The Waffling and Half-Truths of Jamie Dimon
The Waffling and Half-Truths of Jamie Dimon
Yesterdays excruciating House Financial Services Committee hearing featuring financial regulators and Wall Street wonder boy Jamie Dimon may have been, as Kevin Roose wrote, a lot less brownnose-y than last weeks Senate meeting, but there was still plenty of praise and back-patting from the other side of the dais, and many of the more contentious and important issues were obscured by the meetings concision (congressional members were afforded a mere five minutes each, after all).
When Dimon couldnt deny, he would dissemble, making the job of the already over-stretched and under-informed lawmakers even more difficult. But there were still a few moments of illumination.
The first: Congressional members confronted Dimon numerous times with JPMorgans cost-of-borrowing advantage relative to smaller banks, as put forth Monday by Bloomberg. The gist of the argument: JPMorgans borrowing costs are lower because of the salient perception that governments will bail out the creditors of systematically important banking institutions. Dimon responded:
I dont believe thats true. Im going to give you two facts, if you dont mind. Fact number one is, we borrow in the marketplace, unsecured, with the smartest people in the world. It costs us 200 basis points over Treasury. It costs the average single A industrial like 100 basis points over Treasury. So if everyones so smart and knew that were too big to fail, wed be trading at 10 basis points over Treasury.
He then seemed to argue that JPM paid the same for retail deposits as small to medium-sized banks. But as Felix Salmon from Reuters noted, retail deposits are insured by the FDIC, which means thats not where the cost-of-funds advantage lies. .......................(more)
The complete piece is at:
http://www.alternet.org/newsandviews/article/989130/the_waffling_and_half-truths_of_jamie_dimon/