JPMorgan Chase, one of our nation's ethically-challenged financial institutions, is facing another big fine. That means that once again you'll be hearing the right wing's go-to defense of the bank: President Obama's out to get JPMorgan Chairman Jamie Dimon.
The leading purveyor of this line is the Wall Street Journal editorial page, which wrote last month that Dimon is "the Obama Administration's favorite Wall Street target" because he "keeps deviating from the Obama script." The claim is that Dimon ticked off the White House by objecting to Dodd-Frank financial reforms, grousing about Obama's "anti-business rhetoric," and even hinting that "he preferred a change in the White House."
It would be pretty damning if that's what really caused JPMorgan's regulatory problems. But does the argument hold water? Here's the short answer: no.
And here are some details, drawn from the 10-page list of Morgan's legal problems in its last annual report.
To begin with, it would probably take a superhuman coordinating effort to get all the federal agencies gunning for JPM to work together. A partial list includes: Congress, the Federal Reserve, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the Department of Justice. Not all of them have invariably marched to the White House's tune. In any event, the Journal's editorial page is not usually where you find a lot of faith in the Obama administration's organizational prowess.
What's also overlooked is that many of the investigations costing JPMorgan its billions in settlement costs weren't started by the federal government at all. The Federal Energy Regulatory Commission slapped the bank with a $400-million penalty for manipulating the California energy markets, but the complaint FERC acted on came originally from the California Independent System Operator, the agency that found its own markets being manipulated.
How about the criminal charges faced by two Morgan employees over fraud committed in Italy? That complaint came from the city of Milan. Morgan's alleged complicity in Bernie Madoff's enormous Ponzi scheme? That allegation comes from the trustee of the Madoff securities estate, who wants to recover $19 billion in supposedly fraudulent transfers to the bank.
The celebrated London Whale disaster, which has cost JPMorgan roughly $10 billion in trading losses and penalties, is being investigated by Britain's Financial Services Authority, among many other regulators. Among the charges is that JPMorgan made false and misleading statements about the disaster. It's hard to imagine, of course, that President Obama or his minions tricked Dimon into calling the huge loss "a tempest in a teapot." But he did.
Then there's the scam JPMorgan and other banks perpetrated in the auction-rate securities market just before the 2008 financial crisis. That investigation was launched by then-New York Atty. Gen. (now governor) Andrew Cuomo and the state of Florida.
Finally, there's the ongoing investigation of the manipulation of the LIBOR market by JPMorgan and other banks. (LIBOR is an international interest-rate benchmark.) The investigating agencies there, including several state attorneys general, the European Commission, the British Financial Services Authority and the government of Switzerland.
The shocking thing is that this isn't even a complete list. But does it tell you that JPMorgan's ills are the result of animosity from the Obama administration? The regulators and prosecutors haring off after JPMorgan aren't all federal, they aren't all Democrats, and they aren't even all American. Even if people in the White House were out to get Morgan and Dimon, they would have to get in line.