Dimon Plays Humpty Dumpty to Congress


-Lewis Carroll, Alice in Wonderland



Let’s give a few examples of Dimon’s crude propaganda efforts. I wish I had a transcript; I’m working from rough notes, and some of the memorable howlers were quick asides.

At one point, Dimon tried calling making loans proprietary. This was an effort to insinuate that the Volcker Rule’s efforts to ban proprietary trading would interfere with core banking businesses.

Brad Sherman presented Dimon with the results of an IMF study (via Bloomberg) that showed that JP Morgan had lower funding costs due to its implicit government guarantee. Dimon responded by arguing that single A industrial companies pay less for funds than his AA rated bank. Huh? Industrial company funding costs are completely irrelevant and Dimon knows this. It’s a “blow smoke” answer.

McHenry argued that the Dodd Frank orderly liquidation authority preserved too big to fail. I happen to agree because I’ve gotten estimates that 30% to 50% of JP Morgan’s derivatives contracts are under UK law, and therefore the FDIC could not override their termination or cross default clauses if it tried putting the parent into liquidation and keeping the subsidiaries going. Since derivatives are booked in the depositary, it’s hard to see how the FDIC can stop derivatives not under US law being terminated or subject to higher haircuts as a result of a parent company resolution, and that not producing a risk of a run on the depositary (which is what the OLA was meant to avoid). McHenry then asked for Dimon to discuss the difference between OLA and bankruptcy. There’s a considerable difference, but Dimon dissed McHenry (whose poorly worded question gave Dimon too much rope) by telling him he saw them as the same.

Dimon (annoyingly) kept claiming the failed trade was a hedge. That’s only because Dimon uses a wildly personal definition of what a hedge is: something to protect you from Bad Things Happening. No, that is either a reserve or insurance. A hedge is a position taken to reduce or limit losses in a position you already have. And he kept promoting the dubious idea that portfolio hedging should include bets against systemic risks (Dimon kept presenting hedging against systemic risk as if it was a unitary phenomenon).

Dimon kept maintaining that because his organization was slow to pick up on how risky the trade was, that regulators couldn’t be expected to have caught it either. That’s barmy. As we stressed, this trade violated a really basic premise of trading desk management: never take a position that is too large for you to unwind quickly (shorter: never get too big relative to that market). Lisa Pollack of FT Alphaville (who wrote extensively that something WAS amiss before JPM woke up to it) demonstrates today that regulators could have seen something suspicious was going on and have tracked it back to JP Morgan from DTCC reports.

Nevertheless, there were some interesting themes throughout the day: jousting over Dimon’s opposition to regulation, Dimon’s insistence that US banks needed the right to compete against those evil foreign banks who got better treatment (this was actually not true when the trade was being put on; Eurobanks were subject to what is referred to as Basel 2.5, meaning a tightening in capital standards as part of the gradual implementation of Basel III. JP Morgan and other US banks are actually arbing the fact that foreign branches, which fall under US regs, are not effectively overseen by US supervisors. The UK’s FSA has argued they’d get better oversight if they were made into subsidiaries, which would put them under the purview of foreign regulators).

But the most important difference of views was on whether banks were serving the real economy or themselves. Some even dared to talk about banking as a utility, and Dimon conceded that if JP Morgan were regulated it could would not have lost money in the CIO trade. Several Congressmen took up the theme, but the most persuasive statement came from Gary Ackerman:



Ackerman: That been my experience in investing.






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  1. Garrett Pace


    Okay, do you mean that his dishonesty was obvious to even the financially uninitiated, or do you mean that even those with a little knowledge can suss out the lies?

    To me, bupkis = zero.

  2. 4D

    If anyone knows he knows that the game is up and that Ben is pushing on a string…with a piece of string, so they have to up the ante with these desperate “hedges” to try and make a buck.

    Having followed this risky path the markets will eventually level him too.

  3. HKJonus

    In the end the bankers always get their guys on the inside of the regulatory and administrative agencies that over see our financial markets. Its so glaring its blinding, and in that way its invisible. It seems being CEO of Goldman Sacks is the precurser to being Treasury Secretary. We get the government we deserve and the banks get the government they pay for.

    1. Carla

      Excuse me, the banks get the government they pay for and “we” are not even part of the equation.

    1. Yves Smith Post author

      Stroopy is Australian/Commonwealth slang for what we might call “copping a ‘tude” but it is a little more tense and tight jawed than that. “Copping a ‘tude” is more overtly argumentative.

      Per both comments re my use of “bupkis” I’ve often heard it used to mean a miniscule amount, as opposed to zero. But maybe the people I know are taking liberties.

      1. Mark P.

        It’s stroppy in the UK and the commonwealth, I know. (I grew up in London and have a UK passport.)

        Maybe ‘stroopy’ was a variant in Australia when you were there?

  4. stripes

    What these banks hold is worthless paper. They are so arrogant and drunk with power that they are repackaging it and selling it back to themselves disguised as hedge funds with depositors money and gambling on it to blow it up…! Time for the FDIC to take the Tnt away from the maniacs by auditing them.

      1. stripes

        Max Keiser also said it well, take fraud out of the equation and they are out of business.

  5. Foppe

    Just for the heck of it.. CNBC:

    Bill Smith, President, SAM Advisors says Jamie Dimon was ‘exceptional’ at the Senate Committee hearing because his replies were direct and transparent.

  6. gerold k.b. weber


    A great line, and thx for the thought provoking post. The public discourse on the discrimination between saving, investing, hedging, speculating, betting, and gambling, and their respective social value has not fully run its course. We need more of it.

    Given that the future as a space of expectations has been massively financialized, financial land mines were deposited which will explode automatically when future transforms into present. Modern financial instruments are not only ‘weapons of mass destructions’ (Warren Buffett), but weapons which are already prepared to explode, with devastating consequences for the losing players.

    As a society we have to come to grips how to handle this detonations, how much contagion emanating from the losers we should allow, and if we really like to share losses and let the winners get away scot-free. Or if we should just ban the deposition of those land mines.

  7. vlade

    Hmm… While I agree with Ackerman in principle (there’s no real difference between investing and gambling, and we even have “house” – or rather Houses), I believe he could have made his point better – and to an extent, he run a risk that Dimon could have turned the question around to his benefit.

    Hedging, after all, is a very common activity in quite a few real industries (and Dimon could have argued that the bank acts as a clearing house/market between buyers and sellers of (some) risk, w/o taking any other than credit risk, which should be the primary business of a bank).

  8. bmeisen

    Why can’t they cede ground? Because their egos are so fragile that admitting the truth would drive condemn them to the Bowery? And why do so many American executives remain silent? TBTF enjoy undeserved privileges, like the taxpayer covers their asses. Why don’t executives in other industries either demand similar advantages or collectively call a duck a duck?

    1. Jack M. Hoff

      Probably because they have that guarantee. Did you ever read the list of wh received TARP money? Harley Davidson for one was on it. Many many more were.

  9. Conscience of a Conservative

    This all goes back to needing to bring back Glass Stegall and making sure shareholders and bond holders face the full liability for any liabilities engaged in by a bank not engaged in a pure commercial enterprise(e.g. no investment banking and trading). While there’s nothing wrong with trading, or proprietary trading in themselves that changes when a bank has tax-payer subsdized funding costs or an implied or actual back-stop. The JP Morgan situtation once again shows that regulators will always be a day , week or month behind and it’s ludicrous that regulators should be more on top of this than JP Morgan’s own people. Not only should Glass Stegall be brought back, but double liability bank stock and more force subordinate debt by banks.

    1. alex

      “bring back Glass Stegall”

      And what evidence do you have that it would work, decades of real world success? So what. Jamie and friends tell us that it isn’t necessary, and they offer much bigger bribes (oops, I mean campaign contributions) than the pro-Glass-Steagall folks.

  10. Hugh

    Banksters, like Dimon, are the great villains of our times. They are our Stalins and Hitlers, Berias and Himmlers. They have the blood of tens of thousands of Americans on their hands each year. They have ruined the lives of tens of millions and have damaged the lives of hundreds of millions.

    I am reminded of something Hannah Arendt wrote:

    The world at large, on the other side, usually gets its first glimpse of a totalitarian movement through its front organizations. The sympathizers, who are to all appearances still innocuous fellow-citizens in a nontotalitarian society, can hardly be called single-minded fanatics; through them, the movements make their fantastic lies more generally acceptable, can spread their propaganda in milder, more respectable forms, until the whole atmosphere is poisoned with totalitarian elements which are hardly recognizable as such but appear to be normal political reactions or opinions.

    [Origins of Totalitarianism]

    Substitute kleptocracy for totalitarian movement and elites for front organizations. And you have the dynamic we see today. We look at the Romneys, Obamas, and Dimons of the world, and we continue to view them as part of the normal world. In the view of the normal world, they can at most be foolish, mistaken, incompetent. Viewing them as normal effectively blinds us to their criminality and downright viciousness. We must, like Arendt, peel back the layers of feigned normalcy to see the festering reality and putrid pathology beneath. When we can begin to see these luminaries of our elites on the level of say a particularly sick and twisted serial killer, then and only then will we begin to see them as they really are. Every shred and trapping of legitimacy, every benefit of the doubt we accord them is just so much cover for them to continue their looting and destruction.

    1. Up the Ante

      ” .. the great villains of our times. ”

      Like these guys ?,
      Michael Duke
      Lee Scott
      David Glass
      Sam Walton

      “Viewing them as normal effectively blinds us to their criminality and downright viciousness. ”

      Probably exactly Dimon’s view of “these guys”, and what could be greater empowerment of Dimon’s looting ?

      Iconic Villains sold to you.

    2. Warren Celli

      Excellent comment, right on, especially this;


      The “putrid pathology” has a name — it is called Xtrevilism. It also has many symptoms, one of which is to spend the wealth extracted from its victims to convince those very same victims of their normalcy, and worse, to convince the victims to admire them and want to be like them. That is the contagion in the disease. Many foolishly fall for it. They are not normal. Aspiring to corruptly gained wealth is not normal. Terror Tuesdays in the White House picking drone victims is not normal, it is as you say twisted serial killing. The Xtrevilists are self anointed elite aberrant diseased individuals, their core deception is the Noble Lie.

      The disease is a mutation of Evilism, hence Dimon is accused of speaking Orwellian Baloneyish by the practitioners of Evilism who have their noses out of joint as they are having their old fashioned clocks cleaned. Vanilla Greed for Profit now gets its comeuppance from its bastardly spawn; Pernicious Greed for Control and Destruction.


      Deception is the strongest political force on the planet.

      1. LeonovaBalletRusse

        “Aspiring to corruptly gained wealth is not normal.” It became “new normal” and was reflected in the persona of Gordon Gekko in “Wall Street.” The “criminogenic environment” in business, banking, brokerage, was in place. Any schmuck could earn a living as a “working stiff” without crime, but the real “winners” had Gordon Gekko, crooked oilmen (“Dallas”) and Tony Soprano for their models. In America, only the “made man” was King, with power to get “underlings” to “blow me” and the money to burn in the company of hookers, with tons of Cristal, cocaine, and heroine (your choice). These phallic champions were “heroes” to the 1% DNA churned from Elite Universities into the maw of Wall Street. Churn and burn praxis was exalted through the “miracle of technology.” The Whore House always wins. This is America.

    3. SR6719


      Excellent comment, I agree with Warren Celli.

      However it’s not easy to remove every shred and trapping of legitimacy from these scum when their corporate lackeys in the media speak to the American public as if they were obedient children, always eager to do whatever they’re told.

      Or when the public is treated by the media as if they were retarded children who always believe whatever nonsense or gibberesh they’re told, no matter how ludicrous, even if they were told to believe the exact opposite just the day before.

      1. LeonovaBalletRusse

        “Manufacturing Consent” — when, where, and why:

        “The Century of the Self” – all parts – on You Tube (BBC Documentary, so the Tavistock Institute is not mentioned).

  11. Goin' South


    I tend to agree with you that the day of accounting will come, but that day will only arrive when the Dimons and Blankfeins have brought down the system entirely through their own arrogance and greed combined with the internal contradictions of Capitalism.

    Until that happens, the Dimons and Blankfeins will be buying the historians to write the kind of history that paints them as heroic geniuses.

  12. Hugo Stiglitz

    This is probably not a solution for long term unemployment, but I see real potential for guillotine manufacturing in the US.

    1. SR6719

      “Five or six hundred [aristocratic] heads lopped off would have assured you repose and happiness; a false humanity has restrained your arm and suspended your blows; it will cost the lives of millions of your brothers.” – Jean Paul Marat

      But Americans would prefer to see 500 or 600 people loot 99.99 percent of the wealth, while they live in cardboard boxes and fight over scraps of food in garbage bins.

      Then finally when we’re reduced to eating the last meat off the last mangy dog, one or two brave voices will dare to ask the unthinkable: Should we implement the “Volcker Rule”, or will that impose too much of a hardship on the big banks?

  13. Nowhuffo

    Can anyone tell me why Jamie Dimon released any info on the banks loss in the first place? Was he trying to get in front of the story?

  14. Skeptical

    Thanks for identifying Dimon’s mendacity for what it is.

    We live in the age of The Big Lie, which prevails because no one in MSM dares to say that someone like Dimon was dishonest.

  15. brazza

    Perhaps I’m too old, or maybe I missed something important in my personal development along the way … When I grew up I was taught gambling was akin to mental illness, that money only had value if it was earned. I should specify that I grew up near Venice, once a city of enormous opulence and wealth, and whose decay included a spell in the 17th century when its citizenry dissipated approximately half its nominal worth … gambling. Perhaps the ghosts of lessons passed meant my upbringing was laden with values that don’t seem to pertain to our current era.

    Having said that, when I saw Dimon’s hearings and perceived, as Yves points out, the pervasive arrogance and hubris that permeates his persona … I would have liked my mother to slap him one sharply across the ear, one of those that leave red finger marks on the cheek. The image I had was of a spoiled 8-12 year-old without boundaries, who has perfectly learned how to manipulate his parents, through a mix of subtle blackmail, and bravado.

  16. JTFaraday

    “Dimon and his peers are unabashedly out for what is best for banks”

    But they’re not out for what’s best for “the banks.” They’re endangering “the banks” in hot pursuit of a payout.

  17. John

    How many times yesterday did Jamie bring up “getting together” and “fixing” mortgages?

    Enough times to tell us that we are going to shell out a lot more money to the banks.

    1. LeonovaBalletRusse

      LS, thanks for the link. Says it all, in a nutshell. Any fool can understand it.

      But here’s the problem: Americans do not want to understand, they do not want to know. They never are prepared to face harsh reality until their own heads have been buried in the dunghill, and even then some resist knowing.

    1. Warren Celli

      It is a common ploy of any corrupt government of any size (local, state, federal, global banking cartel, etc.) to withhold regulation to create intentional chaos so as to always be able to step in with the more repressive fix that benefits the crooks who withheld the law enforcement in the first place.

      In this case — in the overall global moral crisis and the Dimon subject at hand — I believe that no fix is intended and the chaos is the end goal. No remedial measures within the system will be effective. Any give backs will be controlled and token as the aberrant self anointed elite work in concert globally. Birds of a feather do flock together.

      Overcoming the “I want to believe factor!” is the stumbling block.

      The Alpha article comments are almost reminiscent of those made early on about the 9/11 commission and reveal that folks are still in the “I want to believe zone!”.

      Slaps self on forehead and says “Gee, I could have been organizing election boycotts!”

      Deception is the strongest political force on the planet.

      1. Susan the other

        Politics follows money, not the other way around. If the Banksters were poor and humble servants, the politicians would never give them any time at all. So why not take away their market? Money needs to be put in its place. Like any other rogue commodity. Oil. Drugs. Political fatuousness. Let’s do this: Let’s take the stewardship of our social well-being back by making finance a more complex and less fragile system. An organic system which will self-regulate. Take away all the TBTF charters since they have busted them themselves a million times. Banking and finance should be opened up, crowd sourced, and done democratically. Put your money where your values are without a creepy dishonest middle man. The uses of money should be clearly defined and regulated under a strict public office controlled in part by referendum. And then there will be no need to regulate the sleazeball banksters because their glittering industry will be in ruins overnight. Take away the market. Take it back.

      2. LeonovaBalletRusse

        WC, aren’t you describing The Shock Doctrine of “disaster capitalism” at work?

      3. Warren Celli

        Susan the other — I believe all of life is politics. Follow the money and you will locate the Xtrevilism. You are right on about banking, it needs to be put in the hands of the people in utility form and not just the aberrant few. I am a direct democracy advocate.

        LeonovaBalletRusse — No, I take my cues from a much wider framework, am much more human nature based, and I believe that capitalism is non existent for starters. I don’t see “shocks” as much as I see natural growth spurts, in humans and in ‘nature’, with some more rapidly manifested than others. Cycles are deceptions.

        Deception is the strongest political force on the planet.

  18. readerOfTeaLeaves


    Yes, it’s as if the capital markets and finance have become feral.
    They operate according to Ferengi Rules, by Ferengis who slaver over HFT strategies and blame the rest of us for the murder of the Golden Goose.

  19. MichaelC

    Dimon’s sloppy/dishonest demeanor may be due to the fact he wasn’t sworn in, so perjury wasn’t an issue, and he had no fear that the few lips that weren’t planted on his ass were just making noise and he responded in kind. He was bored out of his skull I think.

    But I do think (and hope) he miscalculated and revealed more than he intended to. He may be right that he won’t be held accountable in any meaningful way by the regulators, but he pretty much admitted that the CIO was his baby, and he ran it as he pleased, and the internal controls sucked/didn’t exist so if a regulator decides to grow a spine in the next few weeks he may come to regret his glib performance. Or if his board decides that he went too far and the internal investigation backfires on him, he may need to worry. The bodies he threw under the bus were well paid and took theirs for the team. Once he books a nice writeoff in 2Q who is going to have the balls to go after him? The regulators(?) in an election year (?)!

    And if he’s positioned JPM against a Euro collapse he’ll be a hero again.


    1. curlydan

      Exactly! When you’re not sworn in (hello? you’re testifying before Congress), you can be really loose. Maybe that does make Dimon smarter than Blankfein.

      1. Valissa

        Yeah, I know, I read that as a kid. One of the many cartoons I previewed before selecting these was the one showing the quote this post started out with.

        It is my habit at this blog to post cartoons based on my own whimsical and often tangential fancies. Perhaps you are new here?

    1. LeonovaBalletRusse

      LL, very important link, and the most plausible reason Dimon is “Untouchable.” Many leads to this piece are out and about.

    2. Ms G

      Very important indeed and thank you.

      What mechanism exists to force disclosure on who is the counterparty? If it’s the US Gov, as the article suggests, what exactly are the odds that the half dozen US Gov agencies supposedly “investigating” are busy covering this up rather than bringing it to light?

      Invoking the Giant Squid metaphor (for its broader meanings beyond just GS and here for equally squiddish JPM), a squid’s tentacles by definition do not attack or strangle each other, only 3d parties . . .

  20. Jim A.

    It’s no surprise that he thinks that regulators could never have prevented problems. There is a widespread conviction among banksters that regulators are dumb: After all, if they were smart, they’d work for us and make real money,” is how their thinkign goes.

  21. mannfm11

    The Senate hearings were so bad, I had to turn it off. Corker was literally giving Dimon a blow job. Then I hear Maria Bartaroma crying about them questioning Dimon about risking his companies money. Well, lets see how well JPM can fund itself without the implied US government guarantees? Bet they would be broke by the end of the month, minimum.

    Just watch the fix going on in Europe. The bailouts aren’t of countries, but of banking systems. The solution is to continually pull more and more of us under a fascist banker umbrella so there can be less cross border questioning of the peonage. Tin hat theory is upon us as fact.

    1. Jack M. Hoff

      Mann says; “Tin hat theory is upon us as fact”

      That’s for sure Barry. The thing is, that ‘tin’ has been solider than all the gold plated bullshit thats came from Washington DC for 35 fucking years.

  22. William Neil


    I wonder what you make out of Jim Willie’s complex web of explanations on JP Morgan’s famous losses, that the “trigger has been pulled” on the interest rate swap mechanisms that are supporting the Fed’s zero rate interest policy…which is great for banks but can’t last forever; Willie gives a more ominious twist to Krugman’s repeated references to how good this low borrowing cost is for Treasuries…and building the missing Keynesian demand. Willie is saying there is a run on by “the East” to withdraw gold from Western banks as the backing for new, and perhaps multiple international currencies…and yes, I am aware that Willie’s macro interpretation is a “conservative” one built on, as I perceive it, the Fed-Fiat’s currency dangers…and it also gets into goldbug territory…in essence, a catastrophe theory from the Right that the left can share in more than a little because the key Wall Street banks are alleged to be in cahoots with the Federal Reserve to keep dollar dominance in place…

    here’s the link to the long version from Willie:


    I would think it is worth everyone’s while to have Krugman take a crack at this…or perhaps you Yves…right or wrong, Willie is trying to get at deeper causes in JP Morgan’s positions and the seeming dissembling of Mr. Dimon.


  23. William Neil

    And let me add just another assumption behind Willie’s complex web of causation and collapse which I assign to his Right economic spectrum view: the Western banks are tottering on the brink, illiquid and insolvent except for the zero interest rate policy by the Fed, but both their debts and the soverign debts in Europe and the US can’t survive the invevitable rise in rates to even one percent, which would end the bank’s carry trade. I say this is a conservative view of the world, independent now of the details of flows in the crisis because it does not believe in the power of central bank currency/fiat printing and the willingness of those on the left – say Krugman and James Galbraith, to have much greater tolerance for large sovereign debts. Independent of what one thinks of Willie – and I’m agnostic because I don’t have a long book on him – the questions he raises ought to bring Krugman down a bit from the high horse, and maybe William Greider could weigh in also…Willie is poking into the deepest darkest recesses of what has gone wrong…and deserves a critical thrashing – or credit for a least probing what must be probed.

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