Jamie Dimon, the CEO of Too Big To Fail JPMorgan Chase, has been whining about the fact that sensible people loathe him and his ilk. You’d think a guy who made $20.8 million in 2010 plus $17 more million for the previous year might be able to withstand a bit of loathing. But you would be disappointed. Lately he’s started bitching about the terrible possibility that someone might interfere with his Galtian right to make all the money in the world, and cajoling us with what the media seem to think is charm and/or brilliance. The issues include the amount of reserves Too Big To Fail banks like his have to keep, regulation of derivatives, and debit card fees.
If you set the reserves level too high, he says, you “…greatly diminish growth”. If you let European banks use different calculations, “you’re pretty much putting the nail in our coffin for big American banks.”
Regulators are proposing to require collateral for derivatives.
But the idea of adding collateral would in Dimon’s words “damage America.” And instead of the derivatives business going away it would just move away. He cited as an example the possibility that Caterpillar would simply move its derivatives to Singapore.
On regulating debit card fees:
Mr. Dimon … called it “basic price fixing at its worst”.
“It basically penalizes us for having debit cards,” he said. “I think it was very unfairly done in the middle of the night with no facts and analysis whatsoever. This is not the way legislation should be done.”
That is standard practice for the Financial Elites: they promise to wreak vengeance on the US economy if they don’t get their own way, which means the unfettered ability to suck money out of the middle class either directly in the form of monopolistic debit card fees or indirectly through taxpayer guarantees that they won’t fail. It’s fine with me if Dimon wants to move his derivatives business to Singapore as long as a) the costs of the next crash will be borne by the citizens of that tiny country and not me, and b) it gets him out of the country and under the thumb of an authoritarian government.
To hear him whine, bitch, cajole and threaten, you would expect that his bank was moving heaven and earth to support economic growth in the US; and you’d be disappointed. Let’s turn to the recent 10-K from JPM and see what the loan portfolio has been doing since we looked last, when we saw that the loan portfolio was shrinking.
If you just glanced at the linked page in the 10-K, you might think that the loan portfolio had increased from $633.5 billion at 12/31/09 to $692.9 billion 12/31/10. But, if you look at the next entries and the footnotes, you learn that the figure for 2009 does not include $84.6 billion held by off-balance sheet entities for that year. In 2010, JPM moved them to its balance sheet because their accountants told them to. To make the figures consistent, you have to add that $84.6 billion to the 2009 figure, to get a total of $718.1 billion as reported in the line marked “total loans”. In fact, the loan portfolio dropped $25.2 billion in 2010, about 3.5%.
It would have dropped further, but JPM bought $3.5 billion in commercial loans in the third quarter of 2010. (p.57). JPM has been busy repurchasing bad mortgage loans too, which potentially increases the loan portfolio, but no figure is given in the 10-K.
JPM isn’t contributing to economic growth by lending money. On the other hand, derivatives are doing really well. JPM doesn’t report the amount of business it does in derivatives, preferring to discuss “derivative receivables” and “derivative payables” as if these were measures of exposure in one of those never gonna happen financial meltdowns. The OCC reports [.pdf] that JPM’s exposure to derivatives is 265% of its risk-based capital, second only to Goldman Sachs. Table 4. Can you say “Bailout”? Total trading revenue was $1.2 billion in the fourth quarter, twice its nearest competitor. Table 7. Trading revenues were 6% of total revenues in the fourth quarter. Graph 6B.
Debit card fees? Thanks to the corporatist Senator Jon Tester of Montana (no more money from me for him), banks will be able to charge monopolistic debit card fees. It’s for your own good.
So, to summarize, JPM is making piles of money on derivatives, its loan portfolio is down, and it is working Congress to maintain monopoly prices on debit card fees. What a bunch of leeches. Fortunately for them, they have millions to buy loyalty from politicians. And I intend to keep on bashing banksters, no matter how much Dimon whines.