One woman took the fall for Jamie Dimon, the CEO of JPMorgan Chase. Another woman — Elizabeth Warren, the Democrat running for US Senate in Massachusetts — is calling for him to resign from the New York Fed.
So far, the power guys are sticking with Dimon. Appearing on “The View,” President Obama called JPMorgan Chase “one of the best-managed banks there is” and said Dimon “is one of the smartest bankers we’ve got.”
While the FBI investigates potential criminal wrongdoing at JPMorgan Chase in the wake of a complex $2 billion trade loss, the so-sorry Dimon remains at the helm. For now, the buck stops with Ina Drew, the company’s chief investment officer who tearfully offered to resign.
Weep not for Drew and her $23 million retirement compensation package. But it’s still noteworthy that the girl is gone, even though the boys knew exactly what she was doing, according to The New York Times.
As for Warren, it’s déjà vu all over again. She’s the voice of reason and clarity, standing up to Wall Street power brokers. She’s also the voice that Wall Street and Washington insiders like to tune out.
After the 2008 financial meltdown, Warren set up the Consumer Financial Protection Bureau. Its mission is to stop unfair lending practices and to make basic financial transactions more transparent. The bureau was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Warren was supposed to head it. But financial institutions strongly opposed her, because she called them out for running banks like casinos.
The Obama administration didn’t back her either. Treasury Secretary Timothy Geithner didn’t want her in the job, and Obama selected someone else to head the bureau she created.
Warren is, instead, running against Republican Senator Scott Brown. As she again demands Wall Street accountability, her message is being undercut on two fronts.
She still faces questions about her identification as a minority law professor. With the media focused on Warren’s undocumented Cherokee roots, Brown has been able to dodge questions about the role he played in weakening Wall Street regulations.
Brown voted for Dodd-Frank, but he also worked to water down the so-called “Volcker Rule,” the part of the financial reform law that is supposed to stop banks from making risky bets. After it passed, Brown continued to push federal agencies to weaken regulations needed to put an effective Volcker Rule into place. Since then, he has collected more than $2 million from the financial industry, including more than $50,000 from JPMorgan. This week, he refused to reveal who is on his secret New York City fundraising committee, and whether JPMorgan is represented.
But Warren’s message is also undermined by a Democratic president with a JPMorgan Chase account that’s worth between $500,000 and $1 million. Politico calls Dimon one of Obama’s “most prominent Wall Street friends, a rare high-profile Democrat in an industry dominated by low-tax, free-market Republicans,” who has given “hundreds of thousands of dollars in contributions to Democrats.”
The bottom line: Wall Street, in general, and JPMorgan, in particular, curry favor with both parties and it pays off. As Kevin Drum writes in Mother Jones, after all the talk of post-crash reform, “mutual funds and hedge funds got away with only modest new limits, credit ratings agencies were left largely untouched, the most dangerous varieties of derivatives were left alone, almost nothing was done to reduce the size of the biggest banks, and additional powers were given to the Fed, which has shown repeatedly that it’s too close to Wall Street to ever regulate it effectively.”
Dimon is a cozy case in point. His seat on the Federal Reserve Bank of New York gives him a voice in deciding which financial institutions get bailouts for bad trades. As Eliot Spitzer — the ex-governor of New York and ex-AG, who once prosecuted Wall Street — put it, “This conflict of interest is so obvious that it defies all rationalization or explanation.”
Like Warren, Spitzer believes Dimon should exit the New York Fed. So does Senator Bernie Sanders, independent of Vermont.
That’s the power of Wall Street.
People who are out of power or trying to get it are the ones most willing to take it on.
■ Clarification: Last week, I wrote about an Elizabeth Warren campaign stop. The event she attended was a benefit for the Veterans Relief Fund of Melrose.