JPMorgan CEO Dimon goes before Senate

JPMorgan Chairman and CEO Jamie Dimon faces the Senate today for a grilling over his firm's recent multi-billion bad bet.

Stacey Vanek Smith: Over on Capitol Hill today, JPMorgan Chase CEO Jamie Dimon will be in front of the Senate Banking Committee. He'll be trying to explain how his bank lost $2 billion on one risky hedging strategy.

Heidi Moore has more from Washington.

Follow our real-time coverage of the Senate hearings from Heidi N. Moore with photos, Tweets, related reading, and other tantalizing details from the Senate gallery. Read more.

Heidi Moore: When members of Congress grill Wall Street CEOs, the sparks usually fly. Remember 2009? Rep. Maxine Waters faced off against then Bank of America CEO Ken Lewis.

Maxine Waters: Bank of America, you paid yourself $30 million in fees. Why did you do that?

Ken Lewis: I don’t know what you’re talking about.

Or 2010, when Sen. Carl Levin noted the scatological aspect of a Goldman Sachs contract?

Carl Levin: Look what your sales team was saying about Timberwolf: “Boy, that Timberwolf was one [expletive] deal.”

Here in Washington, Jamie Dimon’s testimony today is so anticipated that one veteran of Capitol Hill described it to me as “Dimonpalooza.” Jamie Dimon isn’t just any bank CEO. Stanford Business School professor Anat Admati used an apt phrase.

Anat Admati: The banker we hate the least.

Chris Payne, a senior economic analyst at Bloomberg Government, has met with Congressional staffers and he says that Dimon’s rock-star glow has dimmed lately.

Chris Payne: I daresay no one in Washington is going to be particularly sympathetic to him. I think he’s going to get a fairly rough ride.

That’s because everyone here is sick of sparring about the Dodd-Frank financial reform bill. The political will just isn’t there anymore.

Payne: Perhaps there isn’t the kind of ire against Wall Street that there once was. This is just a kind of irritating blip.

It’s hard to imagine that $2 billion trading loss is a blip. But Admati agrees that’s all it is for JPMorgan, which has $2 trillion in assets. That’s why she says the hearings could open the door to a larger conversation about the health of the banking system.

Admati: What I’d like Congress to be doing is to ask what this means for the bigger picture.

Unfortunately, with the summer recess and the elections in November, not many in Washington will be able to start painting that larger picture until January of 2013.

In Washington, I’m Heidi Moore for Marketplace.

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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Aw, isn't it nice that he said he was sorry? I guess that makes it all better. Who's gonna send these sociopaths back to kindergarten so they can practice basic ethics?

"A Day of Reckoning....." Where's there's smoke there's fire. Some Wall Street analysts think JPM's loss will actually grow to nearly $6 billion when all is said and done. Human beings are symbolic thinkers, and they must believe in the sanctity of their institutions which represent core beliefs and values. Mr. Dimon must be clear and forthright today. Hedging his testimony will not play, even in Peoria. Years ago Big Tobacco acknowledged and apologized for killing people. Human beings are forgiving, and cigarette producers were allowed to stay in business with stipulations. Mr. Dimon's language needs to be crisp, to the point without rationalization, denial, or justification. The repetition compulsion which plagues so many Wall Streets traders needs genuine overhauling. This may never be possible because of the exquisite capacity of the human mind to repress and distort reality. And the money's just too good when the bets click. And we can never lose sight of the fact that they are trading other people's money (our money: shareholder assets). Indeed the Street provides a truly surreal universe for all players and observers.
Christopher Bayer, Ph.D.

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