecessary bank incentive
One of the biggest criticisms of the US Federal Reserve’s decision to push ahead with a second round of unsterilized asset purchases has been its limited direct impact on the real economy.
Sure, we got further support for financial assets, with commodity and equity markets all gaining a lift. This was a repeat of what we’d seen through 2009, when the Fed first got serious about treasury and residential mortgage backed security purchases.
But where was the impact for the man in the street? Here the Fed could at least point to borrowing costs, which it argued were lower along the length of the yield curve thanks to its purchases.
Perhaps, said the Fed’s detractors, but this liquidity wasn’t getting through to business and consumer borrowers; instead most of this new money was ending up back in the Fed.
They’ve got a point, given reserves deposited at the Fed by commercial banks had risen from less than $US100 billion to some $US1.5 trillion over the past three years.
A key consideration here was the Fed’s decision to starting paying interest on these deposits. With the interest rate on excess reserves sitting at 0.25 per cent, the Fed’s set to hand over almost $4 billion a year in interest to commercial banks for the privilege of re-cycling this Fed manufactured liquidity.
I’ve never understood this logic. If one of the key drivers of quantitative easing was lifting economic activity, then surely it made more sense encouraging banks to put these funds to work within the broader economy.
It’s not as though the Fed isn’t aware of the leverage it can exert with this interest rate. It knows when the time is right, lifting the interest rate paid on excess reserves will be a great way of slowing activity, by encouraging banks to lift deposits at the Fed. But with reserves already sitting at $US1.5 trillion, it seems little encouragement is needed.
Two years ago, when deciding it should start paying interest, Fed chairman, Ben Bernanke, called interest on reserves “perhaps the most important” tool for tightening credit. But surely this logic works both ways? Last November I suggested the Fed consider charging banks to hold funds with the bank. Applying a negative interest rate would provide them with a strong incentive for redirecting funds towards commercial lending channels.
That was always going to be controversial. So why not simply cut this rate to zero?
Last year Bernanke wasn’t keen. He argued that was the rate to drop to zero, this would make it more difficult for the Fed to manage short-term interest rates, as it would have created a disincentive to use the overnight market. But when pushed he did concede that lowering the rate “would have a bit of an effect on monetary-policy conditions and we’re certainly considering that as one option.”
Instead they opted for the $US600 billion asset purchase program; since that kicked off last November commercial bank reserves at the Fed have climbed by almost exactly $US600 billion. Funny that.
So maybe its time for a fresh look at the logic of paying banks to sit on this system liquidity. As US markets shut this Tuesday, Bernanke will be giving a keynote address on the outlook for the US economy. Coming as it does in the wake of a slew of sub-par economic releases, investors will be hanging on his every word. Here’s hoping this includes a rethink over the need to persevere with “interest on excess reserves”.
Banks don’t lend reserves so there’s nothing in the payment of IOR that inhibits the banks from “using the funds”.
I wouldnt have been quite so polite Cullen. I would have said “STFU!!”
Jamie Dimon is the poster child of the larcenest behaviour of the banking system his career is the mirror of what has gone wrong in the banking business, He was at the forefront of the depression era banking law changes that has brought the greatest country to its knees…. What Ben should have told that little arrogant turd is ARE YOU PREPARED TO TAKE PHYSICAL DELIVERY OF YOUR MULTI TRILLION DOLLAR COMMODITY BOOK… The answer is yes if the tax payers will bail out there losses again .
CR…..I was very disappointed in your rant.
Just when I thought you would slip the F word in you left me wanting more.
It’s your blog(I think of it as much more than a blog)
But I guess you did say F U too dimon. Once again you remain a gentleman.
This is the best rant I have read in quite a while. Have to agree with posters above, I would have said STFU at the end, but CR is more classy than that.
You guys are too kind. It’s easy to pick on the banks though. The sad thing is I’d thought more highly of Dimon than most other banking CEO’s until he came out with this whining question….
amen.
Be careful what you wish for…you may get it.
What were we to expect from those irresponsible children…the richer you are the more you complain…In France we have a motto saying “plus c’est gros plus ça passe” meaning that when you ask for something you know is not reasonnable you should ask for more…because there are high chances you’ll get more ! On top of that you should use horrible arguments. I mean i suppose JD says the potential regulatory changes are a threat for the economy just after a huge crisis proved regulations was lagging !
At the peak of austerity talks in France, our beloved president fought hard to pass a bill that cut richest people tax ! Indecency, poor timing…but it worked…
When everything is good it’s due to my talent, when everything’s is wrong it’s other people fault (govt etc).
This type of behaviour is simply an insult to common sense…and main street
Finally JD argument is that things are now tougher…but question is not are they tougher but are they tough enough ?! I do not buy his argument that all this is dragging recovery…since we are in a balance sheet crisis !
Anyway,a very sharp post you did Cullen !
Bravo!
TPC
For once my friend I say to you AMEN
Ungrateful Curs, the whole lot of them.
Well said
That was easy. You knew you would get 500 people agreeing with you, but head is up your …
Dimon had no part of the making of the crisis. He just happened to be working in the sector that needed saving. If all banks had behaved as JPM, there wouldn’t have been a problem at all.
He was right then and he’s right now.
Surely you’re kidding, right? Anyone who isn’t familiar with Dimon’s history has their head up their ass if they think he is some innocent player in this. Dimon was Sandy Weill’s right hand man in helping build Citi into the disaster that it became! He was a central player in creating too big to fail!
Do your homework before making these sorts of ridiculous comments. The fact that he left Citi in a mess and took over a relatively healthy bank later does not absolve him of any wrongdoing.
What an absurd comment.
Cullen,
Sandy Weill built Citi into a diversified financial services colossus, but it was CEO Chuck Prince – a lawyer – and his poseur CFO Sallie Krawcheck that destroyed the company through horrendous lending and risk management. Jamie Dimon was long gone from Citi before the build up to the financial crisis. Dimon can be blamed for JPM/Chase to the extent it deserves blame, but not Citi
This is simply not true. Dimon was Weill’s right hand man in their mega merger days. Right up to the Travelers merger which is largely seen as being the pinnacle in too big to fail. Dimon was instrumental in making that bank too big to fail and he did the same thing to JPM when he merged it with ONE. He is a key player in too big to fail. Arguably, THE key player.
Well, I agree that Dimon was part of making Citi “Big” – that is simply a fact. Of course, he was also instrumental in making JP Morgan “big”, i.e. the combination with Banc One (although JP Morgan Chase was already “big”). But the issue is not so much “big”, in my view, rather the issue is risk management and how well one manages a “big” institution. JP Morgan and Goldman are both “big”, but both were well managed w.r.t. position risk, unlike Citi, BAC, Merrill, MS, etc.
I liked your rant, but be careful not to throw the baby out with the bath water. There is no doubt that overcompensating with excessive, ill conceived and poorly thought-through regulations pose a substantioal risk to economi growth and job creation through more rapid contraction of credit. Politicians always over react and always slam the barn door closed after the horses have left the stable. I ttink that was Amie Dimon’s point. Also, I don’t think he was looking for any sympathy (nor does he deserve it).
Its easy to pick the yarn when you are the weaver. When you create the instruments that create the risk and sell the worst of these same instruments on your book to your customers whom you are to have a fiduciary responsibility to protect, then short the market and when it collapses you STILL need government guarantees then you are not on managing your risk well, you are a thief and an incompetent one at that!
I don’t see how you can remove the “too big” from the debate. The problem is that all of these banks are too big, too diverse and too intermingled. Dimon, whether you like it or not, was a key player in helping create this problem of too big.
He made his bank big. Successful. No crime in that. Now if he would have lent
unresponsibly, you could fault him. I can’t fathom how you could fault him for ‘big’.
He made shareholders a lot of money wiyh ‘big’ and profitable. That’s his job
I’m not faulting the man for doing his job. He made his shareholders a lot of money. But if you’re going to create an entity that is so large that it becomes systemically critical then you better be willing to let that entity be regulated by the Federal govt in a manner that ensures that you can’t destroy the US economy. You can’t have it both ways. You can’t be huge, create massive risks and regulate yourself. You either have to choose to be large and regulated or small and less regulated. As a country, we simply cannot allow these institutions to hold the economy hostage as they pay themselves excessively and increase systemic risk and hardship.
Simply look at what a major bank president earned in 1960 and then now. Also, look what major bank presidents around the world earn.
The US major bank presidents have done very well under crony capitalism, very much unlike the general populice they continue to fleece, with the help of our elected leaders.
The banks were not the only culprit in the mess. The government played a rather large role themselves… Think about it for a minute.
Think for a minute about who owns the government. Hint: contrary to popular myth, it’s not the people. I think you have it mostly bass-ackwards; it’s the banks extorting the government. Where have you been the last three years?
The cries about regulation are a shrill distraction, all sound and fury for the ears of the idiocracy. From cap-’n-fade to drill-baby-drill to S&L dereg, de-uunionization, SHAFTA, futures “modernization”, repeal of Glass-Steagall, to outright bailouts, it is DE-regulation that has ripped the harness off crony capitalism and destroyed the pseudo-free market. What substantive regulation remains to prevent the overgrown finance sector from completely looting all the remains of the US economy and middle class?
The one that really kills me is that the government forced Countrywide and Merrill down the throat of Ken Lewis at BofA. Then turned around and sued them for all the crap they had unleased on the public prior to the acquisition. Seriously, had Lewis waited until Tuesday to buy ML, it would have gotten a 90% discount.
First off, the government didn’t give them money for nothing. They are making a massive buy-the-fucking-dip profit on those “bailouts”. Not that it really matters in the face of the general deficit, but anyway.
I don’t know if you have looked at (all sorts of) reserves at banks recently but the one of the reasons they’re hesitant to lend has to be the regulatory environment.
The question he asks is thouroughly valid and while I don’t agree with the bonusses that wall street people get (who are after all mere employees who are imo not socially entitled to the rewards of entrepreneurs and other real capitalists) one has absolutely zero to do with the other.
To conclude, this is article is a straw man. In summary your article says “because Jamie Dimon pays himself lots of money (which is wrong) and because he was working at a financial institution which was in trouble he is wrong about everything related to finance and he is probably a douchebag personally”. If you’d written an article on the impacts of financial reform on the industry and on the basis of positive impacts of such said that Dimon’s question was invalid then maybe you would have had a point.
Banks don’t lend reserves. If you’re going to come here and basically call me an idiot then you should at least get the very basics of banking right. Otherwise, your “conclusion” is built on nonsense and misguided thinking.
Anonymous
That type of thinking is not productive. It’s correct but serves no one or society.I’ve heard it with bernanke also.”he is just doing his job” . While true. Its well…..just silly.
I keep thinking of the character from “the reader”
She was just doing her job. She did it well..outcome be damned