Jamie Dimon, the CEO of Chase, has lost billions and risked another financial crisis this year – but is tasked with regulating Chase and other NY-based banks at the Fed.
WTF? Jamie Dimon needs to step down from the Fed, NOW.
Here are the facts.
- Jamie Dimon is CEO of Chase AND on the board of the NY Fed, a super-important regional Federal Reserve bank which is supposed to help regulate Wall Street.
- Why is the NY Fed so super-important? Because it regulates the banks that caused the last financial crisis: Goldman Sachs, CitiGroup…and Chase. Which means Jamie Dimon, CEO of Chase, is responsible for regulating his own bank. This boils down to: Jamie Dimon is in charge of regulating Jamie Dimon. (We saw how well self-regulation worked in the last financial crisis.)
- This would be bad enough in good times – but Jamie Dimon is approving insanely risky gamble with our money right now, and risking another financial crash. How much of our money is he losing? Somewhere around $9 Billion on a single freakin’ bet, numbers that have the potential to threaten the stability of Chase in a very serious way.
- Why is it our money? Because he’s making those bets with federally-insured depositor money – the money you and I might place into a Chase checking account without ever intending to fund economy-risking investments – instead of investor money. Using depositor money to fund super-risky bets led to both the Great Depression and the Financial Crisis of 2008 – and would be banned by the real financial regulation, like Glass-Steagall and a strong Volcker Rule, that Chase is lobbying against.
- Worse: Jamie Dimon probably lied about it, claiming Chase lost $2-3 Billion, when they knew it’d be more like $9 Billion – and Congress still refused to grill him about it even after the lies became public. (Might as well not piss off the guy who pays you, no?)
- And he’s still not sorry – he calls the $9 Billion loss an “isolated incident and calls a strong Volcker Rule, which would have prevented the whole thing, “unnecessary” – even after he lost $9 Billion without it.
- So now what? One thing that should be obvious: corrupt bankers shouldn’t be in charge of regulating corrupt bankers. Jamie Dimon needs to resign from the Fed.
- And it’s not just us. Folks who normally never agree on the need to rein in Wall Street – like Timothy Geithner and Elizabeth Warren, banking lobbyists and Occupy The SEC – have all said it’s time for Jamie to go. (Geithner was President of the NY Fed during the financial crash – not exactly some kind of radical critic of Wall Street.) Not only that: bankers have been forced to resign from the NY Fed before, and recently – it’s not impossible if enough pressure builds up.
- It’s time for Jamie Dimon to resign from the NY Fed – or be kicked off.
Footnotes & more info:
 The Federal Reserve Bank of New York (“NY Fed”) is by far the most important of the 12 regional banks that, along with the central Federal Reserve Board of Governors (chaired by Ben Bernanke) and a few other more smaller bodies, make up the Federal Reserve. The NY Fed, like all of the regional banks, is in charge of regulating the banks within its specific district – and since almost all of the most important US Banks (with some important exceptions) are in the NY area, that makes it the first among equals: covering enormous banks and bank-holding companies in NYC that you hear of every day like HSBC, Morgan Stanley, Goldman Sachs, Citigroup…and Chase.
 Specifically, in addition to being one of 9 overall board members, he sits on the Management and Budget Committee of the NY Fed.
 How much money is that? Let’s put it this way: Chase’s entire first-quarter profit this year was $5.4 Billion – they are literally making bets that lose them half the money they make in a good year. This is insane. Or put another way: the office that the bet went through, the chief investment office, has brought in $4 Billion prior to this bet in the last three years – which accounted for 10% of Chase’s profit over that time. Do the math, and we’re talking almost a quarter of the money Chase has made, in net, over the last three years. This is also insane. Learn more here:
 The specific bet he’s making involves proprietary trading, which is super-complicated – all you need to know is that it played a big part in the financial crisis, and that Glass-Steagall and the Volcker Rule would mean you couldn’t do it with depositor money. Even worse, Chase is pouring lobbyist and campaign money into bribing Congress not to pass a real Volcker Rule or Glass-Steagall, the exact pieces of legislation that would make it illegal/inconvenient to use our FDIC-insured deposits on super-risky bets. Want more detail on the specific bet, as well as the regulation that could help put it to bed? Check these out:
 You can learn more about Dimon’s response here:
 There’s a bunch of good policy options we can also pursue – bring back Glass-Steagall, put in a strong Volcker Rule – but really, Jamie Dimon needs to be exposed and made toxic, until the public demand he either resign or be kicked out of the Fed – and only Ben Bernanke can do that, really. This article does a good job laying out the policy options that would prevent these kinds of insane bets from causing another financial crisis:
 Here’s Geithner on the need for Dimon to resign:
 Here’s some information about the last major NY Fed Board resignation, former Lehman Brothers head honcho Dick Fuld: