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Yet another petulant banker

By Holden Lewis · Bankrate.com
Wednesday, April 7, 2010
Posted: 10 am ET

The Wall Street Journal has a front-page feature on Jamie Dimon, the CEO of J.P. Morgan Chase, that explains his frustration with government regulation. (I would link to the article if the WSJ posted it in full length for nonsubscribers.)

Dimon cuts a less unsympathetic figure than most elite bankers. Like any banker who draws a bonus, he believes regulators go too far, but he does believe that Washington has a valid role. He favored the TARP bailout, even though he says his bank didn't need the $25 billion loan it got, because TARP strengthened the banking system.

It bugs Dimon that people don't make distinctions between his bank, which didn't cripple itself by overdoing subprime mortgages, and banks that did threaten the financial system by excreting all manner of subprime loans and derivatives. Why is he lumped in with guys like Goldman Sachs CEO Lloyd Blankfein, who is about as likeable as a salmonella bacillus?

Dimon tells the Journal: "Punishing whole industries, whether you were reckless or not, just isn't the way to do things."

Dimon is wrong to equate regulation with punishment. When you tell your teenager to be home by 10, you're not punishing; you're setting a boundary for proper behavior. When your teenager confuses rules with punishment, it's a sign of petulance and immaturity. Ditto with Dimon and other bankers.

Dimon opposes creation of an independent consumer financial protection agency, which would enforce consumer-protection regulations and allow the myriad safety-and-soundness regulators to stick to their critical paths. Dimon views the proposed consumer financial protection agency as a duplication of effort, telling investors last month: "If our legal department isn't doing a great job, I don't start another legal department."

But if Dimon truly believes that, then he should start a grassroots effort to merge the Federal Reserve, the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Association and the FDIC. By having all of these federal regulatory agencies, we allow financial institutions to choose their regulators. And regulators compete on friendliness to bank executives. They don't compete on friendliness to consumers.

Also, it's disingenuous for Dimon to say that "I don't start another legal department," when, in fact, Chase does hire outside law firms to handle foreclosures.

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6 Comments
Dru
April 08, 2010 at 11:05 pm

Horrid way to spend your $$$ with Fifth Third mortgage!!$$.
Could not leave a comment on their site so here goes. I have held mortgage with 5/3 over 20 years. Payment is due on the 1st, late on the 10th. Well, they have contracted a Call Center to make calls by automated technology $$ EVERY DAY from the 1st into my office $$, then hook me up to a live agent $$$, to ask me to pay, but not have any info on my history. Gee, I have automated pay sent out EVERY month to arrive by the 5th so WOW are they stimulating my nerves. But HUGE $$$$ were spent to bug people who are honest. Get me OFF their list. And the rich 5/3 goes through their $$$$ bankroll... Sad

Gina Pogol
April 08, 2010 at 3:39 pm

Bravo. These guys take regulation the wrong way. Because publicly held companies have a duty to their shareholders, they have to do everything legal that they can to enrich the company -- even if it's icky. The mandate to do icky things if they are legal would put anyone with a conscience in an untenable and uncomfortable position. So unless Mr. Dimon likes wallowing in ickiness he should welcome responsible regulation that gives lenders a level playing field and is good for society.

S.S. Harte
April 08, 2010 at 9:12 am

Right on! Earlier this year, after his outrageously petulant statement that he was “getting tired of the constant flogging,” I couldn't resist writing to the emperor of CEOs. In that letter, I asked him how did he think the rest of Americans feel, the people who had lost their homes and their livelihoods. Needless to say, he wasn't from the south. I didn't get a thank-you note.

Michael Becker
April 07, 2010 at 9:42 pm

If JP Morgan was forced to bring all of their off balance sheet assets back onto their books, and value them accurately, I'd be willing to bet they would have needed a whole lot more than $25 billion. Mr. Dimon will get no sympathy from me.

Debru Aklil
April 07, 2010 at 11:48 am

great job guys!!!

Holden Lewis
April 07, 2010 at 10:15 am

Allow me to write the first comment. Hooray!