Jamie Dimon Now Trying to Beat Up on Heads of Central Banks

We’ve mentioned in older posts that Dimon’s history as a bully goes back at least to business school. Former section mates report that even by Harvard Business School standards, Dimon was a standout in the aggression category.

Readers may also recall that Dimon’s latest effort to get out of having international capital standards imposed on JP Morgan was to call them “anti-American”. It appears that, for a big bank, “American” = “not having to obey any rules”.

We did point out that since foreign markets are, well, foreign, it wasn’t exactly reasonable to expect everyone abroad to roll over and do things US style, particularly since one of our major exports was the US way of doing capital markets, plus a boatload of toxic securities, which in combination produced a global financial crisis.

But Dimon apparently got so much reinforcement in the US on his “anti-American” line that he has tried taking it on the road. His first browbeating object was Mark Carney, the governor of the Bank of Canada. Dimon appears to have been going on the “my dick economy is bigger than yours” basis of argumentation, no doubt assuming that because Canada is a smaller economy that is attached at the hip to the US, of course he would be able to get his way.

What Dimon seems to have forgotten is that Canada got accolades during the crisis precisely because its banks came through the crisis is very good shape, and that is because they are more heavily regulated than US banks, particularly with regard to entering new markets and creating new products. In addition, a foreign private company browbeating a public official, particularly on close to indefensible grounds, is guaranteed to boost his stature at home. Finally, Carney is ex Goldman, and so has likely seen tricks like Dimon’s in spades over his career and is therefore not easily cowed.

I was amused at Dimon’s abuse merely stiffening Carney’s resolve. From the Financial Times:

Jamie Dimon of JPMorgan Chase launched a tirade at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than two dozen bankers and finance officials, underscoring mounting tensions between bankers and officials over financial regulation.

The JPMorgan chief executive’s remarks to Mr Carney, who is touted as a potential next head of the Financial Stability Forum, the international group of regulators, were focused on a capital surcharge for the largest banks…

On Sunday, 48 hours after the contretemps, Mr Carney delivered a speech to global bankers at the Institute of International Finance, warning them “it is hard to see how backsliding [on implementing new capital rules] would help” the global economy.

“If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon,” he said.
Mr Dimon told Mr Carney that many of the rules discriminated against US banks and he was going to continue to use the phrase “anti-American”, first used in a Financial Times interview this month, because it seemed to resonate with people who might be able to modify the reforms.

In his speech, Mr Carney said: “Authorities are increasingly hearing concerns about the pitch of the playing field for Basel III implementation. Everyone is claiming to be a boy scout while accusing others of juvenile delinquency.”

He added: “However, neither merit badges nor detentions will be self-selected but, rather, determined by impartial peer review and mutual oversight.”

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    1. Yves Smith Post author

      What, to hire private investigators and find out that the Bank of Canada has regulators with wild private lives? That is not turning out to be a lot of leverage.

      I assume you are being tongue in cheek.

      1. Jane

        When AG Schneiderman decided to go after the banks, my first thought was “he better be squeeky clean”.

        We remember what happened to Elliot Spitzer.

        I can’t abide Dimon. He’s an arrogant, crass piece of $h!t.
        I’m glad to see someone standing up to him.

        I agree with you Yves, the “American” = “not having to obey any rules” meme is getting very tiresome. I think most of the international community would agree. Not just the World’s policemen, but the bullies as well.

        1. montanamaven

          Rule of law goes way back. I’m reading David Graeber’s excellent “Debt; The First 5000 years” (Thank you, Yves, for featuring him). I am at the chapter on Medieval Irish honor codes and laws. I liked this for Dimon and the Missus.
          “Whoever draws blood from an abbot of any of those principal seats before mentioned, let him pay seven pounds; and a female of his kindred to be a washerwoman, as a disgrace to the kindred, and to serve as a memorial to the payment of the honor price.”
          The ability of a man to not be able to protect the women of his family brought terrible dishonor to him.
          There should be rules and those that disobey them should pay the price. Friedman/Rubonomics is a false theory/religion. Time to reestablish the rule of law.

  1. Linus Huber

    I understand Dimon very well. Someone wants to take away his ability to continue looting; who would not get fed up.

  2. Fiver

    Canada’s banks were quietly bailed. One big 5 was insolvent. All the mortgage risk was taken onto the balance sheet of the federal government’s housing mortgage entity CHMC. There’s tons of future bad paper there as Canada’s been in a bubble for years now, only briefly interrupted by the crisis – at least 10% of these mortages are going to go under. Many Canadian Provincial and municipal governments are deeply debt-sotted and personal debt to income is at levels where US consumers already hit the wall.

    In any case, methinks Jamie doth protest TOO much. He just can’t help being a knob from time to time.

    1. Jim Haygood

      Fiver is quite right. Canada skated through the 2008-9 crisis with only a brief dip in property prices. Now, having carried on rising, they look decidedly bubbly.

      A few days ago the New York Times-Titanic featured a modest 1930s cottage with about 1,600 square feet of above-ground space in a good neighbourhood of Toronto, offered at … $1.3 million.

      I’m sorry, but that’s insane.

      Carney had better enjoy his lucky moment in the sun, because he seems to be basking in the complacent Greenspandian notion that ‘we’ll clean up the bubbles after they pop.’

      1. Typing Monkey

        Fiver is quite right. Canada skated through the 2008-9 crisis with only a brief dip in property prices.

        Partly because property values were much lower then. Things only got really frothy after CHMC started screwing around in the market in a big way (indeed, they were allowed to do this in a big way only after the stock market crashed in 2008). The political party in power at the time also started to reduce the amount of money required for down payments and extended the length of time allowed for a mortgage.

        This bubble, in other words, is largely government-induced.

        Carney had better enjoy his lucky moment in the sun, because he seems to be basking in the complacent Greenspandian notion that ‘we’ll clean up the bubbles after they pop.’

        Carney is *not* some conservative Central banker. In fact, almost all of his actions make him very, very similar to Bernanke and Greenspan (credit, weakening currency, etc). Most of the “conservativism” in the existing policy (and there’s really not much left) was due to his predeccessor David Dodge.

        I’m leaning towards a theory that this story is just some random BS to generate support for Carney’s appointment to the Financial Stability Forum. Dimon wouldn’t have to throw a tantrum to a guy who is going to go there–he could have that appointment blocked if he likes. And, as other stories have shown, he could also get his government to exert more pressure on the Canadians behind the scenes if he liked.

        This story is highly questionable, I think…

        1. Yves Smith Post author

          Sorry, this is the Financial Times, not the New York Post. And Blankfein had to intercede afterwards.

    2. Typing Monkey

      There’s tons of future bad paper there as Canada’s been in a bubble for years now, only briefly interrupted by the crisis – at least 10% of these mortages are going to go under.

      I’m betting on about 25%. CHMC, incidentally, is explicitly backed by the Canadian government if I remember correctly (not implicitly, as were FNM and FRE). Maybe my memory is wrong, though.

      Take a look at TD’s financial statements (and BMO’s, while you’re at it).

      1. Fiver

        Canada isn’t as far gone as Australia, but you could be right if there’s a complete rout in commodities due to a China bubble-burst. It’s biggest 3 cities (Toronto, Vancouver, Montreal) are rated as “severely unaffordable”, i.e., income to price multiple exceeding 5x. They account for about a third of the population of Canada. The next 3 biggest (Ottawa, Calgary, Edmonton) are very-high income cities, the first dependent on the Federal Government, the other 2 on oil, so are still considered only “moderately unaffordable”. Will China blow? That’s the million dollar question for the entire global economy. It’s evident to me it cannot possibly continue as is, but that doesn’t mean an uncontrolled collapse, as opposed to significant slowdown, is inevitable.

        My real point was that the Canadian banking system on its own is not nearly as robust as advertised. Though far less prone to outright crime, they are well short of Tier 1 capital benchmarks and still heavily levered, second only to European banks. Dimon knows it, and it pisses him off to hear Carney yapping because he knows Carney knows it too. The current Government (the elected, not unelected portion) does NOT know it. Nor does the public. Any serious damage to commodities and Canada is going to look like a mouth full of fist. Carney will do what he’s told by the Fed, which means Dimon will get most, at least, of what he wants.

        1. Typing Monkey

          I’m guessing that the economy slows as interest rates increase–perhaps sharply. That is going to ravage the housing market–especially in Toronto, which is the financial center.

          Ottawa is already facing government cutbacks (I think I saw numbers showing that the Federal government in Ottawa almost doubled over the last decade or something like that? Well, the current Canadian government is trying to roll that back somewhat). Vancouver is one of the most expensive places in the world to buy a home when measured wrt income. This always ends badly.

          I just can’t see much by way of possible future good news that isn’t already baked into existing price levels. Maybe I’m wrong–I often am. But I just don’t see it…

  3. Robert Asher

    Remember Joseph Goebbels? Repeat lies. Arrest anyone who challenges you in public. Of course this is a tactic that was there when the written history of homo sapiens began. So Dimon is just being…………..?

  4. PaulArt

    One wonders if the system of Capitalism is tilted to the anti-social being the winner on a probabilistic basis. The ‘nice guys finish last’ syndrome. If one starts from this premise it is easy to envision the USA of today, the people who are most easily motivated by greed rise to the very top and then proceed to mold society in their own image. Barack Obama is born to a mother who is left leaning by all accounts but over time he becomes a money grubbing lying pol who calls Jamie Dimon ‘my friend’. Isn’t Obama like Clinton before him a prime example of this trend? They keep looking and admiring at the positive effects of greed and convince themselves that too much of it can only be too good.

    1. ReaderOfTeaLeaves

      I wouldn’t take Obama’s use of ‘friend’ at face value. It’s conceivable they are friends, but it is equally likely that Dimon is a high- maintenance pain in the ass. Say what you will about BO, the man has enough problems without Dimon shooting off his mouth and creating more of them.

      Think of ‘friend’ as a term of art. Or war by other means.

  5. Norman

    Oh where have we heard that “Anti” before? Where are we hearing it today? If there was a man or a woman who had the brass ones, then a good bitch slapping would be in order for Mr Dimon.

  6. Susan the other

    Nobody has commented on Jamie Dimon’s last leak – that is the first time he used the anti-American bomb. He went on to say that American banks didn’t need to sock away 9% of their capital to cover losses and he insinuated that our MBS were more secure than Europe’s covered bonds. He said our MBS were actually GBMBS, “government backed mortgage backed securities.”

    1. Mark P.

      Thank you. There it all is nakedly in Dimon’s remark — the financialized corporatocracy that is the U.S. today.

  7. ReaderOfTeaLeaves

    Okay, after this post, I must be officially down the Rabbit Hole.
    It almost sounds as if Dimon is testing Talking Points that Cong. McHenry ( who accused Elizabth Warren of lying about her schedule), Sen Jim Demint, Sen Richard Shelby, and the Bachmann-Palin factions of the far right wing GOP approve of — so how is it that Dimon has turned himself into a toady for the far right?!

    Because I don’t see Dimon’s whining being viewed as productive by people who actually have to sell products and services globally.

    I’d start looking at House and Senate committee composition to see who he’s trying to curry favor with, because on the face of it….this makes it appear that Dimon is getting desperate.

    1. Typing Monkey

      this makes it appear that Dimon is getting desperate

      Or that Carney wants PR.

      This story is just absurd–Banksters suck up to people who are in these positions and just lobby them for what they want. If there are threats, they’ll be behind the scenes to block appointments or whatever. There’s no need or point in making stupid threats or throwing tantrums. Unless Dimon was not taking meds or something, the spin on this story is just preposterous.

      1. Yves Smith Post author

        You are really off base here. The FT right now is the most highly respected paper in the world (no joke). They’d have a lot to lose if they got this wrong. You’d expect an immediate denial by JP Morgan and retraction if this story were made up. And the head of a central bank would also lose face if he were to make up a story like this.

        Get a grip, your reaction is paranoid.

        1. Armchair Revolutionary

          Yves, I do not think he is saying that it did not happen. I think he is saying that it is contrived; kind of like Barney Frank who always talks a big game against the bankers, but who will make sure nothing of substance makes it through his committee.

        2. Typing Monkey


          Armchair Revolutionary interpreted my reaction correctly (and articulated it better than I did–thank you). I am not saying that the FT is lying; rather, I’m saying that it is contrived and being spun. From Carney’s perspective, the timing is great. The argument he is making is popular. And it was leaked to a worldwide premier financial paper (why not a local beat?), unlike anything else that occurred between Carney and the banks over the time he took office. Also, you can look at Carney’s record–what has he done over the last three years (i.e., since his appointment) that would be considered fiscally conservative and that really stifles the banks?

          Sorry, but if the shoe were on the other foot–if this were a story about a leaked argument that was favourable to Dimon, for example–you would immediately suspect that this were contrived as well. I think that you are applying a double standard in your analysis.

          Of course, WTF do I know–I could always be wrong, and I often am.

          And, fwiw, I love the FT. If nothing else, it’s nice to read editorials that are generally measured and well thought out instead of the BS propaganda spewing from the WSJ. When I am on the road, it’s the only newspaper I am ever wiling to pay for.

  8. Ming

    Does anyone know what has happened to Downsouth?

    I really enjoyed his insights; he elevated  the discussion to moral and philosophical issues, and his erudition of great writers and leaders was very impressive. I noticed, that when the scandal at News Corp in England erupted, Downsouth disappeared from this Blog. Perhaps, he is right now very gainfully occupied. 

    I hope that he is doing well.

      1. Valissa

        Good catch! Sounds like downsouth to me too… the references to Arendt, Lobaczewski,and Quigley are all quintessential downsouth… I miss him and his wonderful quotes amongst his synergistic thinking… although he got quite belligerent and often hostile on little or no provocation the last 6 months or so of his posts here and I don’t miss that part.

      2. ambrit

        Mz Valissa;
        Yes indeed, I don’t miss those parts either. Could he or she have just decided to ‘take my marbles and go home’ in a snit? Come on! We’ve all had bad times. Learn to live with reality and don’t go running off to the Guardian. (At least he or she hasn’t ended up on Page Three yet.) I know I shouldn’t throw stones, but…

  9. steelhead23

    I am deeply concerned, deeply concerned that the world is stifling innovation and opportunities – for Jamie Dimon to further enrich himself. How dare they? I’m not quite certain I know what a “capital surcharge” is, but suspect it has something to do with reserves. How dumb is Jamie, really? Look, FASB has let you mark to make believe your assets for years. Would you perhaps prefer to see where JPM stands if it marked everything to market? If not, Mr. Dimon, please STFU, you are embarrassing yourself.

    1. steelhead23

      Actually, I am not replying to myself, but expanding on my thoughts. It appears that Jamies big complaint is that the Basel committee is discounting the value of mortgage servicing rights. Apparently, those rights are worth plenty, and Jamie wants those assets counted toward his reserves. Help me out here Yves – aren’t the servicers on the hook for a bunch of this bad transfer/bad paperwork mess? If I understand correctly based on information from this blog and your book, servicers routinely pay the trust in full during mortgage delinquency and then recoup those cost (plus fees and interest) from the foreclosure sale. That is, even if a goodly portion of a CDO’s underlying mortgages aren’t performing, the trust does just fine – until the servicer decides to recoup its losses, forecloses and hands the trust the bill. Seems like a scam to me Jamie, as the servicers have a fiduciary responsibility to the trusts. Eventually, I suspect the trusts will sue the servicers and that nifty little asset you want Basel to count, will turn into a nasty liability. Have a nice day, Jamie.

  10. rotter

    “It appears that, for a big bank, “American” = “not having to obey any rules”.
    That appears to be the Libertarian interpretation of “freedom”. Its a literal and correct interpretation, but most of your ron paul fans “appear” to be very selective about the rules which shouldnt be applied.

  11. ECON

    As a Canadian observing the comments on Dimon, GS and Mark Carney it is not an easy ride to be independent of economic and banking policy by the mental midgets inhabiting Congress these days. It was a Liberal government under Paul Martin that did not allow Canadian bank mergers to have a presence in the North American market of a capital size to be competitive with the banksters in New York.

  12. Schofield

    Now here’s a line that Jamie Dimon ought to give consideration to if he’s not a sociopath. Markets need morality! That means for markets to work efficiently and beneficially prices, or values, should be set out there in the marketplace openly and transparently. There should not be an attempt to fraudulently determine them outside the marketplace as the ratings agencies tried to do by giving “Neutron Bomb” Mortgage Bonds triple AAA ratings at the request and payment of the “manufacturers” of these “bombs.” Neither should these “manufacturers” be allowed to short these “bombs” because only they now the fuse on them is….well short! So put two and two together means that to have morality you need rules and rules created by democratic forums just to make sure they are fair. That will often mean quite detailed rules and not some airy fairy generalized rules that you can drive a coach and horses through. Of course, doing morality and having markets that actually work as they should means ditching all this Neo-Liberal nonsense that democratic forums like the Federal government should stay out of trying to regulate the markets. Oh my Jamie that would slow down your bullying!

  13. Glen

    Diamon reminds me of a modern version of the Man from Nantucket – I keep expecting him to start bragging about bedazzling his ears.

    Hopefully he will be picked to succeed little Timmy when Obama has to give Timmy the boot so we can more closely examine a terrorist banker psychopath in all his glory.

  14. Willy H

    Dimon is just another Wall Street trickster desperately looking for their next victim. He talks of regulation as “anti-American” yet he was part of the cabal that shorted their own nation and ultimately betrayed the American people and left the American tax-payer holding the bag.

    I wonder just how far his message with resonate with average Americans, millions unemployed and millions more underemployed post-2008?

    Canada’s banking sector stability is attributable to the fact that that cost of capital is historically higher than American, UK and a few European countries as a result of increased regulation. It’s a a trade-off that has allowed them to weather the 2008 meltdown. This is the crux of regulation argument, better to shave off a little growth for some stability than allow for bubbles and their much more expensive political and economic fall-out.

    Most Canadians and Europeans don’t need to be persuaded by this argument.

    Canada’s housing sector is not going to crash and burn like the American and Irish experience, rather a slow melt over 5-10 years. This is long overdue, but it will likely be delayed by our central bankers love affair with low rates (almost free money.) Yes mortgages are explicitly guaranteed by the federal government, but so what? Even when they aren’t covered, the “too big to fail” argument wins the day and our governments bail them out anyway!

    Never before has the Canadian economy demonstrated so much resilience while their biggest trading partner (the USA) flounders economically. Canada’s current economic condition vis-a-vis the USA is truly unprecedented. Unemployment is lower, health costs are lower, and post-retirement benefits are fully funded.

    Deficits and debt are troublesome at both the federal and provincial level, but unlike the US experience, these law-maker’s have the proper mix of corporate, personal and commodity tax levers to deal with this over the mid to long term.

    Canada’s fastest growing trading partner = China
    Canada’s next free trade agreement = The European Union

    Canada’s mix of commodity wealth, manufacturing (automotive and aviation), combined with a workforce fully covered by medicare and a robust education system bode well for the near to mid-term.

    1. Typing Monkey

      Yes mortgages are explicitly guaranteed by the federal government, but so what? Even when they aren’t covered, the “too big to fail” argument wins the day and our governments bail them out anyway!

      No, you don’t get it–the amount of crap paper held by the “Too Big To Fail” crowd would have been much, much smaller had they not received all that guaranteed funding (ie, CHMC backstop). Basically, their “conservativism” went out the window since 2008. This is a Canadian style repeat of the US’ FNM saga. The US banks are lending to the US government directly. The Canadian banks are lending to the Canadian government via the housing market. Because the consumer is the middleman in Canada’s case, there is (temporarily) money to be spent and therefore better economic numbers.

      But those numbers are beginning to look worse. Unemployment is creeping up. Debt levels are insane. Toronto, which is the county’s main financial center, is going to have some severe issues once a financial crisis hits because of the crazy leverage and high dependency on its financial district (think London, only with a richer Federal government to back it up, if the West allow it).

      Never before has the Canadian economy demonstrated so much resilience while their biggest trading partner (the USA) flounders economically.

      Look at the commodities boom in the 1970s. The problem is that you are comparing two countries that are in different parts of their economic cycles (and you are also comparing Canada to a country that has begun its terminal decline…) For all the criticism of “austerity” on this site, Canada is reaping the benefits of having become fiscally conservative after it lost its AAA rating in the 90s. It is now going in the opposite direction. The intermediate time–where there’s lots of free money and government spending–is of course going to be a party, as indicated by absurdly high home prices and consumer debt levels.

  15. Schofield

    I agree the “No Rules and Don’t Tax Me Because I’m a God Fearing Republican Tea Partyer” is getting rather tedious as well as already contradictory and childish.

  16. Lee

    Chicago hates Dimon. Dimon’s success is laced with irony. When he was head of Bank One all he really wanted was to be CEO of Citigroup, where previously worked before Sandy Weill fired him. But Dimon couldn’t manipulate himself into the Citi job so he merged Bank One with JPM. Dimon failed at achieving his greatest goal. He became the great all-powerful banker because he failed. It was sheer dumb luck. Had he succeeded in fulfilling his life long ambition he would have ended up disgraced and out of the picture. Like Chuck Prince. A damn shame he failed.

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