Jamie Dimon met with the Senate Banking Committee for a hearing on Wednesday. For those of you that watched the hearing or at least followed it in the news, what exactly did we learn? The highlights that are out there are of Dimon apologizing to clients and shareholders about the loss (why? I don't know, maybe it serves for a good soundbite on the evening news to the average viewer who doesen't know much about the industry) and the panel members asking Dimon what he thinks would be good regulation to prevent this sort of thing from happening in the future, etc.
One of the big arguments in the media over the weekend was whether the CDS selling activities were hedging or prop trading. Dimon replied to an inquiry of the matter that "the line between the two is not always very clear". This answer is rather ambiguous, but a correct one. For anyone who has worked in a trading or AM role where portfolios have to be hedged against certain factors, you know that there are a plethora of different things that could be done to mitigate potential risks. Now, I do not see how collecting premiums from selling CDS is justified as hedging as this particular example is a bit odd, but then again I do not know what assets JPM had in this case that are being 'hedged'. Unfortunately this topic and how it relates to the Dodd Frank regulation will never be black and white and there are probably many similar activities going on within other banks that have not come to light because there simply haven't been any losses yet like there were at JPM.
The other issue at hand here is the fact that JPM and Dimon himself were political contributors. This article has a great graphic of JPM's contribution layout for the last five years. Granted, the money isn't exactly mind blowing but it is the appearance of conflict of interest that matters here. Besides, the media won't exactly mention the numbers if they are irrelevant, they will just say something like "JPM has contributed money to twenty members of the Banking Committee" or something of the like. I think the financial industry needs to completely get rid of political contributions to wipe out any appearance of wrong doing in case there are hearings or other issues. The other thing I found that was interesting (probably completely irrelevant, but interesting nonetheless was the fact that Dimon was wearing cufflinks with the Presidential Seal on them. The cufflinks are a mircrocosm of what the contributions do for the appearance of conflict of interest, in that they are insignificant, but still provide an appearance of impropriety as shown by the many articles and mentions in the media of them.
All in all, the hearing was rather non-eventful with Dimon receiving some soft-ball questions here and there. Like I described in my article a couple weeks ago where I touched on the JPM issue, it is really the regulation that needs to be cut down in size and revised to a more basic approach of what exactly the government feels needs to be prevented in the industry.
Deregulation all the way.
I watched the entire hearing and it was hilarious. When Blankfein testified in front of Congress, he got owned. When Dimon testified, all the congressman got down on their knees.
IMO, the general public of american society could give a rat's ass if Dimon or whatever person/institution contributes to whatever politician/committee. As long as they have iphones to play with and fashion blogs to pretend to do some meaningful work in, their eyes will forever be covered by a veil of ignorance.
I feel like you just finished watching Margin Call.
You are right when it comes to the general public. However, the point I was trying to make is that these conflicts of interest are being taken advantage of by the media and other groups that have an interest in painting the finance industry in a bad light.
Mr. Dimon goes to Washington
Et autem iure nesciunt aperiam est et. Error illum quos laudantium est vel sint. Voluptatem ullam optio dolor est odio natus. Deserunt ut voluptatem corporis dolorem rerum nihil et. Molestias sunt eos illo quia animi nisi sit.
Sint vero quo voluptatem. Quos veritatis corporis eveniet ipsa neque. Cumque porro tempore nostrum eos.
Et officia et sunt. Numquam aut et voluptatibus molestiae magni rerum iste sunt. Velit rerum dolores sit voluptatibus tempore. Beatae exercitationem quo aut et magni ut qui distinctio. Quia sunt hic praesentium enim.
Nam est reprehenderit totam rerum sint voluptatibus. Enim reiciendis nihil qui reprehenderit. Id nam vel repellat in consequuntur velit dolores. Non et eius deleniti aut nesciunt dolore expedita reiciendis. Iure animi qui est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...