If there is any one individual who has come to symbolize the evil of crony capitalism, too big to fail, and the financial crisis bailouts, it is Jamie Dimon, CEO of JP Morgan Chase. Unbelievably arrogant, he holds himself out as a symbol of capitalistic accomplishment, never acknowledging that his bank’s business model is built on a heads we win, tails you lose proposition—leveraged speculation where the bank takes the profits and the taxpayers bear the risk. JPM and the rest of the too big to fails should have been allowed to go down the drain in 2009. Instead, Dimon’s smug countenance graces a recent Barron’s cover and a JPM shareholder letter. It’s the kind of face you’d like to plant a fist in the middle of, with all the force you can muster. From Michael Krieger, at libertyblitzkrieg.com:
The recent shareholder letter by JP Morgan CEO Jamie Dimon provides a crystal clear example of why it’s so dangerous to encourage and subsidize the corporate welfare babies known as the “Too Big to Fail” mega banks. The letter, which features a gigantic photograph of the executive seated casually with legs crossed in jeans, a shirt that appears almost uncomfortable around his neck in the absence of a tie, and all ten fingers touching flawlessly in what undoubtably took multiple takes to provide the sufficient creepiness factor (the presence of presidential cufflinks cannot be confirmed or denied), expounded on how well the mega banks performed during the financial crisis compared to the hundreds of small banks that failed.
This was understandably too much to handle for Camden R. Fine, president and chief executive of the Independent Community Bankers of America. He wrote a scathing piece in American Banker in rebuttal titled, Dimon’s Defense of Big-Bank Model: An Exercise in Hubris.
Here are some choice excerpts:
The financial crisis caused by Wall Street has been devastating for the U.S. economy, bringing on a downturn from which we are still emerging. But apparently there are some on Wall Street who still don’t understand the effect the collapse they constructed has had on the rest of us.
With baseball season underway, I get the feeling Jamie Dimon woke up on third base and thought he hit a triple.
Ridiculing the smaller financial institutions that have to answer to the free market — that do not enjoy an absolute taxpayer backstop against failure — is beyond hubris. It shows a complete unwillingness to accept responsibility. It shows that Wall Street, infantilized by privilege, has learned nothing from what it wrought in those panic-stricken months in 2008 and 2009 and in the years of economic doldrums that have followed.
That is not only infuriating to those of us who have had to survive on our wits instead of billion-dollar backstops — it is fundamentally dangerous. The danger lies in Dimon’s point that the largest banks are not the riskiest. He suggests the megabank model is nothing to worry about, even though its taxpayer-funded backstop incentivizes large institutions to continue growing and taking outsized financial risks. His point — in fact, his plea, to shareholders who might prefer to split up the massive institution into smaller, more manageable and more valuable parts — was that they’ve got a pretty good thing going and shouldn’t relinquish the benefits of their sheer size and complexity.
We as a nation cannot allow ourselves to fall back into the too-big-to-fail trap. We must continue to seek ways to end federal subsidies and funding advantages for the largest financial firms that incentivize risky behavior and put taxpayers at risk. And we shouldn’t fall victim to the siren song of the Wall Street megabanks, those institutions to which the rules of the free markets do not apply.
Simply brilliant. I have nothing to add.
I think Davey Crockett’s “Not Yours to Give” would be a nice reminder about how Wash.DC out to support this group of banksters and others who are able.