In the end, it’s all about raising money for campaigns.
Jamie Dimon is no boy scout and his firm JP Morgan, has benefited immensely from artificially low interest rates from the Federal Reserve and from connections to the Federal government. The bank for the most part sailed out of the 2008 Crash. Aside from the “London whale” incident, the Obama years have been very good ones for the bank. It has seen its partnership with the government grow along with its bottom line over the last half decade.
For instance JP Morgan administers the digital food stamp system in a number of states for hundreds of millions of dollars. Because of the recent Dodd-Frank Act and the fact that the bank enjoys “too big to fail status” under the Act, Dimon’s firm also enjoys another big advantage. Its cost of lending is much lower than it would be without Uncle Sam’s backing. This subsidy to Wall Street is worth billions.
That JP Morgan has made some sketchy moves within metals markets over the past 5 years is also worth noting. As is the fact that this spring JP was one of the banks which received Fed minutes early by “accident.”
Dimon has exhibited a tendency to be arrogant in public. Though there is nothing illegal about being arrogant, it’s not very wise to show such a disposition publicly given the power Dimon enjoys. In Davos this past Winter for example he had this little gem.
We are not going to shed many tears over JP Morgan’s current regulatory woes. And as we said last week, there is no honor among crony capitalists. Now the government facilitator and catalyst for business has turned on one of its sponsors and clients. (For this quarter.) The fine Eric Holder has levied absolutely feels like a shakedown. Here’s why.
The DOJ fine is also an important message to other big banks. Even mighty JP can be made to feel pain. So keep those campaign checks coming to the DNC, or you may be made to feel pain too.
Indeed, some similarly crony banks have been made to feel some pain already. B of A is on the hook for $2.9 billion, and Wells Fargo for $1.97 billion.
But these fines are absolutions if anything. Bumps in the road. The cost of doing crony business.
Were theses absolutions even for fraudulent business as we are told? Perhaps to some degree. But the bank’s greatest sin, like Dimon’s, may have been turning their backs on a president to which the banks bundled piles of cash in 2008. Like a jilted girlfriend (or boyfriend) Obama has a score to settle.
Note that this tantrum comes just before mid-term elections get really rolling.
In the attached article Charlie Gasparino borders on apologist for Jamie Dimon. We see the fine handed to JP Morgan from Eric Holder less an example of gross injustice (though it may be) and more a cautionary tale of what happens when one partners with the government.
(From The New York Post)
For a while, Dimon (a longtime Democrat) was a rarity in Corporate America in that he refused to be cowed by the Washington political class and keep his mouth shut in the face of the absurdity this administration was administering to businesses in the form of taxes, regulation and now a new health-care system where even something as vital as designing a workable Web site to sign up new recruits doesn’t work.
By speaking out, Dimon became de facto public enemy No. 1.