Felix Salmon

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Heading into Jamie Dimon’s testimony before the Senate Banking Committee, Andrew Ross Sorkin, Bloomberg View, Occupy the SEC and many others offered up the questions they would ask JPMorgan’s chairman and CEO. But this was, after all, the Senate Banking Committee, whose members are no strangers to JPMorgan’s campaign donations.

The Senators by and large met our low expectations, delivering performances that Brian Beutler said “turned the cross-examination into a coronation, and exposed the extent to which elected officials still feel compelled to genuflect to powerful financial interests”. Dimon decidedly got the best of his questioners, so much so that David Weidner said he came “off too much like a know-it-all. His inner confidence and cockiness have come to the surface”.

Senators Menendez and Merkley were the exceptions. Menendez reminded Dimon that his company’s vaunted fortress balance sheet has a moat built by taxpayers. Dimon bristled when Merkley suggested JPMorgan had benefited from TARP, Federal Reserve borrowing and AIG’s bailout. Dimon said that view was “factually wrong”. (It’s not.)

Neil Barofsky, the former TARP inspector-general, condensed the proceedings:

Shorter Dimon testimony: We could have a great financial system if you people would just shut up and let me design it.

— Neil Barofsky (@neilbarofsky) June 13, 2012

Dimon did say that JPMorgan was “likely” to claw back pay from those involved in the CIO losses. Even as he repeatedly said he had been “dead wrong” about the CIO’s trades, he came closest to a gaffe when explaining his own involvement: “I was aware of it, but I didn’t approve it”. It’s unclear whether that distinction will exempt his own pay from a clawback.

Dimon continued to get the better of the senators – at one point he was asked to expound on the fiscal health of the US government – and important questions remained unanswered. Were the bulk of the CIO’s operations located in London to avoid the view of regulators? Why were the firm’s risk models changed, and how reliable is the better model, if, as Christine Harper tweeted, it still massively underestimated the size of the losses? And what about risk management?

The most important thing Dimon said was “we didn’t understand the risks.” Message is: If they didn’t, no one does. — Henry Blodget (@hblodget) June 13, 2012

But the most eloquent thing that Dimon said was not verbal at all: He appeared before the senators wearing POTUS cufflinks. You couldn’t get more Wall Street alpha male if you tried. – Ben Walsh

On to today’s links:

Consumers
The simple problem with the US economy – Americans can’t spend like they used to – Robert Reich

Must Read
What it’s like to live and work in one of America’s poorest counties – The American Prospect

Politicking
Of course passing healthcare reform slowed the recovery – Jonathan Chait

TBTF
“Hypothetical, illustrative example of the orderly liquidation of JPMorgan Chase” – FT Alphaville

Popular Myths
Five persistent myths of the financial crisis – Fortune

EU Mess
A reminder that Spanish taxpayers are on the hook for their country’s bailout – NYT
Greeks are already withdrawing cash and stockpiling food – Reuters

Investigations
The DOJ is starting an anti-trust investigation into cable companies’ disdain for web video – WSJ
The Feds’ cable probe means web video is about to get more expensive for you – All Things D

Startups
How Silicon Valley got the next big thing (widgets) spectacularly wrong – Pando Daily

New Normal
The state of the nation in four datapoints – The Awl
“It’s fair to say that the median US household is no richer now than it was 30 years ago” – Felix

Ugh
NYC may be about to repeat Chicago’s disastrous parking meter mistake – Rolling Stone

Simulations
The frightening lessons of a decade spent playing Civilization 2 – Andrew Sullivan

Politicking
Study: Corporate political giving doesn’t pay – except for highly regulated industries – WashPo

Oxpeckers
How HuffPost co-founder Jonah Peretti got fed up with partisan journalism – The Atlantic Wire