Why Should Jamie Dimon Testify? Ask Fellow Wall St CEOsVW Staff
Jamie Dimon, CEO of JPMorgan Chase & Co. (NYSE:JPM) will be testifying before the Senate Banking Committee on Wednesday to discuss the specifics of the bank’s $2 billion trading loss. Some of Dimon’s peers simply do not understand why Dimon is being called to testify before the Senate.
Stephen A. Schwarzman, CEO of The Blackstone Group L.P. (NYSE:BX) says, “Occasional losses are inevitable” and “Publicly excoriating JPMorgan serves no purpose except to reduce people’s confidence in the financial system”, reports Bloomberg.
This highly controversial trade has lopped $27 billion off of JP Morgan’s market cap since the loss was first announced on May 10th. The government is really trying to get to the bottom of this as five federal probes and two Senate hearings have been harassing Dimon. The government has also been debating on whether or not to introduce new regulation that will help cut out risky, large bets such as the one made by the London Whale that cost the bank up to $5 billion.
Many business professionals believe the whole ordeal has been blown out of proposition. And it has but its not so much as the trade that is the real problem, the real problem was that people thought this wouldn’t happen to JP Morgan. The fact of the matter is that JP Morgan made an error and the loss doesn’t even put a significant dent in the bank’s overall earnings.
JP Morgan has already taken the necessary steps of firing all those who were involved or failed to do their job properly. The only thing this Senate hearing is going to accomplish is the breeding of fear. The government could be worried after this testimony which could lead the way to new regulation which is not needed. More regulation would hurt more than help, especially in this soft period of economic growth. It is already hard for banks to try to get back on solid footing after 2008 that they do not need extra laws to hinder an already difficult task.
The bottom line is that Dimon’s testimony is overblown. The government, understandably, is worried about the return of bank failures which would call for bailouts. The US government is already spending too much and we simply can not afford another round of bailouts for the banks. That being said, more laws on the banks could put too much stress on the institution, causing it to ultimately fail.