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January 29, 2015

Opinion: Why J.P. Morgan’s Dimon is wrong about what’s bedeviling banks

“Say this for Jamie Dimon: The man’s got cojones.

“J.P. Morgan & Chase’s JPM, chief executive officer is taking a well-deserved roasting for complaining Wednesday that “banks are under assault” from regulators, who nastily want them to make good on old misfeasance, while meanly insisting they raise ever-more capital so the 2008 credit crash and near-depression won’t recur. Asked for details, Dimon responded: “Are you kidding?”

“Poor baby. He’d be way more convincing if J.P. Morgan’s press office hadn’t been unable to produce a list I requested of all the legal settlements the nation’s biggest bank has been forced to enter in recent years. Neither could Better Markets, a Washington-based consumer watchdog that bedevils the too-big-to-fail set. From enabling Bernie Madoff to manipulating energy markets to defrauding credit-card customers, there are just too darn many scandals for either side to count. Better Markets once tried to make an intern compile a list but gave up — there were so many, at J.P. Morgan and elsewhere, they decided it would take a full-timer, President Dennis Kelleher said.

“So, let’s try this as a first principle for post-crash banks: If all lib’rul horses and all P.R. men can’t figure out how many problems you’ve caused, take my sainted late mother’s advice and “shaddap.” That’s “shut up” in Jersey City.

“If the too-big-to-fail banks didn’t crash the economy and almost cause a second Great Depression, they’d still be in the land of no regulation,’’ Kelleher said. “If a regular person did a tenth of what J.P. Morgan did, they’d be in jail.’’

“Now, I haven’t even mentioned any of the mortgage issues J.P. Morgan inherited by taking over Bear Stearns and Washington Mutual in 2008. Or the fact that J.P. Morgan, Citigroup and Bank of America all tanked after reporting fourth-quarter earnings this week, complicated in J.P. Morgan’s case by yet another $1 billion write-off for a settlement with foreign-exchange regulators as well as a revenue miss.

“The last time I tried to put all the J.P. Morgan legal numbers together was in 2013, and I got to $36.7 billion in settlements and reserves for actual and potential legal expenses since the financial crisis. They have kept coming since, including $1.1 billion in the fourth quarter. J.P. Morgan did make $21.8 billion last year, up more than 20% from 2013. But growth is sluggish, interest rates are low, and the bank’s overhead rose as a percentage of revenue even though it has laid off tens of thousands of people since 2011, CLSA analyst Mike Mayo said.”

***

Read the full MarketWatch article by Tim Mullaney here.

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