Tell Jamie Dimon: “Leave the Fed” and Other Bank News

JP Morgan Chase chief Jamie Dimon has been one of the leading opponents of strong bank regulations but still sits on the board of one of his bank's chief regulators-- the New York Fed --despite his bank's recent gambling losses. Help us tell Jamie: it's time to go. 

JP Morgan Chase chief Jamie Dimon (photo) has been one of the leading opponents of strong bank regulations but still sits on the board of one of his bank’s chief regulators– the New York Fed — despite his bank’s recent gambling losses which probably would have been limited by a strong Volcker rule. Help us tell Jamie Dimon: it’s time to go (action). Resign from the New York Fed board. Your conflicts are not possible or presumed but real.

In his New York Times Economix column “Will there be a meaningful Volcker rule” today, MIT professor Simon Johnson explores some of the arguments that the banks and their supporters in the U.S. Senate are using to browbeat regulators into delaying and gutting this important Wall Street Reform and Consumer Protection Act provision that — if had already been implemented as envisioned — would have likely minimized JP Morgan’s shocking $3 billion and up gambling losses. Simon Johnson dismisses bank arguments here:

“Artificially pumping up market liquidity through too-big-to-fail subsidies to market makers is not a good idea. Along the same lines, allowing big banks to speculate wildly under the guise of hedging their risks is not a good idea. With more details now surfacing about how big risks were taken and mismanaged at JPMorgan Chase, this argument is currently being played down by the industry.”

The structure of the regional Federal Reserve banks — basically run by the bankers they regulate — is a classic example of the foxes guarding the chicken coop. Let’s take a first step toward reform by asking one of the foxes to leave.

In other important financial news, a House Appropriations subcommittee voted yesterday to take away the CFPB’s independent funding. This is the latest in a series of House actions to make the CFPB into a lapdog, not a watchdog. So far, the Senate has rejected them all. More from my previous blog on the issue. Note that the latest bill does not also specifically cap CFPB funding, but simply places it under the politicized Appropriations process — so banks, payday lenders, credit bureaus and others can ask Congress to cap it or otherwise block its efforts to make markets work, beginning in FY 2014. CFPB would become the only bank regulator without independent funding.

Also yesterday, a House Financial Services subcommittee held a hearing on a proposal to make it easier for credit card companies and department stores to issue credit to people who do not have the means to repay. U.S. PIRG and other members of Americans for Financial Reform believe that the current law — the Credit CARD Act of 2009 — should not be changed. The department stores, which seek unfettered ability to give out instant credit at the store’s front door without verifying ability to pay, are among those pushing changes very, very hard and have gained some support, including from a group whose members include “stay-at-home-moms.”  But as our colleague and Truth In Lending expert Chi Chi Wu of the National Consumer Law Center told National Journal:

“You don’t want to give credit to someone who can’t afford it. Unfortunately, divorce and dissolution of households does occur. The spouse who either doesn’t have income or has lesser income may find themselves in the situation where they have incurred debt and don’t have ability to repay.”

Stay tuned. The CFPB also has an inquiry into this issue. Shouldn’t Congress at least wait to hear from the experts?


Ed Mierzwinski

Senior Director, Federal Consumer Program, PIRG

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

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