In fifty years, when historians look back upon the current era of unbridled financial sector influence on American government—unless all historians are by then employed at CitiBankofAmericaChaseOne Institutions of Higher Learning™—Wednesday’s hearing of the Senate Banking Committee will be an instructive example of our perverse power structure.
Jamie Dimon, CEO of the JPMorgan Chase, the country’s largest bank, appeared before the committee after a clear screw-up: traders at JPMorgan placed a series of complex bets that resulted in $2 billion in losses and counting.
This should be of great concern to the Senate. Since deposits at JPMorgan Chase are backed by the federal government, risky market gambling could create the need for another massive public bailout of a normally profitable private bank.
But instead, a vast majority of the Senators at Wednesday’s hearing repeatedly praised Dimon’s wisdom and executive acuity while politely soliciting his opinion on how he thought his own bank should be regulated. That shouldn’t be too surprising if one examines the bank’s political giving–members of the committee received $522,088 of the bank’s cash in recent years, with $296,557 going to Democrats and $285,531 to Republicans. (See the graphic above).
And Dimon happily played the part. To underscore who is the boss, he first demanded and received a one-week delay in the hearing after being summoned by the chairman, Senator Tim Johnson, and then showed up on the appointed day wearing cufflinks with the presidential seal to take questions from his underlings.
“We’re here quizzing you,” Senator Bob Corker (R-TN) explained to Dimon in a typical exchange. “If you were sitting on this side of the dais, what would you do to make our system safer than it is, and still meet the needs of a global economy like we have?”
Rather than focusing on the clear and present danger presented by JPMorgan’s risky financial maneuvers, Corker then invited Dimon to opine on the “societal good” of his bank, and asked, “What would society be like without these institutions?” (Dimon eagerly expounded on the value JPMorgan chase provides to the public, particularly “mothers and veterans.”)
Instead of pressing for tougher controls, Senator Mike Crapo (R-ID) asked Dimon, “What should the function of the regulators be?”
Some Senators even asked Dimon what regulations he’d like to dismantle. “I would like to come away from the hearing today with some ideas on what you think we need to do, what we maybe need to take apart that we’ve already done, to allow the industry to operate better,” said Senator Jim DeMint (R-SC).