Jamie Dimon Sounds Off, As Obama Makes Big Symbolic Gestures To Appease The Nation

Jamie Dimon, the head of JP Morgan who looks like the sort of boss who rewards staff with bear hugs, high-fives and strippers, has been laying into Obama for his portrayal of Wall Street bosses. As the FT’s Lex column notes today, “As Jonah spoke to Nineveh, the world now speaks to the City of London and Wall Street of their wickedness”; Dimon is telling the world to go shove it up their ass (seriously, he probably said just that).

“Pay got a little exuberant”, admitted Dimon yesterday, “but I don’t think the president of the United States should paint everyone with the same brush”. He’s got a fair point – JP Morgan may have doled out $22.7bn in salaries and bonuses last year, but they’ve been outperforming and outsmarting their rivals, while maintaining relative prudence. You may remember that they steered clear of CDOs and other complex derivatives, selling them off to Citigroup and HSBC, and avoided the subprime mortgage market. 

His words come as Obama plays the stern, frowning God you get in Renaissance painting, ordering a $500k cap on executive pay on Wall Street. According to Bloomberg, “the rules will force greater transparency on the use of corporate jets, office renovations and holiday parties as well as golden parachutes offered to executives when they leave companies,” referring on the various recent stories that have sent everyone apoplectic with rage. This is a move by Obama to appease a nation out of love with Wall Street, that tries to get people to trust banks again and therefore kickstart the economy; but a long-term change to the financial system it is not.

The rules only apply to banks with “significant federal assistance”, which leaves out many of America’s 8000 banks. They don’t apply to asset managers, who saw their bonuses rise amid the recession by 15-20%; nor does it cover unit trusts, hedge funds, bancassurance, or any other significant and lucrative areas of the financial world. The issue of transparency over petty expenditure like an office refurbishment has been addressed; but transparency in dealings with complex financial instruments and hedge fund trades, the two areas that have most damaged the financial system through their opacity, has yet to emerge.

Dimon said last month: “Hopefully we end up with good regulation instead of very bad regulation that’s done out of haste and anger”. While a cap on executive compensation is a boost to the nation’s mood, there’s still a long way to go to “good regulation”.

Posted by Ben Beaumont-Thomas in Hot Money | February 4, 2009 12:33PM |