Walt Laws−MacDonald | Show Me The Money!
Dimon in the Rough
Published: Thursday, November 29, 2012
Updated: Thursday, November 29, 2012 07:11
Warren Buffett — Oracle of Omaha, investor and philanthropist of no relation, everyone’s favorite Hawaiian shirt−clad resident of “Margaritaville” — made a bold pick Tuesday for the next U.S. treasury secretary.
Jamie Dimon, the CEO of JPMorganChase, a fellow Jumbo and my personal idol, would be “the best person you could have in the job,” according to the CEO and Chairman of Berkshire Hathaway.
Of course Jamie Dimon would make a terrific treasury secretary. But I’m going to try to put aside my fanboy ravings and explain why picking Dimon really is a great idea.
After graduating from Tufts with degrees in psychology and economics — but not quant, so it doesn’t really count — Dimon attended Harvard Business School, eventually working his way through the ranks of the giants American Express and Bank One, before taking his current position at JPMorganChase in 2004.
Elizabeth Warren — I have your attention now, don’t I? — called for Dimon to resign from his position on the board of the Federal Reserve Bank of New York in May of this year in one of the capstone moments of her crusade against Wall Street.
“We need to stop the cycle of bankers taking on risky activities, getting bailed out by the taxpayers, then using their army of lobbyists to water down regulations,” Warren said. “We need a tough cop on the beat so that no one steals your purse on Main Street or your pension on Wall Street.”
Warren’s statement came after the epic “London Whale” trading loss — most recently estimated at $5.8 billion — that has rocked JPMorganChase’s London office to its core. But blaming a CEO for one trader’s bad bet is ludicrous. This was a systematic failure, not a systemic one.
Though I support Warren on most of her consumer protection legislation and social issues, this statement made me question how much she really knows about Wall Street. Let me make this clear: Little 19−year−old me clearly does not have the same education or experience as Senator−elect Warren. However — and this is a big however — Dimon is a beacon of hope on a very dim Wall Street.
JPMorganChase was Wall Street’s saving grace during the early stages of the credit crisis of 2007, reducing exposure to the housing bubble before any other major bank and catching the falling knife of Bear Stearns when other Wall Street titans were scrambling for capital.
Dimon was later criticized for using the crisis to his advantage, but this wasn’t the case. Treasury Secretary Henry Paulson had actually pressured Dimon to go lower on their offer, but Dimon refused.
Dimon is regularly mentioned as one of the top CEOs in the country at a time when most bank heads have either been vilified or put on trial — ahem, Brian Moynihan (Bank of America), Bob Diamond (Barclays), Sandy Weill (Citigroup), etc. It’s sad that I can actually use “etc.” there.
The banking sector is not the only responsibility of the treasury secretary, of course — the president’s primary economic advisor must draw from both domestic and international factors. But as the 2008 crash and current recession have shown, banking is the backbone of the country’s economy.
Who better to lead the banking sector through crisis than a man who led a bank through crisis?
Perhaps the most important reason Dimon would make a great treasury secretary is that he understands banks need regulation, even if it’s not the same regulation that Warren and others argue for. Our economy and our banks are still in crisis mode. Dimon is far and away the most logical choice right now.
And he went to Tufts, so what could go wrong?
Walt Laws-MacDonald is a sophomore majoring in quantitative economics. He can be reached at Walt.Laws_MacDonald@tufts.edu.