When the Senate Banking Committee meets Wednesday to question Jamie Dimon about the massive trading loss at JPMorgan Chase (JPM), its five most senior members will have one thing in common: a heavy reliance on campaign contributions from the politically connected New York bank.
JPMorgan is Banking Committee Chairman Tim Johnson's second-largest contributor over the last two-plus decades, according to the Center for Responsive Politics, which analyzes campaign giving from companies' employees and their political action committees since 1989. The same is true for the committee's top Republican, Sen. Richard Shelby, and its second-ranking Democrat, Sen. Jack Reed.
Says who? Well, American Banker has the report.
The article goes on to describe the carefully constructed, web-like relationship JP Morgan has with Congress. We're talking about a relationship partnership that goes well beyond simple campaign contributions. Congress and banks share advisers and other employees.
Dwight Fettig, who currently serves as a top aide to Johnson as the Banking Committee's staff director, is a former lobbyist at Porterfield & Lowenthal who did work for JPMorgan in 2009 and 2010. In addition, a former top aide to Johnson, Naomi Camper, is one of JPMorgan's chief lobbyists.
Sean Oblack, a Banking Committee spokesman, released a statement Tuesday defending Johnson's record with respect to JPMorgan, noting the South Dakota Democrat was the first committee chairman to call Dimon to testify about the firm's trading loss. "While Senate and House Republicans, along with Mr. Dimon, have fought to weaken or repeal the Wall Street Reform Act, no one has been a stronger defender of the law than Chairman Johnson," the statement said.
The statement also noted: "Dwight Fettig has served for more than 16 years on Chairman Johnson's staff, and the chairman has complete confidence in his integrity, judgment and independence."
It is not just Johnson who has close ties to JPMorgan, which declined an opportunity to comment on the record for this article. In-house lobbyists for the bank include Kate Childress, a former aide to Schumer, and Steven Patterson, a former Republican staff director of a Senate banking subcommittee.
Additionally, three outside lobbyists for the bank have formerly worked for the Banking Committee or one of its members, according to information compiled by First Street Research Group, which publishes reports on Washington lobbying. ...American Banker
And it doesn't stop there. Not by a long shot.
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From the New York Times' business section's live blog of the hearing. Excerpt includes the final minutes and the wrap-up.
11:58 A.M. Relatively Safe
Mr. Merkley cites numerous reports about JPMorgan executives believing they were instructed to invest in higher-yield securities to generate a profit, or in the firm's parlance, "icing." He asks Mr. Dimon, "Shouldn't you take personal responsibility?"
Mr. Dimon bristles a bit and says the firm is following a relatively safe strategy, one that is much less risk-averse.
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12:02 P.M. Picking on Volcker
Senator David Vitter, Republican of Louisiana, returns to the Volcker Rule. "Is there a version of the Volcker Rule that you think makes sense?"
Mr. Dimon says he thinks it is going to be very hard to get it right, given what he calls vague language. But Mr. Vitter interjects, asking whether there should even be such a regulation.
"I thought it was unnecessary when it was added on top of other stuff," Mr. Dimon responded.
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12:05 P.M. Sizing Up the Bet
Senator Kay Hagan, Democrat of North Carolina, is interested in the size of the chief investment office's soured bet. "How big was the position," she asked, "and how could it be so large without coming to the attention of management and regulators?"
Mr. Dimon declines to comment, saying his first duty is to manage his company properly. All he will allow is that the C.I.O. gamble was "a complex series of trades," adding, "Like I've said, we've managed that risk down."
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12:13 P.M. Unwinding the Bet
Senator Michael Bennet, Democrat of Colorado, opens up by playfully bemoaning that his turn has come at the end of the hearing. All his colleagues have already asked a lot of good questions.
That said, he makes a basic query. Why did the chief investment office not just unwind the trades in the first place? Why go the more complex route of building up a second portfolio that eventually went awry?
Mr. Dimon said that he was told that the thinking of the executives involved in the trade was that the chosen method was more cost-efficient. In other words, it was cheaper.___
With Mr. Bennet's questions answered, Mr. Johnson, the committee chairman, wraps up the testimony.
"Today's hearing is a reminder that we can't let down our guard and that we must remain vigilant," he said.
With that, the hearing has concluded.
When Senator Johnson says, "We can't let down our guard and ...we must remain vigilant," did the entire committee room dissolve into hysterical laughter? The New York Times doesn't say...