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Hubris, Thy Name is Dimon

JPMorgan Chase & Co. chairman and CEO Jamie Dimon waits before speaking at Simon Graduate School of Business at the University of Rochester's New York City Conference in New York City.

Jamie Dimon, the CEO of JP Morgan Chase, is never at a loss for words.  He is usually the first to speak frankly and issue a direct smackdown when he feels the occasion demands it.

Dimon has been particularly voluble in his open war on regulation, burnishing JP Morgan's reputation as the master of risk in its industry, the bank that stood above others, whose leadership and shining good sense are a daily reproach to the sloppy antics of the rest of Wall Street. JP Morgan, he has reminded the public, the media and regulators daily since 2008, is the bank that didn't make stupid mistakes, that never got scarred by the financial crisis. Such a paragon, Dimon implies, should not be sullied by the dirt of regulation and the implication that JP Morgan is less than all-knowing. Dimon was so convincing, his power so unchallenged, his reason so shining, that Simon Johnson declared the silver-tongued banker "The Most Dangerous Man in America."

Well, that was the past. Today, Dimon doesn't have a leg to stand on.

So, in the spirit of Dimon himself, we're calling out some problems with his reasoning.  Rounded up some of Dimon's greatest hits - his most outspoken  - on the subject of just how safe JP Morgan is. You can fill in the before-and-after yourself.

  • In April, Dimon called the concern about the firm's London Whale trade "a tempest in a teapot." (Quite the afternoon tea; maybe the accompanying finger sandwiches would be filled with crow.)
  • Just before his yearly trip to Davos, Switzerland earlier this year, Dimon claimed the regulation proposals circling among bank regulators were positively traitorous. "Some (of the regulations) are anti-American," he said, in an interview on Fox Business.
  • Dimon likes his space. Regulators hovering near him? Unnecessary.  “If you want to be trading, you have to have a lawyer and a psychiatrist sitting next to you determining what was your intent every time you did something,” he said with a touch of sarcasm, according to Businessweek
  • Last year, Dimon turned up the heat by taking a swing at Paul Volcker’s competency.  In a JP Morgan earnings call with investors last fall, Dimon implied that Paul Volcker didn't comprehend the depth of US markets. "The United States has the best, deepest, widest, most transparent capital markets in the world which give you, the investor, the ability to buy and sell large amounts at very cheap prices. That's a good thing and I wish Paul Volcker understood that," Dimon said, according to a transcript of the call on the economics blog Seeking Alpha
  • In January, Dimon went further with his criticism of the former Fed Chairman. "Paul Volcker, by his own admission, said he doesn't understand capital markets.  He has proven that to me." Dimon said in a different interview with Fox Business.  
  • Also during that conversation, Dimon justified his reasoning for not needing this level of precautionary regulations. "We don't make huge bets," he said. 

These quotes are particularly tone-deaf if we play a little game of Dimon versus Dimon.

  • In 2008, when he was the federal government's teacher's pet. Back then, a more measured, less bellicose Dimon talked to Charlie Rose at the Aspen Ideas Festival. Remember this guy? Start the video at 11:50 to walk down memory lane. "The institutions that lost money should blame themselves. They shouldn't blame anybody else. Not the federal government. "
  • In the same interview: "Some firms took a tremendous amount of risk, there were tremendous misincentives to take risk....U advise other CEOs, don't fall into the trap of, "where's the growth, where's the growth, where's the growth"...they feel tremendous pressure to grow. Sometimes you can't grow! In some cases, growth means you're putting on either bad clients, excess risk, excess leverage....so I think some of the Wall Street firms felt this pressure to grow too, and succumbed to it."
  • Rose asked him, "They're letting traders do whatever they want to do, and so to maintain profitability, we gotta do that too." Dimon replies, "I think some people may have done that, yeah."
  • Even in 2010, Dimon was no slouch at understanding the implications of taking big risks. He told Fortune, "The recognition of this crisis is that certain institutions that can be very vulnerable in downturns if they take on too much risk aren't going to just hurt their shareholders. They are going to hurt the system and, by extension, the taxpayer....just what risks we take should be our judgment call, provided we avoid taking extensive risk." 

A bank CEO acknowledging he shouldn't be taking extensive risk, particularly with customer deposits. Anyone know where that guy went?

-Marketplace's Karl Baker contributed to this post.

A hat tip to CNN Money and the Huffington Post for citing some of the quotes today.

                                                                      

About the author

Heidi N. Moore is The Guardian's U.S. finance and economics editor. She was formerly the New York bureau chief and Wall Street correspondent for Marketplace.
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I have a problem that James (Jamie) Dimon is a Director of the Federal Reserve Bank of New York District 2, while he speaks out against Federal Regulation and while he continues to operate J. P. Morgan Chase as a Taxpayer - Funded casino. This takes hubris and hypocrisy to a whole new level. Isn’t this also a conflict of interest?

I've been tweeting this for 3 years but few media people (other than Rolling Stone's Matt Taibbi) cared to investigate. JPM's derivatives exposure (~$78 Trillion) exceeds all top 25 U.S. banks. Read the OCC's "Quarterly Report on Bank Trading and Derivatives Activities
2Q2011":

http://bit.ly/KgkONQ

See page 25 for 2Q2011 derivatives holdings for top 25 U.S. banks. At the height of the meltdown, in 1Q2009, Jamie Dimon was sitting on ~$97 Trillion in derivatives.

Bear Stearns knew it, as the primary counterparty on JPM's CDS contracts -- the REAL reason JD cut a deal with Sheila Bair to "rescue" BS with money "borrowed" from his own private piggybank (Federal Reserve Bank of NY).

Lehman Brothers got it -- when JD refused to release $17B they had on deposit with JPM before they filed bankruptcy ... because he needed Lehman's failure to divert attention from his own mess.

WaMu got a taste when JD conspired with Sheila B to kill WaMu -- which was not even under FDIC jurisdiction. JD tapped FRBNY for the $1.9 Billion bargain basement price he conned Sheila into accepting for WaMu's ~$380 Billion in assets and deposits.

Where were the media and Congress *and* POTUS then? Mesmerized by silver-tongued JD, no doubt. All hail the "hero/rescuer" banking equivalent of Indiana Jones ... running as fast as he can to keep ahead of the ever-growing boulder rolling toward all of us. JD makes Madoff, Stanford, and Fuld look like AMATEURS!

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