Much has been made of the way Barack Obama has changed the sociology of the capital. There’s the shifting locus of social activity from Georgetown to Logan Circle, and the intrusion of two basketball hoops on the White House tennis court. But, even in Obama’s Washington, some of the old status symbols still matter. Take, for instance, the periodic ritual of the state dinner. In advance of such affairs, the most recent of which occurred in May, entrails-readers up and down the Amtrak corridor still scrutinize the guest lists. Invariably, they find hints about who the White House is courting (Chris Dodd, Anthony Kennedy) and who it may be shunning (no Lindsey Graham?). To this day, there’s still nothing like a state dinner sighting to shore up a hobbled official (Janet Napolitano), announce the arrival of an up-and-coming constituency (Univision anchor Jorge Ramos), or vouch for a wise man’s access (Mack McLarty … ?). The Salahis may be tacky, but fools they were not.
Coming as it did near the climax of the financial-reform fight, the May dinner held particular interest for a certain class of status-conscious gossip: Wall Street executives. Read one way, the guest list functioned as a crude, if not terribly surprising, guide to the administration’s financial-sector allegiances. Topping the list was Robert Wolf, CEO of UBS Americas, a longtime Obama fundraiser and confidant. Wolf was joined by James Gorman of Morgan Stanley, a firm with strong relationships at Treasury and the White House, and Brian Moynihan of Bank of America, whose bravery as a reformer Valerie Jarrett recently touted. Conversely, with his firm now shorthand for Wall Street double-dealing, no one should have been shocked to find Goldman Sachs CEO Lloyd Blankfein on the wrong side of the rope line.
But there was one invite decision that did seem vaguely curious: the omission of JP Morgan Chase CEO Jamie Dimon. Unlike Citigroup or Lehman Brothers, Dimon’s firm never teetered on the edge of collapse. Nor is JP Morgan run, à la Goldman, like a giant hedge fund backed by taxpayers. While the bank does have a significant trading operation, much of its revenue comes from dowdy loans to industrial companies and individual homeowners.
On top of which, Dimon is a longtime Democrat who traces his friendship with Obama back to Chicago, where he spent years running a predecessor company. For that matter, he’s not just any Chicago Democrat with ties to Obama, but one who’s spent the last few years painstakingly bolstering his bank’s presence in Washington. In 2007, Dimon famously told his board that the company’s government outreach was subpar and gave himself a “D” for his role in it. He elevated Bill Daley, the Democratic power broker who was then the bank’s Midwestern chairman, to his operating committee and handed him the government-relations portfolio.
This proved to be a coup when Obama won the presidency. Daley had doubled as the campaign’s co-chair. He’d been close to David Axelrod, Obama’s top adviser, for 30 years. He’d also helped revive the career of chief of staff Rahm Emanuel after Hillary Clinton exiled him from the White House inner sanctum in 1993. It was Daley who arranged to have Emanuel detailed to the administration’s NAFTA war room, which he oversaw. According to sources close to the administration, the Obama transition team approached Daley about becoming ambassador to China. (He declined.)
All of which is to say, if anyone should be attending a state dinner these days, it’s Dimon, whom The New York Times once dubbed “President Obama’s favorite banker.” And yet, as the months have passed, Dimon’s frustration over the direction of administration policy has become palpable. He sarcastically referred to Treasury Secretary Tim Geithner as “Timmy” at an industry event last June; in April, he derided the administration’s proposal for recouping bailout money as a “punitive bank tax.”
"God help us if our plan going forward is to count on everyone acting like Jamie Dimon. Certainly Dimon himself, the preeminent risk manager of his generation, would never take such a chance. At least not if he were sitting on the other side of the table."
I was hoping you ended up here Noam (the above quote), and not some major defense of Jamie Dimon. You're right, he's done better than most bankers in some ways, but right now, he's doing a lot better in other ways than many of the working class in the rest of the country. There's no getting away from that no matter how nice you've been to Democrats in the past. He should be so lucky.
"God help us if our plan going forward is to count on everyone acting like Jamie Dimon. Certainly Dimon himself, the preeminent risk manager of his generation, would never take such a chance. At least not if he were sitting on the other side of the table."
I was hoping you ended up here Noam (the above quote), and not some major defense of Jamie Dimon. You're right, he's done better than most bankers in some ways, but right now, he's doing a lot better in other ways than many of the working class in the rest of the country. There's no getting away from that no matter how nice you've been to Democrats in the past. He should be so lucky.
(I realize this is a defense of Dimon of sorts, but not to the point I expected).
(I realize this is a defense of Dimon of sorts, but not to the point I expected).
This is a really good article. One of the best TNR has done.
This is a really good article. One of the best TNR has done.
what ArtKleiner said
what ArtKleiner said
Life is not fair. Mr. Dimon will get over it, just like the taxpayers that bailed out Wall Street.
Life is not fair. Mr. Dimon will get over it, just like the taxpayers that bailed out Wall Street.
Interesting article, though th author does get a bit yellow with a few points. A congressional aide with years of experience in derivatives finds the term "end user" new? Say what? And to suggest that the notion of a company wanting to use derivatives to hedge price risk is somehow dubious ("The House passed a financial-reform bill that included an exemption not just for bona fide end users, but for any company that used derivatives to hedge "commercial," "operating," or "balance sheet risk""”a loophole wide enough to protect a variety of high-risk transactions among Wall Street firms.") suggests to me that somebody either doesn't really know what they're talking about, or do ... view full comment
Interesting article, though th author does get a bit yellow with a few points. A congressional aide with years of experience in derivatives finds the term "end user" new? Say what? And to suggest that the notion of a company wanting to use derivatives to hedge price risk is somehow dubious ("The House passed a financial-reform bill that included an exemption not just for bona fide end users, but for any company that used derivatives to hedge "commercial," "operating," or "balance sheet risk""”a loophole wide enough to protect a variety of high-risk transactions among Wall Street firms.") suggests to me that somebody either doesn't really know what they're talking about, or does and is getting all Oliver Stone on me.
American companies that want to use derivatives have serious barriers placed on them by the Federal Accounting Standards Board, such that engaging even in legitimate hedging is often times made prohibitive by the rules on what consititues an effective hedge and how companies can apply "hedge accounting" to open derivative positions. Banks can undoubtably come up with extremely toxic, "exotic" derivative structures (has your zippy congression insider never heard of that term either?), but the overwhelming number of American companies could not and would not even consider buying them. For this reason alone, the suggestion that the selling of these products to American companies has been a cash cow to the banks is complete and utter rubbish.
Take a deep breath, Mr. Scheiber, and leave the sensationalism alone.
very impressive detail!
very impressive detail!
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