Jamie Dimon is the Chairman of the Board, President and CEO of JPMorgan Chase, one of the largest US banks. Today he testified before the Senate Banking Committee. At issue was the bank’s loss of more than 2 billion dollars stemming from bad investments. Over the past few months, the Senate has made much of this loss, using it as an example of the need for more and stronger regulation of the banking industry.
JPMorgan Chase has a business plan, operating procedures, a budget, and accountability to their shareholders. Yes, they lost dollars based on high risk investments. Notice I said they lost dollars, not that they lost money.
In spite of the dollars lost on bad investments, the bank lost no depositor money and was in fact profitable in Q1 of 2012, with a net income of $5.4 billion (vs $5.6 Billion in Q1 of 2011). Earnings per share were $1.31 vs $1.28 for the previous year, so the shareholders saw gains. The bank has instituted internal policy changes to avoid a repeat of the problem. As of this writing, JPMorgan Chase shares are up on the day as well.
The federal government, on the other hand, ran a deficit of roughly $120 Billion for the month of May alone. That’s a deficit of almost $4 billion per day. If Mr. Dimon testifies for the full day, We The People will have lost twice what the bank did just during the brief period of his testimony.
I’ve worked for a few big companies over my lifetime. I once worked with a man who would walk around the plant carrying a clipboard (yes, I said clipboard, and yes I’m that old). Whenever it looked as though someone was approaching to ask him what he was doing, he’d raise the clipboard and pretend to be making notes. The challenger usually turned away.
Another former coworker would come to work in the morning, turn on his desk lamp, hang his sweater over the back of the chair, and no one would see him for the rest of the day. I’m not sure that he ever did anything, but his light was on and his sweater was there, so he got credit for showing up.
Over the course of the last few years, these two have come to represent our Congress in my mind. As they say in Texas, “all hat and no cattle”.
In my humble opinion, Congress, especially the Senate, has no standing when it comes to dictating financial operations. The Senate hasn’t passed a budget in three years, and Congress as a whole has allowed the deficit and the national debt to spiral out of control.
The banking committee investigation of JPMorgan Chase is just smoke. It’s a distraction from the real issue, which is the financial health of this country, and Congress is behaving like the two posers described above.
In the past month, voters in areas of the country long thought to be hopelessly entrenched in spending programs have flown in the face of conventional wisdom, voting instead to get spending under control with an understanding of the attendant sacrifices involved.
If Congress and the Administration were really in touch with public sentiment, they’d recognize that now is the time to grow a spine and take forceful action regarding our national debt.
As citizens, we need to grow a spine and take forceful action regarding our government this November.