They got an extraordinary bailout funded and guaranteed by the taxpayers of the United States of America — they still are — and yet Jamie Dimon of Citibank Chase is whining about regulations from Dodd-Frank:
Dimon, head of the most profitable U.S. bank, took an unusual step in pressing Bernanke in a public forum on June 7 on whether regulators have gone too far in reining in the U.S. banking system and are slowing economic growth. The U.S. unemployment rate rose to 9.1 percent in May as the S&P/Case- Shiller index of property values in 20 cities showed that U.S. home prices slumped in March to their lowest since 2003.
The questions unaswered in this piece is exactly what is it about the current state of the economy that banking regulations are slowing down? It isn’t as though the TBTF banks aren’t really profitable. And why shouldn’t they be? There are certain and sure profits in borrowing money from the Fed at an almost 0% interest rate and lending it back to the Government at a considerably higher rate. *That* transaction isn’t regulated by Dodd-Frank, you can bet. You can also bet that the deficit peacocks certainly aren’t spending any time on cutting *this* back. And think a little bit about *why* this government even continues this practice.
This, right here, is the problem with TBTF. Save it and it wants to set the terms of its survival — especially when that means access to money other than theirs. Sheila Bair notes:
“I see a lot of amnesia setting in now,” Bair said today during a question-and-answer session at the Council on Foreign Relations. “Banks are not doing a lot of lending now, and the ones that are doing the better job of lending are the smaller institutions that have the higher capital levels.”
Banks with higher capital levels on hand are likely not in danger of being insolvent once the various Fed windows that lend money at little interest close.
Others in this Bloomburg article note the *poisoned environment* that Wall Street currently operates in. Well, of course it’s poisoned. These institutions were right at the forefront of leading this economy over its cliff and could not survive without the infusion of taxpayer funds. They have clearly not learned any lessons from this and nor have they gotten the clue that most Americans are pretty hostile to these bailouts. Especially since it clearly looks like the only people who have been made whole here are the original culprits. The housing business and homeowners are in deep and worsening trouble and yet no one is working at healing this festering wound. Only bankers got enough attention to be made whole enough to be able to challenge the regulatory scheme put in place to try to ensure that they aren’t in a position to need even more of our money. Taxpayers — especially middle class and working class ones — continue to pay for and provide the current profitability of these banks.
Since Delaware’s banking business pulls more strings with our congressional delegation than to those of us who vote for them do, it is important to keep reminding these folks that is is vitally important that we not have to live through another financial crisis like that again. And the only way to do that is to ignore these profitably companies and work on getting their customers whole and confident again.