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You are here: Home / Economics / Free Markets Solve Everything / Kiss on the Lips With Tongue

Kiss on the Lips With Tongue

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So Jamie Dimon goes to the Hill to explain how his company managed to blow 2 billion on bad bets, and rather than tough questioning, our paid in full Senate bowed to kiss the ring:

The long-shot big hope for Wall Street reformers Wednesday was that JPMorgan CEO Jamie Dimon would trip up before the Senate Banking Committee and expose the need for tighter rules governing big banks. His firm, after all, recently lost billions making risky bets with depositor funds on the line.

Instead, with some notable exceptions, the senators themselves turned the cross-examination into a coronation, and exposed the extent to which elected officials still feel compelled to genuflect to powerful financial interests.

“You’re obviously renowned, rightfully so I think, as being one of the most, you know, one of the best CEOs in the country for financial institutions,” crooned Sen. Bob Corker (R-TN). “You missed this, it’s a blip on the radar screen.”

Banksters run our world.

Reader Interactions

58Comments

  1. 1.

    cathyx

    If he gave you a few hundred thousand dollars I bet you’d kiss his ring too.

    ETA: in fact you might even kiss him on the lips with tongue.

  4. 4.

    MeDrewNotYou

    This wasn’t a kiss on the lips with tongue. This was another orifice entirely.

    Still with tongue, though.

  5. 5.

    beltane

    I’m sure the grovelling of our elected representatives before their overlords was most pleasing to David Brooks.

  6. 6.

    The Dangerman

    There was much bowing, but no ring was kissed (since when was Linda Lovelace elected to office?).

    ETA: Shakes fist at Drew.

  7. 7.

    Jim, Foolish Literalist

    I’m sure all the Tea Baggers who voted for DeMent, Corker et al are furious. The Tea Baggers are all about the Wall St Bailout, you know.

  8. 8.

    Turgidson

    This needs the “Bring on the Meteor” tag, I think.

    I threw up in my mouth a little.

  9. 9.

    Brachiator

    Also in the news, these headlines from BBC

    Spain’s borrowing costs have risen to the highest rate since the launch of the euro in 1999.
    __
    Greeks are withdrawing money from bank accounts ahead of elections amid fears the country may leave the euro, Greek banking officials say.
    __
    The rate of cash outflows from Greek banks rose after parliamentary elections in May failed to give any party a mandate to govern.
    __
    Officials say the rate of withdrawals has picked up again in recent days, ahead of a fresh vote on Sunday.

    It may be the banksters’ world, but the world is rockin’

  11. 11.

    Turgidson

    @Brachiator:

    The shitshow in Europe is the biggest variable that concerns me about Obama’s reelection. If they could just not suck so bad until November, I wouldn’t be particularly worried.

  12. 12.

    FlipYrWhig

    Still not as bad as that Republican Congressman saying to the head of BP that the fund for compensation to spill victims was a “shakedown.”

  13. 13.

    RossInDetroit

    A ‘blip?’ A fucking $2,000,000,000.00 blip is what it was. This is my bank, and it’s no blip to me.

  14. 14.

    Linnaeus

    I’m hard-pressed in recent months to think of what use there is to our House of Lords.

  16. 16.

    FlipYrWhig

    Incidentally, one of the fawners (at least according to the TPM account) is Colorado Democrat Michael Bennet. Whenever I do lists of Democratic conservative/moderate/centrist senators, I think I forget to include him in the list of irritants. But he belongs there.

  17. 17.

    Ben Franklin

    Why isn’t Rmoney (sic) kicking Obama’s ass by 10 points, right now.? Reading their comments, wingerz seem to be intoxicated with the way the campaign is going.

    What could go wrong?

  18. 18.

    jl

    I read the TPM article and watched the video of some of the exchange with Merkley. Looks like only three or so Senators challenged him in any way.

    Not sure it is ring kissing. The quotes in TPM suggested a number of other motives to me: signal financial sector friendliness to potential mega tycoon and corporate contributors, political agenda pimping with a powerful financier. All related to ring kissing but not the same.

    My view is that while important that all stakeholders have a chance to air their grievances schmooze, engage in probably corrupt signalling and mutual grooming behaviors, troll for contributors present their wise thoughtful views, hearings like this are not very important in terms of determining good policy.

    What Dimon thinks, whether he is sad, or happy, carefree, calm, slightly perturbed, cocky, sober, contrite, or apologetic, or an ass, or temporizing, or whatever, makes no differences. Whether he thought he was careful or not, makes no difference.

    The system remains dangerously unstable, and it makes no difference whether all the powerful actors thought they were doing the best things, the wise thing, the prudent thing. Dimon can say what he wants, and think what he wants, it makes no difference in terms of what the best policy is.

    Also, in my opinion, Dimon has already lied his ass off has shown somewhat less respect for veracity than one would wish, about his role in the bad deal. Another reason why his testimony should not be taken very seriously.

  19. 19.

    Valdivia

    Today was just proof that Congress in general is not a place where you can actually pass truly aggressive financial reform no matter the size of Obama’s bully pulpit.

  21. 21.

    JGabriel

    “You’re obviously renowned, rightfully so I think, as being one of the most, you know, one of the best CEOs in the country for financial institutions,” crooned Sen. Bob Corker (R-TN). “You missed this, it’s a blip on the radar screen.”

    __
    Shorter GOP: Bring us your money, Jaime. Come to the dark side. We have cookies.

    .

  22. 22.

    Violet

    Our elected representatives know who’s funding their expensive lifestyles and it ain’t their constituents.

  23. 23.

    Brachiator

    @Turgidson:

    The shitshow in Europe is the biggest variable that concerns me about Obama’s reelection. If they could just not suck so bad until November, I wouldn’t be particularly worried.

    On the other hand, I have not seen Mittens weigh in on this with anything other than “I’m rich, so I must be a master economist.” I don’t know if the GOP will come up with something that sounds persuasive, or if Romney will come off as hapless as McCain when it comes to serious discussion and debate.

    So, as gloomy as the economic picture is looking, I am not yet worried about Obama.

    Yes, for purposes of the November election, I am an Obot, and I approve this message.

  25. 25.

    shinobi

    This hearing presented a vivid picture of who congress cares about. Before the hearing started protesters were shouting about foreclosures, a woman spoke of having her home taken away before being removed. Then the committee goes on to laud a man who lost enough money to save at least 2000 homes. Disgusting.

  26. 26.

    TooManyJens

    Many, many more nauseating quotes here:

    “What would you do to make our system safer?” Sen. Bob Corker (R-Tenn.) asked Dimon.
    __
    “What should the function of regulators be?” asked Sen. Mike Crapo (R-Ida.).
    __
    “How much have regulation costs increased?” asked Sen. Mike Johanns (R-Neb.).
    __
    “We’re honestly looking for some ideas as we look over [Dodd-Frank] in the next year,” Sen. Jim DeMint (R-S.C.) told him.
    __
    Even some of the Democrats sought out Dimon’s advice: Sen. Michael Bennet (D-Colo.), for instance, asked for his thoughts on solving the country’s long-term deficit crisis.

  29. 29.

    Cap'n Magic

    JPM is fucked six ways from Sunday if the Eurozone goes tits-up:

    law.harvard.edu/programs/about/pifs/symposia/europe/baer.pdf

    As Yves Smith noted:

    “First, no mention of derivatives, which are effectively senior to senior bonds. Second, it cheerily says the FDIC can void all cross default clauses. Um, only if they are governed by US law.

    Those two issues are kinda big problems.

    And did you notice the effort to make a $200 billion loss seem inconceivably big? Erm, the losses on Lehman, a smaller bank, without a monster derivatives clearing operation, were bigger than that, Nice try, though.”

    Another take:

    Even more ingenously, it compares the 200m loss while the scenario actually starts with 50m loss then triggering a bank run. Which makes it well within any of the numbers mentioned.

    They also claim “systemicaly important operations continue” – it’s far from clear that anyone would continue to use tri-party repo and clearing facilities unless they were immediately ringfenced and spun into separate, well capitalised company. Loss of these would, I speculate w/o looking at the balance sheet, have significant impact on profitability of the bank as whole, making the rest of the bank considerably less attractive to investors.

    And now comes the coup de grace, courtesy CATO:

    Mark A. Calabria

    Earlier this week University of Chicago Professor Luigi Zingales offered an interesting, although I suspect commonly held, reason for his conversion to supporting a new “Glass-Steagall.” For those who don’t follow banking, Glass-Steagall, passed as part of the New Deal, mandated the separation of investment and commercial banking. This reason? Professor Zingales asserts that Glass-Steagall “helped restrain the political power of banks.” More fully, he argues:

    Under the old regime, commercial banks, investment banks and insurance companies had different agendas, so their lobbying efforts tended to offset one another. But after the restrictions ended, the interests of all the major players were aligned. This gave the industry disproportionate power in shaping the political agenda.

    Perhaps I’m just a little slower than the good Professor, but that seems far from obvious to me. Unfortunately he offers no evidence. Recall Glass-Steagall was finally repealed in 1999. I served on the Banking Committee staff from 2001 to 2009, with a year’s break. While I don’t have the best memory, I can recall no major legislation between 1999 and 2009 that either deregulated or gave massive benefits to the largest banks. There were, however, several pieces of legislation that hurt the banks. Highlights include Sarbanes-Oxley, financial reporting requirements under the Patriot Act, and the Fair and Accurate Credit Transactions Act. None of those were favorable towards banks. You could argue bankruptcy reform in 2005, but its hard to imagine anything beyond that.

    I suspect Zingales’s views are colored by his growing up in Italy, a parliamentary system. Ours, however, is a system of geographic representation. What matters most for politicians is their constituents. Under a system of geographic representation, a system of small banks is likely to have more political pull than a system of large banks. Why? Because a small banker will have more pull with his congressmen than a large out-of-state bank. Anyone who thinks that say JP Morgan has a lot of pull has never gone up against the Independent Community Bankers of America (ICBA). Believe me, from having been in those fights, ICBA makes JP Morgan look politically weak (just read all the small bank exemptions in Dodd-Frank).

    Perhaps the most compelling evidence to me is that most of the really bad features of our financial regulatory system were the result of lobbying efforts by small banks. Such disasters as Fannie Mae, Freddie Mac, the Federal Home Loan Banks, the FDIC, or restrictions on branch-banking (thankfully now gone) all came about from the demands of small banks. The large banks (and FDR) for instance opposed the creation of the FDIC.

    Zingales also ignores that in practical politics, you can only “go to the well” so many times. The larger the number of issues a bank cares about, the actual less leverage it has on any of them. From my experience, if a Congressman has done something once for an industry, they feel less obligated to help on another issue. The most politically powerful industries are the ones with just a single issue of importance.

    Now Professor Zingales may be correct, but as someone who’s spent his career fighting political battles with financial firms, it would be helpful to have some evidence.

  30. 30.

    David Koch

    Bob Corker says Charles Mansion is misunderstood, “the Tate/LaBianca massacres were just a blip”, said the Tennessee Senator.

  31. 31.

    jl

    I posted a few days ago link on Robert Engle, who estimated that capital requirement shortfalls in banking sector approaching those before the 2008 panic. No time to find it now, but that is an example of systematic problem that some rich dude who just oversaw a huge mistake cannot control.

    No one knows whether systematic risk now is such that a capital shortfall of similar size as that before the panic would present a similar risk of collapse.

    But for too big to fail banks, that kind of known unknown is a big problem. Dimon can talk all night about how smart and rich and whatever he and his people are and it would make no difference.

    BTW, Engle is one of the economists who ran around in the months before the 2008 panic warning the financial wizards (or at least their technical minions, he may be considered too liberal, or dangerously ‘fact driven’, to get a hearing with the wizards themselves) that their models were falling apart.

    He also has a Nobel Memorial Economics Prize. But the fact that he was one of the economists who showed evidence before the panic that he knew what was up (Stiglitz is another) shows that his analysis should taken seriously.

  33. 33.

    Cap'n Magic

    FYWP.

    Yves Smith, Naked Capitalism, on this:

    I’m seeing if I can get Das to post on this, but this is a crock.

    First, no mention of derivatives, which are effectively senior to senior bonds. Second, it cheerily says the FDIC can void all cross default clauses. Um, only if they are governed by US law.

    Those two issues are kinda big problems.

    And did you notice the effort to make a $200 billion loss seem inconceivably big? Erm, the losses on Lehman, a smaller bank, without a monster derivatives clearing operation, were bigger than that, Nice try, though.

    Another view:

    Even more ingenously, it compares the 200m loss while the scenario actually starts with 50m loss then triggering a bank run. Which makes it well within any of the numbers mentioned.

    They also claim “systemicaly important operations continue” – it’s far from clear that anyone would continue to use tri-party repo and clearing facilities unless they were immediately ringfenced and spun into separate, well capitalised company. Loss of these would, I speculate w/o looking at the balance sheet, have significant impact on profitability of the bank as whole, making the rest of the bank considerably less attractive to investors.

    Last, but not least, CATO:

    By Mark A. Calabria

    Earlier this week University of Chicago Professor Luigi Zingales offered an interesting, although I suspect commonly held, reason for his conversion to supporting a new “Glass-Steagall.” For those who don’t follow banking, Glass-Steagall, passed as part of the New Deal, mandated the separation of investment and commercial banking. This reason? Professor Zingales asserts that Glass-Steagall “helped restrain the political power of banks.” More fully, he argues:

    Under the old regime, commercial banks, investment banks and insurance companies had different agendas, so their lobbying efforts tended to offset one another. But after the restrictions ended, the interests of all the major players were aligned. This gave the industry disproportionate power in shaping the political agenda.

    Perhaps I’m just a little slower than the good Professor, but that seems far from obvious to me. Unfortunately he offers no evidence. Recall Glass-Steagall was finally repealed in 1999. I served on the Banking Committee staff from 2001 to 2009, with a year’s break. While I don’t have the best memory, I can recall no major legislation between 1999 and 2009 that either deregulated or gave massive benefits to the largest banks. There were, however, several pieces of legislation that hurt the banks. Highlights include Sarbanes-Oxley, financial reporting requirements under the Patriot Act, and the Fair and Accurate Credit Transactions Act. None of those were favorable towards banks. You could argue bankruptcy reform in 2005, but its hard to imagine anything beyond that.

    I suspect Zingales’s views are colored by his growing up in Italy, a parliamentary system. Ours, however, is a system of geographic representation. What matters most for politicians is their constituents. Under a system of geographic representation, a system of small banks is likely to have more political pull than a system of large banks. Why? Because a small banker will have more pull with his congressmen than a large out-of-state bank. Anyone who thinks that say JP Morgan has a lot of pull has never gone up against the Independent Community Bankers of America (ICBA). Believe me, from having been in those fights, ICBA makes JP Morgan look politically weak (just read all the small bank exemptions in Dodd-Frank).

    Perhaps the most compelling evidence to me is that most of the really bad features of our financial regulatory system were the result of lobbying efforts by small banks. Such disasters as Fannie Mae, Freddie Mac, the Federal Home Loan Banks, the FDIC, or restrictions on branch-banking (thankfully now gone) all came about from the demands of small banks. The large banks (and FDR) for instance opposed the creation of the FDIC.

    Zingales also ignores that in practical politics, you can only “go to the well” so many times. The larger the number of issues a bank cares about, the actual less leverage it has on any of them. From my experience, if a Congressman has done something once for an industry, they feel less obligated to help on another issue. The most politically powerful industries are the ones with just a single issue of importance.

    Now Professor Zingales may be correct, but as someone who’s spent his career fighting political battles with financial firms, it would be helpful to have some evidence.

  34. 34.

    Ruckus

    Nothing new here, y’all move on now ya hear.

    Did anyone expect anything different? I sure didn’t. Dog bites man, politician sucks banker cock, not on the news at 11.

  35. 35.

    HelpThe99ers

    @RossInDetroit:

    Not that $2 billion wasn’t bad enough – the real number might end up closer to $8 billion:

    Over the past two weeks, the cost of providing that protection has jumped by about $1 billion for every $100 billion of protection, which could put JPMorgan’s losses as high as $8 billion. Just a few weeks ago, sources were telling CNNMoney that the losses could be in the $6 billion to $7 billion range. (CNN Money)

    But, you know what they say: “A billion here, a billion there, pretty soon, you’re talking real money.”

  36. 36.

    Cap'n Magic

    Guess I’ve been blocked. Go to naked capitlaims and read about Dimon’s performance before Congress.

  37. 37.

    JGabriel

    __
    __
    TooManyJens:

    Even some of the Democrats sought out Dimon’s advice …

    For better or worse (largely worse at present, IMO), Dimon is a Democrat, who is very wealthy and runs a corporation that manages a shit-megaton of money.

    The Democratic Senators don’t want Dimon to think they’re being mean to him and push him into the GOP, while Republicans want to seduce him into joining their team and throwing some of that Midas Morgan money their way.

    The whole ass-kissing/rim-job spectacle is revolting and discouraging, to be sure, but it’s hardly surprising.

    .

  38. 38.

    MikeJ

    @RossInDetroit:

    A ‘blip?’ A fucking $2,000,000,000.00 blip is what it was

    They lost 2 billion on 100 billion in bets.

    If you went to the horse track with $100 and lost $2 how upset would you be?

  39. 39.

    Reklam

    This why I genuflect to just authority and admit I could never do a Senator’s job; because just reading that quote makes me gag and Bob Corker lacks that reflex.

  41. 41.

    Yutsano

    @MikeJ: Depends. Are you using my money to support your gambling habit without my knowledge after I trusted you with it?

  42. 42.

    JGabriel

    __
    __
    HelpThe99ers:

    Not that $2 billion wasn’t bad enough – the real number might end up closer to $8 billion …

    Yep. I’ve been sitting here wondering about that meself.

    Seems I remember this starting as a $4 billion mistake, followed by oopsies, make that 6 or 7 billion, followed by wait wait wait, it’s probably more, we’re still counting.

    How did this get dropped down to $2 billion in today’s reports?

    .

  43. 43.

    Mnemosyne

    @jl:

    The quotes in TPM suggested a number of other motives to me: signal financial sector friendliness to potential mega tycoon and corporate contributors, political agenda pimping with a powerful financier.

    Ding ding ding. “Support Romney over Obama, and we’ll make sure there’s no more of this nasty talk about tighter regulation of banks.”

  44. 44.

    jl

    @JGabriel: The bad position is still unwinding. The loss was two billion minimum several weeks ago on the position itself, and another six to eight in company stock market value. I read someplace a few weeks ago that Morgan will be exposed to additional losses on the position for at least two months.

    If things go wrong again, the losses will grow. Maybe the august Senators were not aware, but they are not talking about something that is over and done with.

    And, IMHO, Dimon lied about his role in it. Deliberately lied and pushed phony stories to hide his direct oversight of the position.

  45. 45.

    gorram

    It’s days like this when I think maybe a death threat or two would do Congress some good.

    The feeling doesn’t last, since I know it’ll just be another excuse to lock up more of us poors in prison.

  47. 47.

    RossInDetroit

    @MikeJ:

    They lost 2 billion on 100 billion in bets.
    If you went to the horse track with $100 and lost $2 how upset would you be?

    J P Morgan Chase has no fucking business trying to make a killing at the track, and that’s what they were doing. They used a system that was supposed to provide insurance to offset risks in other portions of the business as a money maker by gambling on the markets. The $2B isn’t the issue, it’s that they were taking risks where they were supposed to be playing it safe.

  49. 49.

    PurpleGirl

    @Roger Moore: Well, when I proctored SATs, GREs, etc. and walked up and down the aisles crocheting, the proctors nicknamed me Madam Defarge…

  53. 53.

    mainmati

    @cathyx:

    ETA is still not in the Lexicon

    Extra Terrestrial Alien
    Estimated Time of Arrival
    Extremist Teabagging A-holes

    Shall I go on or is someone going to give a definition?

  54. 54.

    I'mNotSureWhoIWantToBeYet

    @mainmati: I believe in this context it means “edited to add”. Dunno why that’s used here as the edit time window seems to only be 5 minutes.

    HTH.

    Cheers,
    Scott.

  56. 56.

    mzrad

    The next time these motherfuckers talk about how expensive it is to [fill in the blank: pay teachers, fund Planned Parenthood, mitigate environmental disasters, etc.], remind them that Sen. Jim DeMint and the other guys just said that $2 billion is chump change. So, that means a few million for these programs isn’t any big deal, right? Right?!

  57. 57.

    Mnemosyne

    @mainmati:
    @I’mNotSureWhoIWantToBeYet:

    ETA is used here to indicate that you submitted a comment and then decided to edit or add text after it was visible to the other commenters.

    Here at B-J, it’s considered courteous to alert people to the fact that you edited the text after it was visible. As with any community standard, you don’t have to do it, but be prepared for people to think you’re a douchebag if you don’t.

  58. 58.

    fuckwit

    No, I’m sorry. That was not a kiss on the lips with tongue.

    That was a kiss on the anus, with tongue.

Comments are closed.