Jamie Dimon Should Embrace TBTF reform (My new article in the American Banker)

Here’s my new take on TBTF problem.

To summarize, to embrace the TBTF reform is a winning issue for Jamie Dimon. It has a limited downside/unlimited upside an has a potential to repair his tarnished reputation and turn him into  the industry leader. He holds a winning hand and doesn’t know it.


17 thoughts on “Jamie Dimon Should Embrace TBTF reform (My new article in the American Banker)

  1. Anonymous says:

    Nice try, but I don’t think he has the character and what would all his friends say? An Andrew Carnegie he isn’t…

  2. It’s an interesting article, but I seriously doubt Dimon even considers this course of action. Unfortunately, for any public company it’s management is always focused on the short term objectives, because Dimon and his CEO brethren are judged on the quarterly earnings, not on their potential future legacy. If he ever appears to be serious about breaking up JPM for the good of the public, he’d be out of the private sector after the next JPM board meeting. And when he’s no longer a JPM CEO, he just won’t have the pull to produce any radical reform.
    P.S. Приятно встретить соотечественницу на англоязычных блогах 🙂

  3. List of X is Russian? What a nice surprise!
    I know, it would take a special pedigree of for a person to do what is required to do. I thought Dimon (unlike all other Wall Street CEOs) posesses or comes close to possessing that kind of quality. He’s shrewed and he never missed a good opportunity before (look at the Bear deal he got). He’s solid player and always knew how to play correctly. Until London whale debacle. The thing about this deal is that he doesn’t have to be a martyr and forgo profits – breaking TBTF can realy be a profitable thing in the end. He can kill 2 birds with one stone – redeem himself in public, make his job easier (he won’t have to go before the Senate panel every now and then) and perhaps even make some money.

    • I am. I had the same reaction when I saw your name on the article.
      Maybe I don’t know Dimon too well, but he just doesn’t strike me as a fighter for the public good. Sure, he could break up JPM if it were profitable to do so, and it’s common for other companies spin off divisions. However, I don’t think it’s profitable for JPM to be broken up and lose TBTF status: a dozen TBTF, including JPM, receive an implicit federal subsidy of around $80B, mainly in lower borrowing costs because federal government is assumed to step in and bail out these companies should they run into trouble. See this: http://www.bloomberg.com/news/2013-02-20/why-should-taxpayers-give-big-banks-83-billion-a-year-.html
      Losing TBTF status, and implicit government backing, would seriously hit JPM’s profits.

  4. Then all this talk about “let free markets work” coming from the same quarters (like Chamber of Commerce, etc) is bs. Clearly, if JPM and other banks need to rely on this cash injections to function then they demonstrate an unsustanable business model. Perhaps, Dimon plans to retire in the next few years and is unconcerned about what happens to JPM and the industry afterwards. Then we truly have no recourse.

    • It is BS. Every company that’s big enough to hire lobbyists is always pushing for regulations that will help them make profit, pay less taxes, or get rid of the foreign or local competition.
      Free market is impossible in the real world: any working economy requires property laws and enforcement of these laws at the very least, and that’s a regulated market already.

      • Oh, it’s my favorite argument when talking to a libertarian (usually having some business or a brockerage account): who’s going to enforce your contracts? What if your counterparty doesn’t pay? Who’s going to collect, Nicky Santoro?

  5. Vladimir says:

    Katya, it seems to me you rest your entire argument on a couple of progressively doubtful assumptions. First one is that you know what Jamie really wants. Let’s say you guessed correctly. Then you follow up with a pretty ‘leftwith’ballsy argument that one of the most brilliant guys in business/finance today ( definitely the sharpest business mind I have ever met ) and with over thirty years experience to boot, doesn’t see what is obvious to you….

    That puts it mildly…:) But it really sounds more like:’Hey, Jamie, get your head out of your ar.e and take a listen to my piece of advice…”

    That aside, it is also possible he is doing what he genuinely believes to be the right thing to do ( for the bank, shareholders, industry, country, humanity who knows) and it happens to be a different vision….

  6. Haha, I guess I do to some degree. That’s why I tried to frame it not as advice but as exploration of possible further action. But you know, life on Wall Street may really clowd one’s judgement about simple things. You really come to believe (of rationalize to oneself) that you’re saving the world. How else would you explain Lloyd Blankfein statment: “we are doing God’s work”? Is he brillian/shrewd in his business sense? Yes. Is he also mistaken? Yes.
    It’s like a ring of power (I’m a LOTR nerd), you think that once you get it you’re going to use it for good. But then even nice guys get corrupted.

    • Vladimir says:

      Mr. God couldn’t afford Mr. Blankfein, so
      a) I am pretty sure he was fooling around, after all it wasn’t a prepared speech, just a retort to an overly enthusiastic reporter
      b) One thing is charting a course of action, another is an interview. Anybody is allowed an occasional slip of a tongue – doesn’t reflect on a person’s sharpness.
      And yes, WS may cloud judgment of many, I don’t think it is the case with Jamie, he is not many, he is one of the very few…

      We’ll never know though, clearly, so just my hunch against yours…:)) It is simply that I wouldn’t never assume to know better than J.D., but then I never claimed to have any balls, either left or right…:)))

  7. Just spoke with Jamie Dimon! Turns out he reads what even lowlifes like me write. Woke up this morning and saw his email in my inbox. anyway, he gave me the usual spiel that he probably already memorized by now to give to journalists and the press. He needs size to be competitive, so he’s not going to break up his bank. He’s sorry about the London Whale, but promised that it will not happen again. So now we can all sleep better at night.

    • Vladimir says:

      Cute. And double cute because exactly on the day when we conversed, my wife had a run-in and a quick chat with JD (and it normally happens never), she comes home and tells me what a great guy he is and how everybody at JP likes him and all I am thinking is: What are the chances!!!!!!
      But hey, he did call you, isn’t it nice indeed for a dude who’s got to be quite busy?! May be he does care more than he gets credit for? 🙂

  8. Sadly, my opinion of him changed for the worse after the conversation. He actually emailed me with his # to call. So, I did. He almost didn’t let me speak and was trying to overwhenlm me with lingo, like “imperfect hedge”. He sounded like he believed his own spin.
    So your wife is at JPM? A funny coincidence.

    • Vladimir says:

      No she is not, and it is very unlikely for them to meet. So it had to happen on the day when I talked abt him so much…:)

      And you are one tough to please senorita…;) Why do you think JD decided to talk to you anyway? You are in no position to influence anything of importance for him, not yet anyway, right? So, why do you think he gave you his number? I don’t know, I am interested in your take on the subject.

  9. Of course I’m not in a position of influence. My job is to throw an idea out there (a valid idea from which he can benefit) and let him hear it. It was under some lucky circumstances that he read it (maybe someone sent a link to him). Perhaps, because no one else has proposed such a move to him before, I’ve never seen such angle addressed in the media. Part of me wants to think that he actually gave it a few moments of serious thought, because I do think my case was made very well. But then he got back to his daily fights and nuisances and maybe found it childish. So, I can’t say what made him contact me if he doesn’t think it’s a good idea.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s