Counterparties: Jamie Dimon’s congressional testimony, in 11 tweets

June 19, 2012

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Jamie Dimon appeared before Congress once again today to talk about JPMorgan’s multibillion-dollar hedging losses. (Here’s our take on Dimon’s first round.) Appearing this time before the House Financial Services Committee, Dimon faced tougher, if equally confusing, questions.

The regulators came first, in the form of the heads of the CFTC, FDIC, OCC and SEC; you can read Reuters’ wrap of the hearing here. Then came Dimon. Here’s our own Q&A of his appearance, with all credit due to the twittersphere.

JPMorgan’s botched hedges could lose it up to $5 billion. Could the losses have been much bigger still? Like, two orders of magnitude bigger?

Were those traders in London just gambling with JPMorgan’s money?

Can Dimon justify the $14 billion per year that JPMorgan saves by having an ultra-low cost of funds thanks to its too-big-to-fail status?

How did the regulators miss all this?

Couldn’t they have seen that whopping-great $100 billion derivatives position?

Or is the problem that Dimon sits on the board of the NY Fed, one of his main regulators? That’s a conflict, no?

Did JPMorgan’s compensation structure push employees to take outsize risks? Ousted head of the CIO office Ina Drew earned more than $15 million last year, after all.

But at least the questions have been smart and well-informed, right?

Anything else you’d like to say, Mr. Dimon?

– Ryan McCarthy

On to today’s links:

EU Mess
Spain is doomed, in three charts – WashPo
EU official: It’s “delusional” to think we won’t need to renegotiate the terms of the Greek bailout – Reuters

Austerity hasn’t really paid off – just ask the bond market – Bloomberg
Sovereign ratings aren’t very important – Felix

It’s time to stop using jobs data as a “month-by-month panic- or joy-inducing catalyst” – NYT
When the economy is “stuck in the mud, austerity just digs it in deeper” – Rolling Stone

The Fed
“If you don’t need the money, you can get it all day long. Thank you, Ben Bernanke.” – WSJ
What the Fed can do to save the US economy – Dean Baker

“For the first time in its history, Microsoft is taking PC hardware as seriously as it does software” – Slate
How to write Microsoft Surface press release: Take an iPad press release and fill it with bland corporate-speak – Rex Hammock

Not That Reassuring
In the future, Spanish streets will be paved with coupons – Fast Company

Old Normal
Did medieval England have stronger economic incentives than modern high-income economies? – Marginal Revolution

New Normal
America’s “disconnected”: Families fall through the cracks as states slash welfare – Huffington Post

Profiles in Pessimism
The EU crisis has its own Dr Doom and his name is Mark Grant – NYT

Had his cake, didn’t want to tweet it too: Man has $1.4 million Marie Antoinette-themed party and tries to keep it secret – Business Insider

Woodward & Bernstein were no Woodward & Bernstein – Gawker

Tax Arcana
The IRS whistleblower program has paid out just 3 awards from 1,300 claims – Bloomberg

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