Jamie Dimon Believes in Corporatism, Not Capitalism
CEO of JPMorgan Chase & Co. (NYSE/JPM) Jamie Dimon testified on Capitol Hill, exclaiming that regulation is unnecessary and that capitalism has proven to be the best system for a country’s citizens and economy.
What a joke.
First of all, when the financial crisis hit, if capitalism were allowed to prevail and if Dimon were such a champion of it, then the big banks, including his, should have been allowed to fail. Period.
Since the financial crisis, according to estimates from Bloomberg and the International Monetary Fund (IMF), JPMorgan has been receiving a government subsidy of $14.0 billion a year; the other big banks receive subsidies as well.
While the unemployment rate remains high and jobs are nowhere to be found since the financial crisis hit, Dimon and executives from the other big banks continue to receive their bonuses from taxpayers. This is not capitalism.
Since the government provides JPMorgan with money, it makes speculative trades on the markets that other people simply cannot. If the trades are profitable, the big banks keep the profits and pay themselves bonuses. If the trade works against them, taxpayers bail out the big banks. This is capitalism?
The Banking Act of 1933 (a.k.a. the Glass–Steagall Act) forced separation between banks, especially big banks, and those institutions that trade. President Bill Clinton repealed the Act in 1999. Should this Act have been in place, it would have gone a long way to preventing the financial crisis, and it should be reinstituted to prevent further financial crises, because it would change the structure of the big banks.
However, when asked whether Glass–Steagall should be reenacted to prevent another financial crisis, Dimon responded by saying that the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Company (Freddie Mac) were never subject to the Glass–Steagall Act and they failed, implying that the Act is irrelevant.
No members of congress questioned Dimon on this. I don’t know if Dimon believes we’re idiots, but it was the repeal of the Glass–Steagall Act that allowed the big banks to create the derivates to speculate with depositor money.
The mortgage-backed securities that caused the financial crisis originated from the big banks. These exotic securities were what took down Fannie Mae and Freddie Mac.
There is no question that Fannie Mae and Freddie Mac were complicit in all this. That aside, these institutions were caught in the crossfire during the financial crisis from the problems that originated at the big banks.
Does Dimon think anyone will believe him? The continued government subsidy is appalling, especially while the suffering of the average American within the economy grows.
When Dimon testified on Capitol Hill, it was a very, very dark day for capitalism.