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« WATCH LIVE - JPM Senate Hearings On The London Whale | Main | Why Charlottesville Is The First U.S. City To Outlaw Drones »
Wednesday
Mar132013

Jamie Dimon: 'That's Why I'm Richer Than You'

Caught on tape.  Dimon loves leverage.

Dimon responds to analyst Mike Mayo on capital ratios.

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Why Jamie Dimon Is Richer Than You

Reuters

That, indeed, is why Dimon is richer than most of us.  He's not gotten rich running a bank on 19th-century lines, conservative with high capital to make its tony clients comfortable.  He's gotten rich, and he's not alone, running banks with high leverage under loose regulatory regimes.

J.P. Morgan shareholders, it should be noted, have done a lot less well.  Since Dimon became president and COO in July 2004, the bank's stock is up about 30 percent.  Since he became both chairman and CEO in 2006 it is up barely at all.

The real issue isn't who is rich, but rather whose interests are being fairly served and whose aren't.  Dimon's approach gives short shrift to both shareholders and taxpayers who, by the way, are still carrying substantial risks for which they are not being compensated.

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More on leverage.

Henry Paulson, when he was still CEO of Goldman in 2004, successfully lobbied the SEC to change the rules on capital ratios.

A true must read:

 

 

Photo - Banzai explains why Jamie Dimon is richer than you...

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Reader Comments (26)

RATIGAN: Yeah, I’ll jump in right there and say, uh, Christina, that is fantastic, that is great news, that you’re going to leave risk with those who decide to take the risk in the first place. Can you give me any sense of what the capital requirement will be? In other words, setting a new capital requirement is – sounds great, but again, for a market that was once thought to be highly levered when I borrowed five or six dollars for every dollar that was out there, and even in the peak of the eighties’ takeover boom we were at ten-to-one, we allowed this marketplace to go – in some cases to go forty-, sixty-, even a hundred-to-one in some cases. I’m curious as to what you believe – what your agency believes fair leverage is.

CHRISTINA ROMER: You know, I think the crucial thing is, that is a topic which is going to be worked out, it’s going to be something –

RATIGAN: Well, worked out by who, though? That’s – my concern is, because I know that the financial lobby has exploded over the past couple of months into Washington D.C., and my concern is that the size of that leverage will be set by the same people who set it last time, one of which was Hank Paulson, who was at the time the CEO of Goldman Sachs, and went on to be the Treasury Secretary, and then he went on to be able to have a secret meeting where he gave out, you know, a few hundred billion of the taxpayer’s dollars behind closed doors. I’m curious what the new process of setting leverage will be.

http://dailybail.com/home/righteous-ratigan-attack-on-leverage-and-regulation-leaves-c.html
Mar 9, 2013 at 3:54 PM | Registered CommenterDailyBail
"Less Than A 3 Percent Drop In Asset Values Could Wipe Out Wall Street" - Crisis Panel Says In Final Report

http://dailybail.com/home/less-than-a-3-percent-drop-in-asset-values-could-wipe-out-wa.html
Mar 9, 2013 at 4:02 PM | Registered CommenterDailyBail
Mar 9, 2013 at 4:05 PM | Registered CommenterDailyBail
Not immune to huge criticism, but Arthur Levitt was asked the primary reason for the financial crisis and his response was one word: "leverage"...all of the other stuff (fraud, crazy risk, etc.) was ancillary to this fundamental problem in the system. There was, and is, too much damn leverage...

Ultimately, leverage is a creature of greed, IMO...
Mar 9, 2013 at 7:56 PM | Unregistered CommenterJosie
And oh, by the way, it takes about 3 seconds of hearing Dimon speak to know that he is a huge D-bag...it must really irk him to know that there are so many more bigger dogs than him in his NYC neighborhood...
Mar 9, 2013 at 8:02 PM | Unregistered CommenterJosie
Sounds like he was very proud of his moral bankruptcy.
Mar 11, 2013 at 12:32 AM | Unregistered CommenterS. Gompers
Bush41 and friends deregulated the markets and made it into the Pedo-Bush Trout Farm for all unemployable lazy immoral swine to gather and pillage while the American idiots watched T&A on the CFRtv. Jamie Dimon reminds me of my three year old brother when he caught his first trout at a trout farm. The little guy was throwing up with excitement. Same with Jamie Dimon. What a stooge.
Mar 11, 2013 at 1:26 AM | Unregistered CommenterHoward T. Lewis III
Ratigan has yet to resurface. Excellent post there DB, though old. Shame that info babe on MSNBC still works. Wonder if Dimon knows where MF money went? Did anyone ever interview him for that crime, or was it just Corzine?
Mar 11, 2013 at 7:12 AM | Unregistered CommenterSKINFLINT
Surprisingly, I find myself agreeing with what Dimon said here. Because what he told here was a completely pathetic, unfunny joke that made no sense whatsoever in the context of the question (aside from implicitly conceding Mayo's premise that UBS has better metrics than JPM, a point Taibbi made), and boiled down to this: Even though my IQ might be less than 100, and I can't overcome a simple speech impediment, I am rich because I'm really REALLY rich, nyuk har huh. The ass lickers on the phone, including the financial press, found this hilarious.

Dimon is actually right about this not only as a matter of fact, but as a matter of official U.S. legal policy: the super rich are officially above the law, which now takes a back seat even to mongoloids like Jamie so long as they are rich enough.

Glenn Greenwald makes that very point in a speech he gave last week. He freely concedes that the U.S. has NEVER--in practice--satisfied the ideal sought by the rule of law. What it had always done until recently, he contends, is to hold up the rule of law as the official chalice of the realm. That is no longer the case, Greenwald says, which he explains using two very interesting personal experiences beginning in 2005.

The pertinent segment is between 11:40 and 21:15 of this video. (In the first few minutes, Greenwald lays a little groundwork that includes the proposition that any system of governance faces a binary choice between the rule of law and the rule of man).

http://www.youtube.com/watch?v=MRiQ0SGJ_98&feature=youtu.be
Mar 12, 2013 at 12:13 AM | Registered CommenterCheyenne
How gauche of me for not saying so earlier: Happy Birthday, DB.
Mar 12, 2013 at 12:20 AM | Registered CommenterCheyenne
Gauche indeed. A belated Happy Birthday, DB.

To your point, Cheyenne, I've noticed the phenomenon Greenwald speaks of -- not just among the political and media class whom we read about and observe from afar, but among my own students and especially my younger colleagues (I'm in my mid 30s). Getting along, getting ahead, pleasing those in power -- or, more pertinently, not DIS-pleasing those in power -- those are the guideposts by which many people live out their professional and personal lives (I nearly typed "lies"). If it might screw up your career, you DON'T do it. That is an iron law. By the same token, no matter how wrong, dishonest or sleazy, you damn well do it, if you want to be successful, because everyone else, or someone else, is going to do it.

Speaking of rotting fish, we're all familiar with Bernanke, Geithner, et al. -- abject screwups (in my view) who should have long ago fallen on their swords. Well, it's clear to me that the rot gone from the select few to corrupt the entire culture.

And I'm not just saying all this as part of some kind of old man's Jeremiad. There are clear political consequences for what's going on. Try to imagine today's 20-somethings taking a cue from the 60s generation and mobilizing to stop a war, for example. It's fucking ridiculous. It just wouldn't happen. They're too busy padding their resumes, looking for internships and trying to game the system in their favor -- and I'm talking about the good kids, here. Sure, part of that is the nature of the labor market in the present moment, but a big part of it is culture and outlook. It just wouldn't occur to them that they could or should drop everything and stick it to the Man. Sure, there's Occupy, but those kids (and I know they're not all kids) are totally marginal to the larger youth culture. Along with mumps and measles, they've been systematically inoculated against outrage.
Mar 12, 2013 at 12:52 AM | Unregistered CommenterDr. Pitchfork
Happy B-Day Steve!!!
Mar 12, 2013 at 1:58 AM | Unregistered CommenterS. Gompers
The rapid and systematic loss of manufacturing was the worst thing that happened, and I watched it destroy the U.S. in slow motion. How retarded were the assholes behind this? There are three, count 'em, 3 ways to create new capital: farming, mining, and manufacturing. The latter is where the real money is. You will notice that finance and banking are not among the list of productive activities...

I grew up in the Research Triangle Park in NC during the '80s. All you had to do to get a $30K job there was go to a local college, all of which were cheap, esp. public ones. By cheap I mean like $450 per semester tuition. Thirty grand was a lot of dough. $50K was the grail--you were rich at that level.

But jerkoffs like Jack Welch got really rich trading away the manufacturing capacity of GE--overseas--and replacing it with credit cards. That's when it all started going to shit. I saw my first "Baby on Board" sticker in a vehicle in 1986. It made me ill, this ego-ization of the culture. It was top to bottom in the culture too.

Now what do we have now that the country produces virtually no new wealth? A swirling toilet bowl in which dumbed-down pirana tear each other apart competing over turds before they vanish down the pipe forever, that's what. Everything from education to pills is vastly overpriced because it's paid for with credit. The debt agreement from the sale is packaged and sold. And then re-packaged and re-sold, with parasites taking their cut at each stage, never creating or producing anything (except fraud). It's a Ponzi scheme.

It's also a house of mirrors. Dissent is ridiculed by a culture that produces pure shit in the way of literature, art, film... I watched Easy Rider the other night. The idea that a film like that could be produced now is beyond laughable; the sheep are watching retard TV or jerking off to Facebook, oblivious to their own brainwashed pliability. It's gotta be that way; too many inquisitive souls makes for a quick game of credit Jenga.

The plant where I used to desgn circuits for motors had 300 people. It's a fucking police station now. How fitting: real jobs are replaced by dumb cops who guard protect the Ponzi's top echelon from disenfranchised workers with real skill.

There are record numbers of "smart" people now who can't think their way out of paper bag. When it all goes down the shitter, they'll burn the people who saw it coming at the stake for witchcraft.
Mar 12, 2013 at 2:04 AM | Registered CommenterCheyenne
"All you had to do to get a $30K job there was go to a local college, all of which were cheap, esp. public ones. By cheap I mean like $450 per semester tuition. Thirty grand was a lot of dough. $50K was the grail--you were rich at that level."
---

(You know I grew up about 3 counties NW of there, right?) Anyway... Exactly! My wife and I started watching Family Ties last night on Netflix (first episode 1982) -- all I could think of was how this family would be working their hippy ASSES off today trying to pay for that house and that Volvo (if they were lucky enough to have jobs). In the 1980s you could go to college, work fairly hard and live a nice, middle-class life. Nowadays it's an outright rat race just to be able to manage the local Radio Shack. And you get long, shitty hours. And no job security. And you either suck it up or ship out. I've seen many textile jobs come and go in my hometown (mostly go) since the late 80s. And people don't even know enough to be righteously pissed off about it.
Mar 12, 2013 at 2:22 AM | Unregistered CommenterDr. Pitchfork
Radio Shack is so old world, professor. You need to get hip and bust into a Mattress Firm. I walk by one every day. Often there are no customers inside. The huge ads in the windows offer multi-year 0% financing. So on the few occasions that a mattress does actually leave the store, no cash comes in.

"How in the fuck do they stay in business NOT selling mattresses?" I wonder.

Then it hits me: they're not selling mattresses, they're selling loan papers. Somewhere there's a guy whose job is to bundle Mattress Firm's no-money-down contracts into a pool, and somewhere else there's a guy who buys that shit for the pension plan he manages. But at least a physical mattress changes hands in this model.

I walk by scads of service-providing businesses that are undoubtedly funded heavily by Medicaid and other insurance. Thus debt props up these businesses too, but there are no goods.

This is what the American economy has been reduced to: low-level service workers driving their debt-financed cars after a hard day of shuffling paper and debt for 10 hours to get a bite of horsemeat with co-comrades in the Ponzimonium at the local Flingers, where they can discuss the fake news about fake terrorists and fake political issues over sedatives (which antagonize several subsidized medications they take, but hey). At midnight, when the Flingers workers get off, the whole Ponzi working day resets and starts anew.

Three counties, you say? I'm guessing you went to a lot of stock car races as a kid. That's awesome if so.
Mar 12, 2013 at 10:28 AM | Registered CommenterCheyenne
Amen to that Cheyenne.
Mar 12, 2013 at 11:15 AM | Unregistered CommenterS. Gompers
What is it about The Bail that attracts north central NC folks--RTP, Durham Co., Rockingham Co., etc.? And Cheyenne, love your 2AM rant. Amen! And I never knew that we have so much in common. Our views, time spent in NC, patent law...

Re: debt and paper passing, aka "pass the trash." As I expressed in another post, we are a nation of payday and quicken loans...and casinos...all subsidized by our gov't and The Fed...Ever walked through an urban casino? Who are the primary customers? A: Folks heavily subsidized by our gov't trying to leverage their checks into riches. What do they care?! It's not their money. Bottom line: casino owners are at the federal trough.

And as one who ate at the trough for a while (our law firm had federal patent prosecution contracts), it can be VERY lucrative once past the red tape BS...
Mar 12, 2013 at 12:01 PM | Unregistered CommenterJosie
Josie--I think the bail gets even more people from Indiana. Must have something to do with basketball.Look at the chalk in the tournament...

http://www.vegasinsider.com/college-basketball/odds/futures/

I've spent a lot of time in both states. The tradeoff that tears me apart is Indiana's horse racing (including OTB's in Indy and Ft. Wayne) and North Carolina's coast. The drive from Sunset Beach to Corolla can take 8 hours depending on how you time the ferries, but the scenery is epic all the way and downright haunting in stretches, particularly if you make the trek outside tourist season.

"Ever walked through an urban casino?"

I gambled in one of the casinos outside Comerica Park in Detroit in 2005. The park is fantastic, but the gambling scene was beyond grim even at the height of the credit boom. I can't imagine what it's like now.
Mar 12, 2013 at 1:00 PM | Registered CommenterCheyenne
Cheyenne-The Detroit casinos soon-to-be owned by Rock Gaming and Dan Gilbert of Quicken loans...see a pattern?
Mar 12, 2013 at 1:08 PM | Unregistered CommenterJosie
The elite and their stock market are headed for the stratosphere at the same speed the rest of the population and their wealth are headed for the sewer.
If Americans keep refusing to stand up for their rights as they have for the last thirty or forty years, they don't deserve them. Let the parasites stack up ten deep on their backs and to hell with em.

If some nut pulls a gun and shoots people, the Chicken Little attitude takes over and things happen. Full coverage by the Presstitutes, Rights disappear, retail businesses and manufactures go bankrupt and your only protection are cops who might or might not get there before your dead, maybe. One thing for sure if the Chicken Little folks have their way, the only person beside the cops who will have a gun will be the killer.

I would love to see action on that level applied to the crooks who stole trillions and are now getting richer committing the same crimes. Even now their employees in the government are figuring out how to get even more money out of the american people while denying more of their rights, as the presstitutes proclaim far and wide, everything is under control, no laws have been broken, and Obama is not going kill you at your breakfast table, maybe.
Mar 12, 2013 at 2:36 PM | Unregistered CommenterSagebrush
Part of the problem we face as a nation is that we are too damned old to want to rock the boat. By and large, by the time we get to our forties we want to stay comfortable and not want any wholesale changes.
http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf

In 2010 the age group of 40+ years had reached a total of 39%. Our citizenry is getting old and I would bet that most want to hang in there til retirement and collect the pensions and other such entitlements that they have paid into all these years. The real test will be when the young folks decide that they have had enough of being a serf that they actually try to make something happen. They will have to form some sort of cohesive unit though to make that work. The guys at the top hate it when they have to be concerned about whether or not they have to cull the population at the birth canal or to forcibly sterilize them.
http://communities.washingtontimes.com/neighborhood/tygrrrr-express/2011/sep/27/palestinian-sexual-problems-and-middle-east-pea/

As has happened in the past, young populations with ideals are breeding grounds for civic unrest. I would suspect that the fellows at the top have purposely waited until the population of the US has gotten to this age to aggressively pursue the agenda of rape and pillage of wealth, stealing homes and ravaging families with drugs and purpose built industrialized prison systems. Just disgusting.
Mar 12, 2013 at 5:27 PM | Unregistered CommenterSKINFLINT
What entitlements are you referring to Skinflint?
Mar 13, 2013 at 4:10 AM | Unregistered CommenterS. Gompers
Gomp, SS Medicare, Medicaid etc.
Mar 13, 2013 at 6:47 AM | Unregistered CommenterSKINFLINT
Skin,

I never really considered things I am forced to pay for every week off my paycheck as "entitlements"...

I always saw free stuff as entitlements, like welfare. Once they condition the mind to believe such things it will be easy to "bankrupt" through misdeeds and have no one question where their money went.
Mar 14, 2013 at 1:05 AM | Unregistered CommenterS. Gompers
Jamie Dimon is yet another Unbridled Trojan Horse. The Greek CHurch begat Islam and Communism by rejecting Original Sin. Jamie Dimon should lead his fellow Greeks to another planet.
Mar 15, 2013 at 10:42 AM | Unregistered CommenterJes Biblew
These people aren't rich. They're poor. Poor in spirit. If they were really rich, they'd tell less about their money, and more about integrity.
Mar 20, 2013 at 1:48 AM | Unregistered CommenterRandall

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