Dana Milbank: The Wall Street Senate
By Dana Milbank,
JPMorgan Chase boss Jamie Dimon has been a scourge of the Obama administration in recent months, but when he appeared on Capitol Hill on Wednesday, Republicans found the head of the country’s largest bank to be alarmingly off-message.
Dimon had little interest in joining Republicans in complaining that President Obama’s regulations destroyed capitalism as they knew it. In fact, he even had some kind words for the Dodd-Frank financial reforms. And the banker’s most passionate plea to the lawmakers was one that Republicans most emphatically don’t want to hear: Enact the Simpson-Bowles debt proposal, a package of spending cuts and — gulp — increased tax revenue that was largely scuttled by House Republicans.
“If we had done something remotely like Simpson-Bowles,” Dimon said in response to Sen. Michael Bennet (D-Colo.) at the end of the hearing, “you would have increased confidence in America. You would have shown a real fix of the long-term fiscal problem. I think you would have had . . . a more effective tax system that is conducive to economic growth.”
In fact, he said, not enacting such a plan “helped cause a downturn last year.”
Ostensibly, Dimon went to Capitol Hill to be grilled about his bank’s loss of more than $2 billion on an investment strategy that amounted to a glorified game of craps. Members of the Senate banking committee were to determine whether stronger financial regulations would be needed to prevent such gambling. But tougher regulation is unlikely, given Wall Street’s bankrolling of panel members’ campaigns, and lawmakers acted as though they were wholly owned subsidiaries of JPMorgan.
“Mr. Dimon,” said Sen. Mike Johanns (R-Neb.), it “occurs to me that an enterprise as big and powerful as yours, you’ve got a lot of firepower and you’re — you’re just huge.”
“You’re obviously renowned, rightfully so, I think,” contributed Sen. Bob Corker (R-Tenn.), “as being one of the most, you know, one of the best CEOs in the country.”
Democrats, perhaps worried that Wall Street has been shifting its campaign largess to Mitt Romney and the Republicans, joined the sycophancy sweepstakes. Sen. Robert Menendez (N.J.) called JPMorgan Chase “one of the nation’s finest,” and Sen. Jon Tester (Mont.) told Dimon: “You guys know the industry better than anybody sitting up here.”
But who could keep pace with Sen. Jim DeMint (R-S.C.), who said, “We can hardly sit in judgment of your losing $2 billion”? The apparently awestruck senator stammered: “I — I — I think we do need to recognize that you are a very big bank, the biggest in the world.”
Despite all the affirmations of how very big and large and huge and great and powerful Dimon is, he declined to join their all-out assault on the Wall Street reforms.
“Has Dodd-Frank more than marginally made our banking system safer?” Corker asked.
“You know we supported some elements — ” Dimon began.
“I know what you supported,” Corker snapped. “Has it made our financial system safer?”
“I think parts of it, in conjunction with higher capital liquidity,” the executive replied. “The financial system is safer today than it was in ’07.”
Sen. Roger Wicker (R-Miss.) asked if he could paraphrase Dimon’s answer as “the financial system is safer today, and you can’t say that Dodd-Frank has helped at all.”
Dimon repeated his admission that “Dodd-Frank and other things made it safer.”
He acknowledged that the “Volcker rule,” a proposed regulation that would sharply limit banks’ trading, “may very well have stopped parts” of Morgan’s losing bets. He conceded that regulators have made “improvements in companies, including JPMorgan.”
Johanns asked whether Dodd-Frank created red tape “so hard to navigate” that banks leave the country.
“We’re going to be fine ourselves,” Dimon replied. “We’ll be able to navigate all that.”
It wasn’t as if the banker suddenly loved the regulatory state; he said the Volcker rule is “unnecessary.” And although his prepared remarks were stocked with contrition (“We’ve let a lot of people down and we are very sorry”), his trademark arrogance returned when confronted by the only tough questioner, Sen. Jeff Merkley (D-Ore.). Dimon, speaking over Merkley, said the senator was “misinformed” and relying on “factually wrong” analysis.
But this time, Dimon had a more deserving target for his criticism than Democrats and regulations: a demand to “get our fiscal act in order” before the election and before automatic tax increases take effect next year. The Simpson-Bowles plan “is a road map which I like,” he said, and the important thing is “getting something like that done.”
If Dimon is the senators’ best friend, as their fawning suggests, perhaps they’ll take this advice seriously.