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Barofsky Slams Dimon/Washington: “Still a Cover Up”

Posted by Larry Doyle on June 14, 2012 9:30 AM |

Not that there was ever any real doubt as to the cozy relationship between OUR elected officials in Washington and THEIR partners on Wall Street, but yesterday’s Senate testimony and questioning of JP Morgan CEO Jamie Dimon added another nail in the coffin of those in America who care for real truth and total transparency.

As CEO of JP Morgan Chase, Dimon’s job is to protect the interests of his shareholders. He was successful on that front yesterday.

As United States Senators, our elected representatives’ job is to protect the interests of American citizens. They failed miserably yesterday.

America may be numb to the ineptitude emanating from Washington but that does not mean we need to willingly accept it as simply the best we can get. Who understands that and hits hard on this front? Former Special Inspector General of the TARP, Neil Barofsky. In a “must see” interview this morning on Bloomberg, Barofsky drills Dimon and the sycophants masquerading as United States Senators.

Why should we care about the issues highlighted by Barofsky? Because the banks and our elected officials both have their hands in our pockets and we pay in spades for the incestuous relationship ongoing between Wall Street and Washington.

Barofksy pulls no punches.  With prompts such as, “all those years of campaign contributions…”, “this shows the level of the capture…”, and ” still a cover up…”, take the 9 minutes to absorb Barofsky’s crushing critique of yesterday’s Washington charade.

Despite the greatest economic crisis since The Great Depression, yesterday’s hearing provides clear cut evidence that little has really changed in the Wall Street-Washington relationship that brought our country to its knees.

I commend Mr. Barofsky for having the character to stand up and expose the stench on display yesterday in the U.S. Senate. America needs more men like him.

Warning: barf bag recommended prior to viewing this clip!!

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Always Learning

    To your point about the cozy relationship between JPM and
    Washington, ProPublica posted yesterday,

    This morning, Jamie Dimon, the CEO of JP Morgan Chase, faced a Senate hearing over more than $2 billion in bank losses caused by risky hedges that blew up. Dimon said that the hedges—investments meant to protect the bank—had grown into “complex and hard-to manage risks.” The losses “let a lot of people down, and we are sorry for it.”

    Many lawmakers are holding up the losses as evidence of the need for stronger financial regulation. The chairman of the Senate banking committee, Tim Johnson, D-S.D., in his opening remarks, asked for “a full accounting” of JP Morgan’s losses.

    But through campaign contributions and well-connected staff, JP Morgan appears to have already taken its own accounting of the Banking committee. Here’s a picture of connections between the company and the committee:

    Revolving Door

    One current staffer on the Senate banking committee, Dwight Fettig, is a former lobbyist for JP Morgan. In 2009, the bank hired him to work on “financial services regulatory reform.” Meanwhile, JP Morgan is stacked thick with former committee staff.

    · Naomi Camper – Currently a lobbyist for JP Morgan. Prior to that, from 2001-2004, she was an aide to Senator Johnson.

    · Kate Childress –A JP Morgan lobbyist since 2008, she is also a former aide to Chuck Schumer, D-N.Y., who sits on both the Senate Banking and Finance committees.

    · Steven Patterson –A JP Morgan lobbyist and formerly a staff director for economic policy for the Banking committee.

    · Nate Gatten— A JP Morgan lobbyist based in London who was reportedly called back to Washington recently to help with the company’s damage control. He is a former lobbyist for Fannie Mae, and, in the 1990s, was a banking aide to former Senator Robert Bennett, R-Utah, who also sat on the committee.

    · P. Michael Nielsen – A lobbyist with a firm run by former Senator Bennett, he has been retained by JP Morgan for help with federal probes, according to Bloomberg. He was also a senior policy adviser to the committee from 2007 to 2010.

    American Banker also reported that three other outside lobbyists currently working for JP Morgan were once affiliated with the committee:

    · Jason Rosenberg – A lobbyist at The Glover Park Group and formerly an aide to Jon Tester, D-Mont., who sits on the committee.

    · Jenn Fogel-Bublick – A lobbyist at McBee Strategic Consulting and formerly a Democratic counsel on the committee.

    · Mike Chappell – A lobbyist for Fierce, Isakowitz & Blalock and a former press assistant to Senator Roger Wicker, R-Miss., another committee member.

    A former senator on the committee, Mel Martinez, R-Fl., is also now the JP Morgan exec in charge of Florida, Central America, and the Caribbean. Martinez was elected to the Senate in 2004 and went to the bank in 2010. Bloomberg reported that he was called to Washington after the losses were reported.

    Lobbyists for JP Morgan appear to be keeping busy. The bank spent $7.6 million on lobbying last year, according to the Center for Responsive Politics.

    Campaign Contributions:

    JP Morgan has also been a generous donor to banking committee members, both Republican and Democratic.

    · JP Morgan is the second largest campaign contributor to Johnson, the committee chair, and to the top Republican on the committee, Richard Shelby of Alabama, over the past twenty years, according to a tally from American Banker.

    · JP Morgan employees have donated more than $80,000 to Johnson since 1998 and more than $136,000 to Shelby since 1990.

    · So far in 2012, Dimon has personally donated to committee members Bob Corker, R-Tenn., and Mark Warner, D-Va. In 2008, he gave $2,000 each to Johnson and Shelby.

    · Six of the 22 members of the banking committee have not received any money from JP Morgan PACs or employees in recent election cycles. Two of those members are retiring and aren’t collecting campaign funds.

    It’s not clear what the committee will do beyond the hearings. Numerous federal agencies are investigating JP Morgan’s losses, including the Commodity Futures Trading Commission, the Office of the Comptroller of the Currency, the Department of Justice, and the Securities and Exchange Commission. Next Tuesday, Dimon will testify in front of the House Committee on Financial Services.

  • coe

    The performance of the Senators should be labeled “sickening”…people mispronouncing names, clear unfamiliarity with the financial concepts, superficial toadies fawning over the celebrity of Jamie Dimon..is this the best we can do on a senatorial financial services committee – excuse me! Truth is, there were legions of folks on the street who readily predicted that by hiring the “whale” in London, JPM was signing up for a future substantial loss. To be balanced, though, where is the concern and outcry when a portfolio measuring 17% of a $2trillion balance sheet makes $5B in a given fiscal period?

    Isn’t the real issue here very simple – why are banks, whose deposit funding and access to price advantaged capital markets money is subsidized by the Federal Government (ie – we, the taxpayers) allowed to use outsized leverage both on and off balance sheet in credit synthetics – even more of an issue when the economy and the bank’s own underwriting predilections dampen their primary purpose – ie to use these same insured deposits to make real loans…that is the heart of the issue in my opinion.

    The smell of easy money is a great aphrodisiac. When a small handful of people in a portfolio/Treasury function can whip around $350B in cash and multiple times that in off-balance sheet rate and credit derivatives – well, in my opinion, that productivity per limited headcount is like catnip! God forbid JPM and other big banks add some more quants/risk managers/modelers that actually have the authority to reign in the cowboys who get outsized pay packages relative to their colleagues in traditional banking roles.

    Congress, the Administration, the regulators, the boards, executive management, the investor community, and the media all have their hands in this insidious travesty of “capture” and their heads in the sand. Is JamieDimon a rock star? Or is his celebrity yet another symptom of an American culture gone terribly wrong…for my two cents, he is a very competent banker with a better than average grasp of facts, figures and risks, but is he creating value for the bank and the shareholders? Take a look at the currency value since he took over. Maybe it was time for Dimon to gracefully fall on a sword and use his considerable charm and ill-earned personal balance sheet to lobby for financial reform…just ask the legion of people he has fired at Citi, BankOne, and JPM et al – $14MM+ annual pay packages could be better used to keep thousands employed and help innumerable families, that’s for sure. As for Congress, if we found the Senate performance a travesty, wait for the House to do that one better next week!

  • Peter Sivere

    Before such hearings Senators should be required “for the record” to disclose how much campaign money they received from the entity or person giving testimony. It would help the public understand the line of questioning.

    Also, it would be great if the public could E-mail questions during the hearings or require the Senators to ask at least one or two questions from a constituent.

  • LD

    Here was a chance to hold one of Wall Street’s most powerful executives to account.

    In the event, it was Mr Dimon who showed up the lawmakers. As was required, he expressed just the right amount of contrition for failing to see the scale of a rogue position that he initially wrote off as a “tempest in a teapot”. Beyond that, however, Mr Dimon emerged with his reputation intact. On more than one occasion he corrected lawmakers’ grasp of how the financial sector works.

    Financial Times, US Regulatory Fog

  • Gary

    It was sickening to watch these corrupt senators. What pigs.






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