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Jaime Dimon...lies to Congress?

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Aristophanes Posted: Thu, Jun 14 2012 2:09 AM

First, so you keep reading, the title is facetious.  This is an article from the examiner about Jamie Dimon's testimony "courtesy appearance" in front of the Senate Banking Committee.  It seems absurd in the first place that a CEO is testifying at a Committee detailing just why exactly the private organization lost so much money.  JP Morgan has a little over $2 trillion in capitalization.  A fact that Dimon dances around in only complimentary terms, but never states outright.  Their tier capitals are all far above government standards (because they got so much credit from the FED, but nevertheless...)

The term "hedging" is widely misunderstood. Most take it to mean a trade made to eliminate risk, when in practice hedging has the effect of diversifying a portfolio of investments, often using leverage to do so.

Prima facie. 

But, really, there is no difference.  You 'attempt to reduce risk by diversifying your portfolio'.  It's really the same thing.  They are just not using the absolute term "elimination."  Using leverage actually would make this worse if one was risk averse.  The author might mean to say 'they trade direct risk for indirect risk in an attempt to make even more money from the initial risk', no?

Mr. Dimon's brief response about the need for fewer regulations which are enforced rather that a myriad of regulators which lack expertise and authority was a brilliant appeal to common sense which mostly fell on deaf ears.

Okay.

As the largest bank on the planet and a Treasury Primary Dealer, JPMorgan may be one of the largest direct and indirect purchasers of US Bond issues. For the most part, the Senators were kind to their biggest customer.

Most of the Senators, while well intentioned, are absolutely clueless about the inner workings of a modern banking entity. Which begs the question, what qualifies them to regulate one?

Okay... If you watch the testimony it becomes painfully apparent that the so called "Senate Banking Committee" is not interested in anything but trying to get Dimon in trouble and to demonize the bank.  They want a "them-friendly" sound byte.  (I am not one to usually stick up for them, but since Rand is compromising, so will I, eh?)  They, over and over, ask the same question...

"Mr. Dimon.  Mr. Dimon, can you explain further...umm, the same thing you just spoke at length about?  I don't get it and I won't get it, but I need you to talk yourself into a stupor so I can look like I am doing my "job."  Now, again, what do you mean by synathentic credit portfolio...?  And mind you, do not feel obliged to reveal any proprietary trading strategies.  Just what went wrong?"

Mr. Dimon places little faith in financial models, which at best are a reflection of the immediate past and generally useless for future decision making.

Okay, why have I not heard Jamie Dimon say these things before?  He sounds like Peter Schiff.  He doesn't bash the FED, for pretty transparent reasons, but I'll say it...he sounds a little bit like an Austrian minded investor.

Let's cut out the middleman, J.P Morgan 2012!!

 

"The Fed does not make predictions. It makes forecasts..." - Mustang19
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Wheylous replied on Thu, Jun 14 2012 3:33 AM

Getting how the system works doesn't make you eligible to run it. Even worse - he knows how to do us in better :P

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