Jamie Dimon faces another grilling from Congress over JP Morgan's multi-billion dollar trading losses - live coverage
A few more questions about "too big to fail" – at one point Dimon says he wants JP Morgan to be "too good to fail," which is cute – and something about "too small to live off," a point about poverty made by Al Green, a Democrat from Texas, and suddenly it's all over.
Green says he wants to talk further with Dimon about "too small to live off," but things dissolve into uncertainty.
That's it then. What did we learn? Other than one congressman thinks Basel is pronounced "Basil".
Representative Lynn Westmoreland of Georgia actually has some praise for how JP Morgan helped handle mortgage foreclosures, which makes a change.
America's capital markets are simply awesome, Jamie Dimon says for the umpteenth time, only a whisker away from starting a chant of "USA! USA!"
Jamie Dimon appears to be getting bored with being asked the same question over and over about financial regulation, and replies "You guys can do what you want" when asked what he'd like to see for the umpteenth time.
An interesting question about the risk managemrnt policies of the CIO, the unit that cost the bank a bundle. Dimon certified that its policies were sound in 2011 – but they weren't.
Dimon looks mildly annoyed for a change and replies that he thought they were at the time, end of story. Which raises the question, why bother with such declarations?
Did you support Dodd-Frank? Dimon is asked by Patrick McHenry, a reference to the post-financial crisis package of legislation. "Parts of Dodd-Frank we supported, parts of Dodd-Frank we didn't support," says Dimon unhelpfully, having explained that the financial crisis brought out a lot of flaws in the current system.
Some grandstanding going on here, as a committee member gets into some heavy semantics over what constitutes bankruptcy and what should happen to banks that really do fail.
Boorishly, McHenry says Dimon should be able to easily define the difference between trading and hedging after 30 years in the business. But Dimon's right: it's not so easy to do in modern financial markets.
The Guardian's Dominc Rushe is watching Jamie Dimon give testimony to the House financial services committee – and thinks the House is posing some tougher questions than its Senate colleagues did last week:
Jamie Dimon is getting a far harder time from the congressional financial services committee today than he did in the Senate last week. Not that that would be hard, as readers may remember that one ended with them lobbing softball questions about his views on Europe.
Brad Sherman pretty much sums up the tone of today's hearing: "Why should we allow you to be so big that if you go under, we are going to have to bail out your creditors?"
Dimon is on the defense but he looks pretty comfortable. He said a lot of banks were "the port in the storm" and the JP Morgan's size and diversification had allowed it to pull through the credit crisis and "allowed us to do the things you wanted to do" including buying failing banks like Washington Mutual, lending money to California and investing in Chrysler. He looks like the captain of the football team waiting for the end of a detention for some jape he knows will have no long-term impact on his life.
On this subject, today's Wall Street Journal has an examination of the so-called "London Whale" trader at the centre of the losses:
JP Morgan Chase & Co trader Bruno Michel Iksil at times resisted sharing some details of his positions with superiors, while trading executive Achilles Macris had a history of clashing with co-workers, according to current and former colleagues.
Mr Iksil, a Frenchman known as "the London whale" for his outsize positions, and the Greek-born Mr Macris are at the center of at least $2bn of losses at the nation's biggest bank by assets. Each remains at the bank but is expected to leave, according to people at the bank.
What's that Skippy? A couple of "rogue traders" threw the bank down the well?
More damning details:
Mr Iksil attended École Centrale Paris, one of France's most prestigious engineering schools, where he played tennis before graduating in 1991.
Here's a question for Jamie Dimon: would the proposed Volcker Rule – a bar on proprietary trading and hedge fund ownership – actually increase risk? It's meant to be a softball, I think, but Dimon treats it like a grenade. After a pause Dimon says he can't answer because, hey, there are lots of rules and regulations out there.
This time, though, Dimon says that he doesn't think the Volker Rule would have made any difference to the bank's losses at question here. That's a slight from Dimon's "probably" from last week.
Next question, from California Democrat Brad Sherman – well, a statement really: If you'd have invested all that money you lost in London in American businesses, you wouldn't have lost it all would you?
Jamie Dimon says all those profits and assets overseas are invested in America.
When Sherman points out an IMF report about JP Morgan's implied support from the US government via "too big to fail"-style policies, Dimon gets fiesty, pointing that JP Morgan bought up the smoking ruins of Bear Stearns and WaMu, at the government's behest. He walso argues that if investors really believed that JP Morgan was too big to fail, its bonds would trade about the same price as US Treasuries.
After the losses in London, I doubt that, says Sherman, contradicting himself.
More argy-bargy about whether or not the committee should have put Jamie Dimon under oath. Because people love arcane procedural arguments.
Now here's a good question: why should you, Jamie Dimon, sit on the board of the New York federal reserve?
You guys make the rules, says Dimon. We basically sit around talking about the economy and that's a good thing, he says.
OK, I spoke too soon about the quality of the questions. After a question about reimposing Glass-Steagal – which Jamie Dimon bats away easily – here's one about what Dimon thinks about gambling.
Dimon nows runs through all the magnificent things that JP Morgan does that aren't gambling.
"What is the purpose of hedging?" wonders Gary Ackerman, another Democrat from New York. Sadly time is over before Dimon can gives his Econ 101 answer.
Surprisingly, the questioning seems to be a bit sharper today rather than last week. Is that because JP Morgan, er, invests fewer contributions in House members than Senate members?
Hum. Off her Londonophobia, Maloney asks a tricky question to Dimon about the timing of JP Morgan's disclosure of its losses and what it hedged when. Something must be up because Dimon pauses – possibily for the first time in either hearing – and seeks advice from someone behind him.
Dimon appears to default to an answer about JP Morgan's next quarterly announcement, when the losses will be explained, on 13 July.
I'm not exactly sure what this is all about but Dimon seemed unsure of himself for the first time, uncharacteristically.
As mentioned earlier, New York congresswoman Carolyn Maloney has something against London as a financial centre. Pointing out that Dimon actually lives in her district – hello local voter! – she demands to know why he's shipping overseas to those ungrateful British (who don't live in her district).
"I always thought you loved New York. Why is all this business in London?" wonders Maloney. Why do you hate America Jamie Dimon?
And this on the anniversary of the start of the War of 1812, which was started by a horse futures contract gone awry.
Former reality TV "star" Sean Duffy – turned Tea Party favourite – is mildly hostile, asking if JP Morgan is too big to fail. When Dimon boasts about how big JP Morgan's balance sheet is, Duffy asks if JP Morgan could sustain a $50bn loss? "Not unless the moon strikes this earth," replies Dimon. That's factored into the VaR model, is it?
Tell that to AIG investors, mister.
"I'm pretty sure somewhere in Dodd-Frank there's a prohibition on the moon striking the Earth," notes Bachus dryly.
Democrat Maxine Waters is asking some searching questions about why JP Morgan lobbys against overseas regulations, given that what happens in London can hurt banks in the US. Dimon slithers out of the question, defending his bank's general right to lobby for whatever it sees fit, and that regulations overseas impacts JP Morgan's operations there.
Here's Barney Frank, and he wants to know Dimon's views about regulation of derivatives. But Dimon's not giving an answer, and Frank says he's "disappointed".
Frank also wants to know if Dimon's own pay will be subject to "claw-back" after what's happened. Dimon says that's 100% up to the JP Morgan board.
Now there's some issue about who speaks next, a dispute between the two parties.
A member wants to know Jamie Dimon's view on the crisis in Europe, which is interesting if hardly relevent. Anyway, Dimon thinks that the "smart people" he talks to expect a fiscal treaty to be signed, which would be something.
Now the committee is having some question about if Jamie Dimon should be testifying under oath.
It seems that the committee chair, the committee chair Spencer Bachus says: "I see no evidence this is a criminal proceeding." Oh well. Another high point for congressional committees there.
And Jamie Dimon kicks off his House testimony by repeating, seemingly word for word, his opening statement to the Senate banking committee last week.
Not long to go now before Jamie Dimon starts speaking at the House committee on financial services. If the usual trends apply, then this committee will make last week's Senate committee hearing seem like a symposium of Nobel Prize winners in physics.
So you can criticise the White House for not acting, and then when it does act, criticise it for a "power grab"? Smooth move there Senator Marco Rubio, who is taking his ball home after the Obama administration's move on immigration last week:
Rubio's decision comes in the wake of President Obama's announcement last week that his administration would halt deportations of certain undocumented youth, a policy that essentially undercut the GOP senator's proposal. In multiple interviews Monday, Rubio faulted Obama for derailing his effort, which he had worked on for three months.
"People are going to say to me, 'Why are we going to need to do anything on this now. It has been dealt with. We can wait until after the election,'"Rubio told the Wall Street Journal. "And it is going to be hard to argue against that."
Of course if Senaor Rubio had actually published a bill or something, he'd have a case. But he didn't.
Democratic party congresswoman Carolyn Maloney of New York asks the big question:
Good question Representative Maloney. One answer is that perfidious British bankers want to steal away your precious American gold.
In case you were wondering, before Jamie Dimon takes the hot seat, the House committee is hearing from a variety of financial regulator rock stars, including SEC chair Mary Schapiro, the Comptroller of the Currency Thomas Curry and the Commodity Futures Trading Commission chair Gary Gensler, among others. It's basically a Woodstock '69 line-up for Wall Street regulation.
Guys, Mitt Romney sometimes tells awkward jokes, and the New York Times is ON IT:
At the breakfast, Mr Romney introduced two of his sons, Matt and Craig, in a slightly unusual fashion. "I love them," Mr Romney said. "I love them like they're my own. And they are! Craig!"
With that, Craig Romney rescued the microphone from his father.
Embarrassing Dad or Weirdo? You decide.
By the way, this is where that formulation comes from.
While we're waiting on Dimon to appear – you know it's a slow news day when this is the lead item on the Drudge Report:
A Massachusetts man has pleaded not guilty to attacking a bicyclist with sausage links and a wrench before making off with jewelry and the bike.
It's round two of Jamie Dimon versus Congress, as the JP Morgan chief executive faces his second session of testimony on the subject of the bank's huge "London Whale" trading losses.
Last week Dimon was given a largely generous ride by the Senate banking committee, and today he's even less likely to have much trouble before the Republican-dominated House committee on financial services.
The wild card is that House committees tend to be more flaky and erratic than Senate committees – with members prone to grandstanding since they get fewer chances in the spotlight, so who knows what questions Dimon may face out of left-field?
But based on last week's performance, Dimon will handle this circus – pardon me, I mean members of the House of Representatives – with ease.
In the meantime, here's a summary of other news from Ryan Devereaux:
• Marco Rubio, the Florida senator thought to be a top contender as Mitt Romney's running mate, has not been vetted for the position, ABC News reports. Jonathan Karl says "reliable sources" have told him Rubio "has not been asked to complete any questionnaires or been asked to turn over any financial documents typically required of potential vice presidential candidates."
• A new poll from Bloomberg finds a majority of voters support president Obama's recent decision to stop deporting certain undocumented young people. According to the survey, 64% of likely voters said they agreed with the president's decision. Broken down by party, 86% of Democrats and 66% of independents supported the decision, and 56% of Republicans opposed it.
• Mitt Romney is returning to New York City next week to drum up money for his campaign efforts. The former Massachusetts governor will attend a major event in New Jersey with governor Chris Christie, as well as a fundraiser at the $70m apartment of wealthy couple Martin and Barbara Zweig.
• The president has a new debate practice partner: Senator John Kerry. As Obama prepares to face Romney in at least three crucial contests of rhetorical nimbleness this fall, Kerry has assumed the role of the former Massachusetts governor. Kerry has a reputation as a strong debater and, like the GOP candidate, he is also very wealthy, owns multiple homes and has been known to flip-flop on issues, essentially he is already inside Romney's mind.
• Obama's nominee for consideration as ambassador to Iraq, Brett McGurk, has withdrawn his nomination for the position. Members of the senate had resisted McGurk's nomination, and an anonymous source leaked intimate emails exchanged in 2008 between McGurk, who was then working for the state department in Iraq, and a reporter for the Wall Street Journal covering the conflict there. The pair later married.
 |
| READ THE ORIGINAL POST AT www.guardian.co.uk |