Tom Ferguson: Senate Banking Chair Calls Jamie Dimon to Testify -– But JP Morgan Chase is His Biggest Contributor!

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By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow at the Roosevelt Institute. Cross posted from Alternet

Holding your breath about the fallout from J. P. Morgan Chase’s derivatives losses? Yesterday, if you believed Politico, you could exhale. Senate Banking Committee Chair Tim Johnson of South Dakota announced his panel would call JP Morgan Chase Chair Jamie Dimon to testify.

It’s good that the watchdog is barking, but we’d all better watch closely to see if it will bite. Here’s what Politico didn’t tell you. Political Money Line’s tabulations of PAC contributions show that securities and financial firms have given more money to Johnson than any other sector in the last three election cycles. In the current cycle, for example, almost two thirds of his $361, 582 in PAC money comes from such firms. In 2008, when he collected over $2 million in PAC contributions, the swag from that quarter amounted to over half a million dollars – and neither figure takes account of numerous individual contributions. Johnson calls his leadership PAC “South Dakota First,” but, not surprisingly, contributions to his campaign committee from New York and other states often run far ahead of receipts from his own state.

Alas, it gets worse. Here’s the real punch line. Which firm is Johnson’s single largest contributor? You guessed it: The Center for Responsive Politics’ count shows that in both the current election cycle and the cycles between 2005-2010, it is JP Morgan Chase.

Don’t bank on the watchdog.

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  1. Amateur Socialist

    “If you can’t take their money, drink their whiskey, screw their women, and vote against ’em anyway, you don’t belong in the legislature” – Jesse Unruh as quoted by the late Molly Ivins

    Days gone by.

  2. Acadiana

    “A politician that is poor is a poor politician.”

    – Carlos Hank Gonzalez, notoriously corrupt former Mayor of Mexico City

  3. R Foreman

    The senate needs to find out just how much more JPM will need from the taxpayer.

    One also has to wonder if this all (the JPM $2 Billion loss) wasn’t staged in order to funnel US taxpayer money to entities (european banks/countries) whose downfall might cause a dominoe downfall among US banks.

      1. Up the Ante

        That did it, cake has been iced.

        For a man who’s supposedly being “investigated” he appears rather nonplussed, as it were.

  4. Teejay

    Say what? JPM intentionally lost $3b in order to prop up
    european banks and countries in order to prevent
    US banks from going under? It was staged. who would’ve
    donbe this funneling?

    1. Yves Smith Post author

      Please improve your conspiracy theories. Hedge funds were mainly the ones on the other side of this trade, including a group in JPM’s investment management unit.

      1. Walter Wit Man

        But isn’t that the beauty of hedge funds? That it’s difficult to find out who really is on the other side of the bet?

        1. Up the Ante

          And didn’t they already telegraph their intention a few years ago to make them into tools of pure utility ?

        2. Mrrunangun

          The Chicago way would work it out so. The big shots at JPM create a little side biz and a couple of insiders “retire” to run it. The big shots at JPM arrange plausible amounts of losses in trades against their side biz. Voila! Cap gain! After all, Fed regulations are crimping bonus payouts, so how is a guy to obtain just compensation within the law. I guess Jamie learned a bit from Billy Daley while he was there. Next yar or the year after the big shots can run the same game. So can every other bankster. Think Holder will prosecute? Those banksters are his once and future clientele. No worries mate, and hundreds of millions in the take. Sounds a lot like the Goodfellas plot doesn’t it?

          1. Up the Ante

            And we have a winner,

            “The Chicago way would work it out so. The big shots at JPM create a little side biz and a couple of insiders “retire” to run it. ”

            Plays like some kind of Retard Drama, where the people who are empowered to prohibit those conspiracies play dumb & oblivious to play startled when accountability time comes. Looting, Inc.

  5. bluntobj

    Brer Rabbit, meet Briar Patch!

    A little public scolding, and “look, we punished him!”

    Soon, these will not be the driods you are looking for…

  6. Lune

    It’s worse than that. Tim Johnson is from South Dakota, the state which first threw out its usury laws in the early 80s in a conscious effort to attract credit card issuers to their state. Ever notice that every credit card bill you get is mailed from either SD or DE?

    So JPM is not just Johnson’s largest contributor, it’s likely one of the largest employers in his state. While former chairman Dodd was frequently derided as the senator from Hedgistan given the high concentration of hedge funds in CT, don’t for a minute assume anyone from SD (or DE like a certain VP…) is less dependent on the financial industry for their state’s economy…

    1. Woodrow Wilson

      “Ever notice that every credit card bill you get is mailed from either SD or DE?” –

      Entities file in Delaware because of their short Statute of Limitations.

      1. Gov'mint Banking

        Ever notice how things really started to go to hell faster than ever before in the 80s? (for some folks)

      2. Lune

        That’s why every corporation in general incorporates in DE (among other business-friendly regulations). But the reason for credit card companies specifically is because DE and SD have no usury laws and very lax credit card regulations in general, and so by HQ’ing your credit card operations there, you can get around a whole bunch of regulations that other states try to impose to protect their residents.

        Check out this link for an interesting history of the Supreme Court decision that started it all:

        1. alex

          Don’t blame the Supremes for this one. Marquette was a simple case of federal law, and the authority to regulate interstate commerce, trumping state law. But there has been nothing to stop congress from passing a federal anti-usury law an any time in the last 34 years.

          1. diptherio

            “But there has been nothing to stop congress from passing a federal anti-usury law…”

            Nothing besides the usual corruption and conflicts of interest. Really, that’s all you need to stop most good ideas.

  7. mac

    Probably this is a way to allow Jamie a platform to tell the world what a good fellow he is.
    Sort of the Senate PR Division of JPM.

  8. Hugh

    I see the hearing unfolding something like this:

    Johnson: I have always believed in your wonderfulcality, Mr. Dimon, but I must admit this has been shaken a bit by recent events, but not so much that a glib explanation and contributions to my PAC won’t fix.

    Dimon: Mistakes were made, by others, but even though I had no way of knowing about any of this until it was too late, I blame myself because that is what CEOs with god complexes do no matter how unfair the criticism. I would just like to add that the problem that I had no part in creating has been fixed and your check is in the mail.

    Johnson: Well then, the photo-op for the rubes having been completed, that about covers everything we need to discuss. Hearing adjourned.

    1. past tense

      Senator- Thank you for coming today.

      Dimon- Fuck you.

      Senator- We are here to talk about JPM, and the losses that have occured over the past few weeks.

      Dimon- I’ve been with your daughter over the last few weeks.

      Senator- Now, now, let’s get back to the point…

      Dimon- Yes, I agree, I’m bored with her…send me the next one. Can someone please call for my jet so I can get the fuck out of here?

      1. Up the Ante

        Senator- Thank you for coming today.

        Dimon- Fuck you [you fukking ingrate].

        Senator- We are here to talk about JPM, and the losses that have occured over the past few weeks.

        Dimon- I’ve been with your daughter over the last few weeks.

        Senator- Now, now, let’s get back to the point…

        Dimon- Then is to become now, is it? I think not, these events Are timestamped.

    2. Up the Ante

      Johnson: .. and if any of my subordinates, my political aides, even breath a word in Jon Corzine’s direction, rest assured Mr. Dimonopoulos Heads Will Roll. Session adjourned.

  9. freedomny

    There won’t be any “pitbull” types bites here, or even growls. More likely the slobering licks from a lab.

  10. KnotRP

    We have to be forward looking!
    [we’ve scorched every bit of ground we’ve covered to date]

    Mittack Obombney for Presidential Banker Puppet in 2012!
    I can’t wait for the “Look Forward” Posters to come out.

    Freedom of Choice, it’s what you want.
    Freedom from Choice, it’s what you’ve got. (Devo)

  11. Crazy Horse

    Barack Obama: Billions for Banksters, Bankruptcy for You

    Mitt Romney: “Let them eat dog meat”

    Jamie Dimon: CEO, Plunge Protection Team “I’ve got the whole world in my hands” ta da

  12. rps

    Hey Dimon, you see that flash of light in the corner of your eye? That’s your career dissipation light. It just went into high gear. JP Morgan will quickly find another wunderkind as the figurehead of credibility of their pirate ship. Obama will follow in his predecessor’s shoes and hand Dimon a Medal of Freedom…..Heck’uva job Dimon

    1. psychohistorian

      The global inherited rich just can’t find good puppets like they use to…..such a shame!

  13. David

    Senator: I am shocked that there is gambling here.
    Dimon: Here is your winnings Senator

  14. Mansoor H. Khan

    The reason JP Morgan does not have to worry too much about losing money is because they are a currency issuer (i.e., issuer of credit money).

    And if they need cash money (reserves) for some reason to settle interbank liabilities there is always the FED ready to deliver the cash to save the world.

    A really huge bank like JPM can create an enormous amount of money without worry and then “invest” it themselves if they cannot find borrowers.

    For more read:

    mansoor h. khan

    1. indio007

      In other news….
      “JP Morgan Chase raises funds to cover losses. Hit’s Control-P on keyboard.”

  15. James Cole

    What is the big deal about JPM losing $3 billion? It has something like $190b shareholders’ equity. This is a pile-on and a distraction from the actual criminality and sucking of the juice out of what’s left of the non-financial economy.

  16. Jack Straw

    “What is the big deal about JPM losing $3 billion?”

    Not defending JPMC. It actually seems like an intentional distraction, something like a “my greatest weakness is that I am just too diligent, and I work too hard” statement in a job interview. The banker version of this might be, “Often, we’re just too honest and public-spirited. We just can’t help caring about other people.”

    Beware relying on anything copped to too easily.

  17. Jackrabbit

    Whats the big deal?

    1. They’re gambling with our money.
    TBTF losses are covered by the taxpayer. TBTF Banks have diversified income so we generally see this only when they all get into trouble at once – like in 2008.

    2. TBTF banks use their gambling winnings to increase their power.
    More campaign contributions; more jobs for relatives of politicians, etc. And more media “buying”.

    3. We don’t know what the true losses were. It seems that they are moving some of the positions to long term portfolios for workout.

    I believe the recognized loss for the current year is expected to be $2B and could be as much as $3B; and the total loss is not expected to be more than $4.5B (when including losses from the positions that are held for longer term workout).

    Given this info, what would be YOUR guesstimate of the total mark-to-market loss? Possibly greater than $10B?

    4. TBTF Banks are systemic institutions – essentially, they are inherently dangerous to the world economy if run improperly.

    a) The losses raise important questions about JPM internal controls; and rightly so. In addition, a commentor on an earlier post on NC raised the issue of accounting fraud (I don’t recall the issue exactly. Maybe they were not using hedge accounting for the CIO office?).

    b) The losses raise important questions about the ability of government to regulate TBTF Banks and hightlight the failure of Dodd Frank reforms/rule-making (which many now regard as bad joke – see Matt Taibbi’s How Wall Street Killed Financial Reform” and other articles/blogs by him and others).

  18. A. G Gelbert

    Now I know where the saying, “Incest is best” came from.

    The only upside to having all these banksters and politician crooks tightly linked is that when it really all comes apart, they all go down together in infamy.

    People forget that all this smoke, mirrors and snake oil ultimately requires the fleecing of the productive members of society (the poor and middle classes) in order to continue. Since the destruction of earning power for the fleeced classes has been so enormous during this iteration of mega fraud, it may be curtains for the elite parasites due to the coming total economic paralysis.

    I predict that within less tha a year, the legal tender laws that support the elite crooks will be unenforceable.

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