Speaking at an event on Wednesday, Jamie Dimon, CEO of JP Morgan, said of Massachusetts Senator Elizabeth Warren (D), “I don’t know if she fully understands the global banking system.”Warren has already offered her retort to this assertion in an April speech. At that time, she noted that finance executives have already argued that those outside the industry don’t understand it. “The problem was never that I didn’t understand what the finance guys were doing,” she said. “The problem was that I understood exactly what the finance guys were doing. I knew it, and they knew it.”
Warren does not come from finance, but she has long been involved in studying the industry. She was a law professor at Harvard for almost 20 years teaching corporate law and has written nine books. She served as chair of the Congressional Oversight Panel that acted as a watchdog for the Treasury Department’s bailout of large banks in 2008, of which JP Morgan, under Dimon’s oversight, was a beneficiary. She was also the person who came up with the idea for what is now the Consumer Financial Protection Bureau.
Dimon, meanwhile, has overseen his bank through some rough times. During the crisis, JP Morgan acquired the failing banks Bear Stearns and Washington Mutual but unloaded most of the banks’ worst assets to the government through the Toxic Asset Relief Program.
The bank has also been involved in numerous legal fights. It was accused of using potentially fraudulent and abusive paperwork to collect credit card debts. It was involved in a scandal over banks manipulating a key interest rate in their favor, accused of acting like a cartel by the European Union. It paid a $100 million fine and had to admit to wrongdoing in violating financial industry rules in the “London Whale” scandal in which one of its traders made a series of bad bets that cost the bank over $6 billion.
And it has also faced many questions over its role in the financial crisis itself. It was sued in 2012 by New York’s attorney general for alleged “widespread fraud” in selling mortgage-backed securities, and in 2013 it reached a $13 billion settlement with the Department of Justice over the same industry abuses. While Dimon complained about that settlement, the terms of the deal mean that it will end up paying far less than that large price tag.
Even so, its legal troubles have been so significant that in 2013, it spent more on those costs than anything else, including compensation for staff.
Sen. Warren has not been shy about critiquing the industry, questioning why the government didn’t decide to break up the biggest banks in 2008 and repeatedly going after regulators for what she sees as leniency in holding the industry accountable for its role in the crisis. Earlier this month, she sent a letter to the chair of the Securities and Exchange Commission arguing its enforcement against Wall Street has been too lax and that financial reform rulemaking is too slow.
Those efforts have garnered her other criticism. In March, Warren Buffett, CEO of Berkshire Hathaway, critiqued her tone when trying to hold the financial industry accountable. “I think that she would do better if she was less angry and demonized less,” he said, adding, “it does not help when you demonize or get too violent with the people you’re talking to.” Women are much more likely to be called emotional and get criticism focused on their personalities, rather than their ideas.
Original Article
Source: thinkprogress.org/
Author: BRYCE COVERT
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