8 ms·

Jamie Dimon blows up at DC's dysfunction

32 points by clebio 9y ago

bluejekyll 9y ago
It's hard to disagree about the beuracracy and litigiousness of the country. But that doesn't mean that he's correct that the core issue are the restrictions put on banks 5 years ago. That is so self-serving. Remember the banks got bailed out after the recession; but the people lost their homes. More money has flowed to the top during this time period, making lives harder for average Americans. It's hard to be sympathetic to Mr. Dimon.
- valuearb 9y ago
  Jamie refused bailout help, until he and his bank was threatened by the administration.
  - burkaman 9y ago
    Do you have a source for that? He says he didn't think the bank needed it, but the Secretary of the Treasury asked him to take it and he agreed it was a good idea. https://www.theguardian.com/business/blog/2012/jun/13/jp-morgan-jamie-dimon-senate-live#block-36 https://www.theguardian.com/business/blog/2012/jun/13/jp-mor...
    - lucozade 9y ago
      I'm a bit confused by your link. This just confirms (albeit in Dimon's testimony) that JPM declined TARP until they were told that the Treasury et al wanted all banks to take it. Did you read something else into this? I don't believe it's particularly contentious in the industry that JPM didn't need bailing out.
      - burkaman 9y ago
        I'm just wondering about the "threatened" part. Dimon says "We were asked to because we were told, I think correctly so that if the nine banks there, and some may have needed it, take this Tarp we can get it to all these other banks and stop the system from going down." Doesn't sound like he was threatened, or even needed persuading.
        lucozade 9y ago
        Threatened may well be too strong. Not given a choice is probably closer to the mark. I strongly suspect that what he meant here was that he accepted the reasoning for asking all the big banks to participate. Not that he agreed that JPM needed the funding. With Lehman down and ML and MS likely to go on the Monday, I can quite well imagine that everyone there accepted that a large, collective response was the only realistic option.
  - maxxxxx 9y ago
    He just wanted all his counterparties to be bailed out. Same for Goldman Sachs.
- kjaleshire 9y ago
  Dodd-Frank & other banking regulation are self-serving for large banks because it shuts out smaller competitors and new entrants [1]. Administration & compliance becomes more expensive for everyone, but bigger companies are able to absorb the cost. The impact this has had on small banks & credit unions has been catastrophic [2]. New regulation will only serve to concentrate banking power & wealth in the hands of increasingly few players. [1] https://www.americanbanker.com/opinion/surprise-big-banks-love-regulation https://www.americanbanker.com/opinion/surprise-big-banks-lo... [2] https://ilsr.org/vanishing-community-banks-national-crisis/ https://ilsr.org/vanishing-community-banks-national-crisis/
- lend000 9y ago
  Who used price control mechanisms to hold interest rates low while the housing boom spiraled out of control? (The Fed.) Who provided a loan buyback program incentivizing bad loans? (Fannie and Freddie, pseudo government agencies.) The 'popular wisdom' that the banks all simultaneously started acting differently, and against everyone's best interests, including their own, is foolish at best. This is a nice write-up of the real estate crash, which underlies the recession as a whole: https://admin.fee.org/files/doclib/houseunclesambuiltbooklet.pdf https://admin.fee.org/files/doclib/houseunclesambuiltbooklet...
  - toomuchtodo 9y ago
    Bad loans were not incentivized by GSEs; it was rating agencies who were rating junk at AAA standards.
    - cmiles74 9y ago
      At the behest of the banks, who were looking to repackage product.
      - deleted 9y ago
        [deleted]
    - magila 9y ago
      The ratings agencies, and their importance in the financial system, have been shaped in large part by government policy. https://en.wikipedia.org/wiki/Nationally_recognized_statistical_rating_organization https://en.wikipedia.org/wiki/Nationally_recognized_statisti...
  - jbooth 9y ago
    We had a housing crash that somehow led to hundreds of trillions of dollars missing. Add up the value of every house in the USA. They're not hundreds of trillions of dollars. The banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out.
- humanrebar 9y ago
  > It's hard to be sympathetic to Mr. Dimon. Do you mind rephrasing your thoughts? Maybe I'm misunderstanding something. Yes, banks got bailouts. I didn't like them at the time and I don't like them in retrospect. But it's not necessarily true that all the regulations are fine because banks had bailouts. And I'm not willing to grant that regulations are fine just because banks and bankers are one-percenters and unsympathetic.
  - cmiles74 9y ago
    I don't think the original post claimed that "regulations are fine because the banks had bailouts." On the contrary, they were pointing out that banks complaining about regulations was clearly self-serving and we probably should keep that in mind. I do think that if we would like to avoid bailing more banks out in the future, some changes need to be made in the way that banks conduct business. To my mind, regulation seems the most straightforward path to this goal.
    - humanrebar 9y ago
      > To my mind, regulation seems the most straightforward path to this goal. It's not that complicated to break up too big to fail entities, encourage dynamism and competition in the sector, and just let them use traditional methods of failure (bankruptcy, merger, etc.) going forward. Heavy regulations, perhaps counter-intuitively, benefit too-big-to-fail banks the most since the overhead of compliance is relatively small compared to small banks and banking startups.
  - bluejekyll 9y ago
    > But it's not necessarily true that all the regulations are fine because banks had bailouts. Of course all regulations aren't fine. The problem is they are a necessary evil. Individuals don't always act with integrity; it's important that we restrict them by some mechanism to attempt to have them do so. On top of that, individuals can lose perspective easily when working in large corporations, where they focus on the bottom line of the Company and not the larger impact of their actions. This is why regulations/laws are necessary. In some cases regulations create defacto monopolies, because the regulations themselves act as a barrier to entry for new players. In these cases, regulations are horrible. They skew the market place, and have all sorts of other negative effects on competition (the healthcare industry is a good example of this). So there needs to be restraint when putting regulations in place. There is a balance, not all regulations are good, but neither are they all bad. Our government should be acting in our best interests to find a good balance there, and I agree with the article that because of the grid-lock it's not capable of doing that. Our political system has become entrenched on both sides, with little middle ground, for this we can blame gerry-mandered districts. To stay on topic though; The banks came out generally far ahead of where the American people did after the recession, which given the shenanigans they used doesn't seem fair (to me at least).
- cmurf 9y ago
  I'm just gonna let his 1000+ millions of dollars comfort him.
deleted 9y ago
[deleted]
valuearb 9y ago
Jamie's right. Imagine how much benefit the US could get if Apple was able to repatriate its hundreds billions in overseas profits without losing over half to taxes.
- greydius 9y ago
  Would the US not also benefit if Apple just paid the taxes?
  - sosa2k 9y ago
    Apple, and many other companies, are not going to "just pay" billions in taxes.
    - recursive 9y ago
      And by a similar token, they're also not "just going to be able" to repatriate that money tax-free.
    - pasquinelli 9y ago
      No one's going to "just pay" any amount of taxes, they have to be forced. No matter what else you think about taxes, that's how they work. Paying taxes is always painful; not paying is made to be more painful, at least for some of us.
      - eplanit 9y ago
        "...at least for some of us" it's made to be painful for most every single one of us who aren't mega-companies with an army of lawyers and accountants. This is one reason I go almost blind rolling my eyes when a CEO of such a company gets all preachy about right and wrong, and what's in the public's interest, etc.
    - deleted 9y ago
      [deleted]
    - guelo 9y ago
deleted 9y ago
[deleted]
perseusprime11 9y ago
He's probably sick of his new commute given the subway delays and transit breakdowns.
ryandrake 9y ago
It's always hilarious to listen to a Harvard billionaire banker tell us what he thinks would be good for "average Americans". Let me go find some cake to eat.
- scrumper 9y ago
  But it's ok to dismiss someone's ideas without consideration because of the size of their bank account?
  - eregorn 9y ago
    Yes? At least while there's people that also ONLY consider their ideas because of the size of their bank account.
  - ryandrake 9y ago
    OK, then let's see what his brilliant new ideas are. "Competitive taxes are important for business and business growth, which is important for jobs and wage growth." Oh, what do we have here? Bog-standard trickle-down economics.
    - scrumper 9y ago
      So debate that then, instead of engaging in sophomoric ad hominem. Why would a less litigious society, a more constrained regulatory regime, and corporate tax rates designed to incentivize capital repatriation not help the economy grow more rapidly? And then, why would a more rapidly growing economy not benefit ordinary Americans?
  - specialist 9y ago
    Only if you look past the hypocrisy and chutzpah.
draw_down 9y ago
No kidding. If DC were operating correctly a bunch of his buddies would be in prison.
CPLX 9y ago
I wonder if he's aware that it's the government that keeps him from being hung by his ankles at the earliest opportunity by the world's poor and hungry as they reclaim their fair share of the obscene level of wealth he has accumulated.
- lodi 9y ago
  Except that without government, the "obscenely rich" would be the ones with all the guns and guards and such; the poor and hungry would be still more poor and more hungry.
  - CPLX 9y ago
    It's not like we haven't tried the whole no-government thing. Guys like Jamie don't tend to do so well.
deleted 9y ago
[deleted]
tptacek 9y ago
This is transparently self-serving. 1. The US remains one of the least bureaucratic, least regulated countries in the west to do business. We have at-will employment, low unionization, relatively minimal mandatory benefits, trivial incorporation, and reliable and well-understood corporate and civil law. The idea that Jamie Dimon wanders the Earth and finds every other country more congenial to to business is laughable. 2. Dimon, a Trump ally, would sorely like the US tax code tilted further in the favor of corporate ownership and financialization. He's happy to leave out the part about how his industry nearly blew up the world economy, and was supported for years during the Obama administration by bailouts. It's possible that there's good policy behind lowering the corporate tax, which is distortive and inefficient. On the other hand: DC is "dysfunctional" for a reason. The system was designed specifically to keep public policy from whipsawing between extremes every time a new party took office. If he's embarrassed to be a citizen of a country like that, he has more than enough means to secure citizenship somewhere else. Don't hold your breath on that happening.

32 points by clebio 9y ago

It's hard to disagree about the beuracracy and litigiousness of the country. But that doesn't mean that he's correct that the core issue are the restrictions put on banks 5 years ago. That is so self-serving. Remember the banks got bailed out after the recession; but the people lost their homes. More money has flowed to the top during this time period, making lives harder for average Americans. It's hard to be sympathetic to Mr. Dimon.

valuearb 9y ago
Jamie refused bailout help, until he and his bank was threatened by the administration.
- burkaman 9y ago
  Do you have a source for that? He says he didn't think the bank needed it, but the Secretary of the Treasury asked him to take it and he agreed it was a good idea. https://www.theguardian.com/business/blog/2012/jun/13/jp-morgan-jamie-dimon-senate-live#block-36 https://www.theguardian.com/business/blog/2012/jun/13/jp-mor...
  - lucozade 9y ago
    I'm a bit confused by your link. This just confirms (albeit in Dimon's testimony) that JPM declined TARP until they were told that the Treasury et al wanted all banks to take it. Did you read something else into this? I don't believe it's particularly contentious in the industry that JPM didn't need bailing out.
    - burkaman 9y ago
      I'm just wondering about the "threatened" part. Dimon says "We were asked to because we were told, I think correctly so that if the nine banks there, and some may have needed it, take this Tarp we can get it to all these other banks and stop the system from going down." Doesn't sound like he was threatened, or even needed persuading.
      - lucozade 9y ago
        Threatened may well be too strong. Not given a choice is probably closer to the mark. I strongly suspect that what he meant here was that he accepted the reasoning for asking all the big banks to participate. Not that he agreed that JPM needed the funding. With Lehman down and ML and MS likely to go on the Monday, I can quite well imagine that everyone there accepted that a large, collective response was the only realistic option.
- maxxxxx 9y ago
  He just wanted all his counterparties to be bailed out. Same for Goldman Sachs.
kjaleshire 9y ago
Dodd-Frank & other banking regulation are self-serving for large banks because it shuts out smaller competitors and new entrants [1]. Administration & compliance becomes more expensive for everyone, but bigger companies are able to absorb the cost. The impact this has had on small banks & credit unions has been catastrophic [2]. New regulation will only serve to concentrate banking power & wealth in the hands of increasingly few players. [1] https://www.americanbanker.com/opinion/surprise-big-banks-love-regulation https://www.americanbanker.com/opinion/surprise-big-banks-lo... [2] https://ilsr.org/vanishing-community-banks-national-crisis/ https://ilsr.org/vanishing-community-banks-national-crisis/
lend000 9y ago
Who used price control mechanisms to hold interest rates low while the housing boom spiraled out of control? (The Fed.) Who provided a loan buyback program incentivizing bad loans? (Fannie and Freddie, pseudo government agencies.) The 'popular wisdom' that the banks all simultaneously started acting differently, and against everyone's best interests, including their own, is foolish at best. This is a nice write-up of the real estate crash, which underlies the recession as a whole: https://admin.fee.org/files/doclib/houseunclesambuiltbooklet.pdf https://admin.fee.org/files/doclib/houseunclesambuiltbooklet...
- toomuchtodo 9y ago
  Bad loans were not incentivized by GSEs; it was rating agencies who were rating junk at AAA standards.
  - cmiles74 9y ago
    At the behest of the banks, who were looking to repackage product.
    - deleted 9y ago
      [deleted]
  - magila 9y ago
    The ratings agencies, and their importance in the financial system, have been shaped in large part by government policy. https://en.wikipedia.org/wiki/Nationally_recognized_statistical_rating_organization https://en.wikipedia.org/wiki/Nationally_recognized_statisti...
- jbooth 9y ago
  We had a housing crash that somehow led to hundreds of trillions of dollars missing. Add up the value of every house in the USA. They're not hundreds of trillions of dollars. The banks got really creative, a bunch of people made nice bonuses, then when their fancy leveraged mechanisms went bad, we all had to bail them out.
humanrebar 9y ago
> It's hard to be sympathetic to Mr. Dimon. Do you mind rephrasing your thoughts? Maybe I'm misunderstanding something. Yes, banks got bailouts. I didn't like them at the time and I don't like them in retrospect. But it's not necessarily true that all the regulations are fine because banks had bailouts. And I'm not willing to grant that regulations are fine just because banks and bankers are one-percenters and unsympathetic.
- cmiles74 9y ago
  I don't think the original post claimed that "regulations are fine because the banks had bailouts." On the contrary, they were pointing out that banks complaining about regulations was clearly self-serving and we probably should keep that in mind. I do think that if we would like to avoid bailing more banks out in the future, some changes need to be made in the way that banks conduct business. To my mind, regulation seems the most straightforward path to this goal.
  - humanrebar 9y ago
    > To my mind, regulation seems the most straightforward path to this goal. It's not that complicated to break up too big to fail entities, encourage dynamism and competition in the sector, and just let them use traditional methods of failure (bankruptcy, merger, etc.) going forward. Heavy regulations, perhaps counter-intuitively, benefit too-big-to-fail banks the most since the overhead of compliance is relatively small compared to small banks and banking startups.
- bluejekyll 9y ago
  > But it's not necessarily true that all the regulations are fine because banks had bailouts. Of course all regulations aren't fine. The problem is they are a necessary evil. Individuals don't always act with integrity; it's important that we restrict them by some mechanism to attempt to have them do so. On top of that, individuals can lose perspective easily when working in large corporations, where they focus on the bottom line of the Company and not the larger impact of their actions. This is why regulations/laws are necessary. In some cases regulations create defacto monopolies, because the regulations themselves act as a barrier to entry for new players. In these cases, regulations are horrible. They skew the market place, and have all sorts of other negative effects on competition (the healthcare industry is a good example of this). So there needs to be restraint when putting regulations in place. There is a balance, not all regulations are good, but neither are they all bad. Our government should be acting in our best interests to find a good balance there, and I agree with the article that because of the grid-lock it's not capable of doing that. Our political system has become entrenched on both sides, with little middle ground, for this we can blame gerry-mandered districts. To stay on topic though; The banks came out generally far ahead of where the American people did after the recession, which given the shenanigans they used doesn't seem fair (to me at least).
cmurf 9y ago
I'm just gonna let his 1000+ millions of dollars comfort him.

deleted 9y ago

[deleted]

valuearb 9y ago

Jamie's right. Imagine how much benefit the US could get if Apple was able to repatriate its hundreds billions in overseas profits without losing over half to taxes.

greydius 9y ago
Would the US not also benefit if Apple just paid the taxes?
- sosa2k 9y ago
  Apple, and many other companies, are not going to "just pay" billions in taxes.
  - recursive 9y ago
    And by a similar token, they're also not "just going to be able" to repatriate that money tax-free.
  - pasquinelli 9y ago
    No one's going to "just pay" any amount of taxes, they have to be forced. No matter what else you think about taxes, that's how they work. Paying taxes is always painful; not paying is made to be more painful, at least for some of us.
    - eplanit 9y ago
      "...at least for some of us" it's made to be painful for most every single one of us who aren't mega-companies with an army of lawyers and accountants. This is one reason I go almost blind rolling my eyes when a CEO of such a company gets all preachy about right and wrong, and what's in the public's interest, etc.
  - deleted 9y ago
    [deleted]
  - guelo 9y ago

deleted 9y ago

[deleted]

perseusprime11 9y ago

He's probably sick of his new commute given the subway delays and transit breakdowns.

ryandrake 9y ago

It's always hilarious to listen to a Harvard billionaire banker tell us what he thinks would be good for "average Americans". Let me go find some cake to eat.

scrumper 9y ago
But it's ok to dismiss someone's ideas without consideration because of the size of their bank account?
- eregorn 9y ago
  Yes? At least while there's people that also ONLY consider their ideas because of the size of their bank account.
- ryandrake 9y ago
  OK, then let's see what his brilliant new ideas are. "Competitive taxes are important for business and business growth, which is important for jobs and wage growth." Oh, what do we have here? Bog-standard trickle-down economics.
  - scrumper 9y ago
    So debate that then, instead of engaging in sophomoric ad hominem. Why would a less litigious society, a more constrained regulatory regime, and corporate tax rates designed to incentivize capital repatriation not help the economy grow more rapidly? And then, why would a more rapidly growing economy not benefit ordinary Americans?
- specialist 9y ago
  Only if you look past the hypocrisy and chutzpah.

draw_down 9y ago

No kidding. If DC were operating correctly a bunch of his buddies would be in prison.

CPLX 9y ago

I wonder if he's aware that it's the government that keeps him from being hung by his ankles at the earliest opportunity by the world's poor and hungry as they reclaim their fair share of the obscene level of wealth he has accumulated.

lodi 9y ago
Except that without government, the "obscenely rich" would be the ones with all the guns and guards and such; the poor and hungry would be still more poor and more hungry.
- CPLX 9y ago
  It's not like we haven't tried the whole no-government thing. Guys like Jamie don't tend to do so well.

deleted 9y ago

[deleted]

tptacek 9y ago

This is transparently self-serving. 1. The US remains one of the least bureaucratic, least regulated countries in the west to do business. We have at-will employment, low unionization, relatively minimal mandatory benefits, trivial incorporation, and reliable and well-understood corporate and civil law. The idea that Jamie Dimon wanders the Earth and finds every other country more congenial to to business is laughable. 2. Dimon, a Trump ally, would sorely like the US tax code tilted further in the favor of corporate ownership and financialization. He's happy to leave out the part about how his industry nearly blew up the world economy, and was supported for years during the Obama administration by bailouts. It's possible that there's good policy behind lowering the corporate tax, which is distortive and inefficient. On the other hand: DC is "dysfunctional" for a reason. The system was designed specifically to keep public policy from whipsawing between extremes every time a new party took office. If he's embarrassed to be a citizen of a country like that, he has more than enough means to secure citizenship somewhere else. Don't hold your breath on that happening.