Wednesday morning’s Senate Banking Committee hearing with embattled JP Morgan Chase CEO Jamie Dimon is not only an opportunity for lawmakers to investigate his firm’s $2 billion hedging strategy loss, but also allow those up for re-election a time to shine as Capitol Hill interrogators.
The campaign manager’s dream is the vivid 15-second sound bite with his senator crossing swords with the man from corporate America.
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JPMorgan Chase & Co. chairman and CEO Jamie Dimon looks on while speaking at Simon Graduate School of Business at the University of Rochester's New York City Conference.
Critics of Wall Street are raising questions about whether, even with the enactment of the Dodd-Frank regulatory regime, mammoth financial firms such as JP Morgan are getting enough scrutiny from in the Office of the Comptroller of the Currency, the Federal Reserve and other regulators.
So Wednesday’s event seems tailor-made for two first-term populists on the committee who are in tight re-election races this fall: Democrats Sherrod Brown of Ohio and Jon Tester of Montana.
Brown faces Republican state Treasurer Josh Mandel while Tester will vie with Rep. Denny Rehberg.
In an interview Tuesday, Brown referred to a report in Tuesday’s Wall Street Journal that some J.P. Morgan executives and directors knew of hazardous trading practices by the firm’s London-based traders two years ago – way before the investment snafu blew up.
“As these stories come out, on what they should have known, and how they should have prepared, and how that bank has done a lot of lobbying of these agencies, I just need to know more,” Brown said.
In his testimony before the Banking Committee last week, Deputy Treasury Secretary Neal Wolin said the screw-up at JP Morgan has important cautionary lessons for regulators and bankers but “is not about the solvency of the firm or for that matter the stability of the broader financial system.”
JPMorgan Chase CEO Jamie Dimon sat down with "Meet the Press" moderator David Gregory for another round of interviews, and Gregory discusses with the Morning Joe panel about his talk with Dimon. Harvard's Michael Porter, Fortune's Andy Serwer and "Meet the Press" moderator David Gregory join the conversation.
“It’s ultimately about the latter,” Brown said Tuesday, “because what we care about in the end is the stability of the system. And this is a well-run bank. In my state it’s got 14,000 employees at pretty much one site. This is a big deal to us, it’s important to us. But are these institutions that are $800 billion and up, the six largest institutions, are they too big to manage?”
Reverting to his populist side, Brown noted that big financial firms “get advantages when they borrow money that the First National Bank of Sycamore, Ohio doesn’t get – 50 to 80 basis points difference in the cost of capital.”
He added, “I don’t blame them and I don’t finger them, but I do worry about this too-big-to-manage.” As for Dimon himself, “I’d like him to acknowledge that the size of his bank – just the size alone -- is problematic for our financial system,” Brown said.
He added that Comptroller of the Currency Thomas Curry (no relation to this reporter) “has to walk a line between the people that are working there (in the Office of the Comptroller of the Currency) and carrying out his duties. If that means he has to bring in new people and let go some of those who have, I think, shown a basis toward the largest banks, then so be it.”
Asked whether voters in Ohio were worried by the JP Morgan news that they might again get saddled with the cost of a bailout of the financial sector, Brown said, “People are always concerned because they see this government too often give breaks to the most privileged and they pay the price – from China currency to health care to collective bargaining.”