Thursday 11 April 2019

'Do you think more folks should have gone to jail for their role in the financial crisis': AOC grills JPMorgan Chase CEO Jamie Dimon on his bank's role in the 2008 recession after he criticized her Green New Deal

Democrat firebrand Alexandria Ocasio-Cortez delivered a harsh rebuke to JPMorgan Chase CEO Jamie Dimon after he criticized the Green New Deal. 
The freshman rep from New York asked Dimon why more senior banking officials weren't jailed after the economic collapse while the people from her district can end up behind bars for far lesser crimes.  
'I represent kids that go to jail for jumping a turnstile because they can't afford a MetroCard,' Ocasio-Cortez told the executive during Wednesday's House Financial Services Committee hearing on the industry's preparedness for another crisis.
'Do you think that more folks should have gone to jail for their role in a financial crisis that led to 7.8 million foreclosures in the 10 years between 2007 and 2016?'
Dimon skirted the question by replying: 'I don't think people should go to jail for jumping a subway, we put too many people into jail, and I think if people broke the law they should go to jail.'
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Rep Alexandria Ocasio-Cortez didn't hold back when questioning JPMorgan Chase CEO Jamie Dimon during a House Financial Services Committee hearing on the industry's preparedness for another crisis on Wednesday
JPMorgan Chase chairman and CEO Jamie Dimon testifies before the House Financial Services Commitee during a hearing, Wednesday, April 10, 2019, on Capitol Hill in Washington. (AP Photo/Patrick Semansky)
Rep Alexandria Ocasio-Cortez (left) didn't hold back when questioning JPMorgan Chase CEO Jamie Dimon (right) during a House Financial Services Committee hearing on Wednesday. The hearing came one day after Dimon criticized Ocasio-Cortez's Green New Deal
Ocasio-Cortez pressed Dimon again and asked: 'Do you think that the failure to hold people accountable for the 2008 crisis is a failure of our legal system?' 
He responded: 'You'd have to talk to a lot of legal experts about why more people didn't, whether they deserved to or broke the law, what's intent or not intent.' 
Ocasio-Cortez ended her line of questioning by telling Dimon: 'I do want to commend you for your decision and Chase's decision to pull out of financing for private prisons. 
'I think that has led to some changes, particularly with Wells Fargo as well, in making sure that we begin to divest from some of the troubling things we're seeing particularly when it comes to the caging of children at our border.'  
She later tweeted about Dimon's role in JPMorgan's 2013 settlement with the federal government over allegations that the banking giant lied about the quality of mortgages sold to unfit investors who were later devastated when the housing bubble burst.  
'JP Morgan agreed to pay out *$13 billion* over its massive role in mortgage schemes w the '08 recession,' she wrote. 
'They also finance major fossil fuel pipelines. It's big money.
'So maybe they *aren't* the best authority on prioritizing economic wellbeing of everyday people & the planet.'
Ocasio-Cortez later tweeted about Dimon's role in JPMorgan's 2013 settlement with the federal government over allegations that the banking giant lied about the quality of mortgages sold to unfit investors who were later devastated when the housing bubble burst in 2008
Ocasio-Cortez later tweeted about Dimon's role in JPMorgan's 2013 settlement with the federal government over allegations that the banking giant lied about the quality of mortgages sold to unfit investors who were later devastated when the housing bubble burst in 2008
Dimon appeared in front of the committee one day after he slammed Ocasio-Cortez's Green New Deal in a CNN interview.   
'I don't spend much time worrying about things that I can't effectuate,' he said Tuesday. 
'Can you focus on climate change in an intelligent way that doesn't damage the economy? Yes, you can. It's called CO2 emission taxes, or trading, there's couple of ways to do it. 
'So you better do it wisely because you could hurt the economy, which hurts everybody.'  
Wednesday's appearance by the chief executives of JPMorgan Chase, Goldman Sachs and five other banks represented the largest gathering of leaders of the banking industry before Congress since the financial crisis.
The CEOs told members of the House Financial Services Committee they've taken steps to improve the stability of their institutions since the financial system nearly seized up in 2008. 
The banks have raised capital, are more diverse, have closed businesses and are more resilient than they were before the financial crisis, the CEOs said.
'There is no doubt that the strength, stability and resiliency of the financial system has been fundamentally improved over the course of the last ten years,' said Jamie Dimon of JPMorgan. 
'Post-crisis reforms have made banks much safer and sounder in three important areas: capital, liquidity and resolution and recovery.'
The backdrop of this hearing is the 10-year anniversary of the 2008-2009 financial crisis. The banking system required extraordinary efforts by regulators - and a bailout by US taxpayers - in order to survive. 
All seven banks appearing in front of Congress received funds under the $700billion Troubled Asset Relief Program, and all paid billions of dollars in penalties and fines for their behavior heading into the housing bubble.
'I am concerned that several of these institutions are simply too big to manage their own operations, too big to serve our communities and too big to care about the harm they have caused,' said Rep Maxine Waters, D-California, who is the chair of the Financial Services Committee.  
The hearing had some policy questions, but many members of Congress took their time to ask politically-charged questions of the CEOs, on topics ranging from gun regulations to executive compensation to climate change. 
Democrats took their time to laud Bank of America and Citigroup's decision not to finance gun manufacturing companies, while Republicans took their turns to lambast them. 
Democrats also focused a significant part of their time on whether banks delegated too much capital toward stock buybacks instead of reinvesting in their individual businesses.
Rep Jim Himes, D-Connecticut, asked all CEOs what they considered to be the products or businesses most at risk in the banking system. 
No CEOs mentioned home mortgages - the product that caused the 2008 financial crisis - but instead the two dominant answers were cybersecurity risks and growth of leveraged corporate lending, or lending to companies with already large debt loads. 
Another threat mentioned was 'shadow banks,' which is a term used to describe non-bank companies getting into financial products, particularly financial technology companies.
A Republican congressman, Steve Stivers of Ohio, asked the CEOs what they considered the biggest non-business risks to the banking system. 
The CEOs talked about how economic growth is slowing across the globe, and again mentioned cybersecurity as a big risk to the banking industry.
Along with Dimon, among those appearing were David Solomon of Goldman and Brian Moynihan of Bank of America. 
The CEOs of Citigroup, Bank of New York Mellon, State Street and Morgan Stanley also testified. 
One executive not at the hearing was Tim Sloan, who resigned from his position at Wells Fargo last week, days after a separate appearance before the same committee.
Of the group, only one is still running the same firm as he was 10 years ago: Dimon. All other CEOs at the other firms were replaced either shortly after the financial crisis, or their predecessors decided to retire in the last year.
The hearing comes after the banking industry had a record year for profits in 2018, thanks partly to the tax cuts passed by Republicans in late 2017. 
Meanwhile, the banking industry's lobbyists have been pushing Congress to further unwind the rules and regulations put into place after the 2008 financial crisis.
Democrats, who control one part of Congress, are not likely to go along with any major overhaul to regulations. 
Instead the banks have been focusing their attention on getting changes at their regulators, like the Federal Reserve and the Office of the Comptroller of the Currency.
'Dodd-Frank has not done anything bad to your bottom line' Waters said, referring to the Dodd-Frank Act, the law passed after the financial crisis to reorganize the banking system. Waters warned the CEOs not to push too heavily for changes at their regulators.
And in a note to how long the hearing lasted - nearly seven hours - Waters said she would bring the CEOs back to testify next year, in smaller groups. 

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