JPMorgan Chase CEO and Chairman Jamie Dimon and President Obama were once friends, but the three major networks were quick to forget this once JPMorgan Chase lost more than $2 billion. Earlier this year, Dimon was one of only three CEOs who had special access to the White House and Treasury Secretary Geithner, according to Associated Press.
Now the Obama Administration and the media have made Dimon into a poster child for why a lack of government control in the banking sector is a bad thing, while at the same time they have distanced Obama from the controversy surrounding his former friend. Dimon used to be regarded, as Politico so aptly put it, as a “blunder-free Master of the Universe.” He was also referred to as the president’s “favorite banker” three separate times by The New York Times. Dimon will be testifying before the Senate Banking Committee regarding the JPMorgan Chase debacle on June 13.
Between May 12, when news of the loss first came out, and May 22, ABC, CBS and NBC made no mention of the relationship between Dimon and the current administration. However, in 2011, The New York Times, Los Angeles Times and Wall Street Journal all repeatedly mentioned Dimon’s relationship to the Obama administration and Geithner. Former Chief of Staff under Obama, Bill Daley, also a former JPMorgan executive, agreed he was friends with Dimon in a New York Times interview in October 2011, while he was serving as Chief of Staff.
According to an Oct. 8, 2009, AP story Dimon and Geithner had established a relationship during Geithner’s time as president of the Federal Reserve Bank of New York. A CNBC writer speculated about Geithner’s response in a PBS interview, when he was asked if Dimon should step down from the board of the Federal Reserve Bank. While Giethner did not say yes, he “did not categorically dismiss the notion” either and John Carney of CNBC wrote that it was “being interpreted by some very smart people as a signal that Geithner wants Dimon off the Fed board.”
JPMorgan Chase’s financial loss comes just two months before a new set of government regulations known as “the Volcker Rule” take effect. Since then, the Obama Administration has been using Dimon’s trading losses to advocate for these new regulations. The Volcker rule would place restrictions on banks and other financial institutions that would limit certain types of speculative trading. Proponents of the rule say it adds a level of security by preventing institutions from making certain risky ventures with their clients’ money. But the media seem unable to recall that the poster child used to be Obama’s friend.
Dimon has been an outspoken opponent of the Volker Rule. He once quipped in an interview with Fox Business Feb. 13 that the author of the rule, Paul Volcker, “by his own admission, has said that he doesn’t understand capital markets.” Dimon said that his losses came at a “very unfortunate, inopportune time,” since it will provide lawmakers with a justification for new regulations, according to a Wall Street Journal article from May 14.
The Washington Post reported on May 16 that Dimon said, while he agreed with the intent of the rule, he thinks it is important to be able to hedge risks. The Obama Administration has argued that since JPMorgan Chase and Dimon could make such a mistake, regulations need to be put in place to prevent similar losses in smaller banks with less capable CEOs that may not be able to recover from such a hit. The president himself said in an interview on ABC’s “The View” “JPMorgan is one of the best managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we’ve got. And they still lost $2 billion and counting … this is why we passed Wall Street reform.” And so Dimon’s former friends used his financial blunder as a rallying call for the very regulations that he fought so hard against.