21 June 2012

Some Additional Questions For Jamie Dimon, Empereur de la République

“When a government is dependent upon bankers for money they, and not the leaders of the government, control the situation, since the hand that gives is superior to the hand that takes."

Napoleon Bonaparte

Interesting questions, but unlikely to come up at Mr. Dimon's next team building session with the Congress. They forgot to ask about this area while they were fawning all over the man, asking him advice on how to run the country.

I would like to see some elected official with the guts and the public concern willing to ask the pampered princes of the monied aristocracy these types of tough questions.

Alas, the likelihood of such a confrontation seems as whimsical and unlikely as the set pieces that Mad Magazine used to run when I was a young boy titled, Scenes We'd Like to See...

Additional questions for Jamie Dimon
Questions for Jamie Dimon that no Member of Congress had the Courage to Ask
By Stanley Haar
21 June 2012

The Golden Rule of government, “Whoever has the gold makes the rules,” was on full display in Washington over the past week as JPMorgan’s Jamie Dimon appeared at hearings held in both the Senate and the House to answer questions about the bank’s recently reported trading loss.

I am in full agreement with the argument that it is actually none of the government’s business when the shareholders of a private bank lose money due to the bad decisions of management, as long as the loss was incurred legally and does not threaten the integrity of the financial system.

However, the Congressmen and Senators missed an excellent opportunity to ask Mr. Dimon about any number of financial scandals (Madoff, Jefferson County, robo-signing, etc.) in which JPMorgan Chase has been involved, including the on-going MF Global scandal.

In our representative democracy, where Senators and Congressmen are supposed to serve the public interest, not the interests of big campaign bundlers, it is sad to report that not one member of Congress had the courage to ask Jamie Dimon the following questions:
1) It is reassuring to hear that JP Morgan has more than enough of its own capital to cover the trading losses that triggered this hearing. But suppose for the moment that under some circumstances the size of the loss were to grow to a substantially larger amount than you now anticipate. If you didn’t have enough capital to cover the loss, would you ever consider taking money from your customers’ accounts to cover the losses? That would be illegal, wouldn’t it?

Permit me to ask you one more not-so hypothetical question: If you were standing in the lobby of a JPMorgan Chase branch, and you saw through the window that one of your customers was robbing the candy store across the street, and the customer then ran into your bank with a bag of cash, would you let that guy pay off his car loan with the cash in his bag?

Isn’t that in essence exactly what happened last October with your customer, MF Global? According to the very detailed report released on June 6 by Trustee Giddens, the infamous transfer of $175 million from MF Global to your bank on October 28 to pay off an overdraft was a transfer entirely between JPMorgan accounts: From the segregated customer trust account to the MF Global Treasury house account to a JPMorgan London account. All of these moves were completely transparent on your blotter.

Your own employees, Donna Dellosso and Barry Zubrow, witnessed those transfers and were so concerned about them that they immediately requested a letter from Jon Corzine and Laurie Ferber, basically stating that they were not stealing customer money. You never got that letter, but kept the money anyway. Weren’t you concerned about receiving stolen property, and potentially being an accessory to the looting of customer accounts? Did you call the CFTC or SEC to report your suspicions?

[Mr. Dimon told the Senate Banking Committee that his bank received verbal assurances that the transfer was legitimate; however the Giddens report directly contradicts this………see page 134: MF’s in-house attorney, Dennis Klenja, “advised that he made no assurances of any kind to JPM”.]

JP Morgan was MF Global’s primary banker. You knew that they were scrambling to come up with cash to stay alive, day-by-day, hour-by-hour. Did you really think that they suddenly found a couple of hundred million dollars of excess cash in the segregated account? Or did you watch them steal customer money for a JPMorgan account, and then ask for the letter as a CYA in case they got caught?

That is the first question. Read the next six questions here.