A few days ago I saw this article. What the hell?
Whoa. Back up there. Treasury Secretary Dimon?
Well, it may only be a matter of time before we’re using that honorific when talking about JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon.
Why the hell would this occur?
Here is what David Reilly, at Bloomberg, one of the two largest financial news outlets, has to say:
Support is often fleeting in Washington, though, and Geithner is "on thin ice," Republican House leader John Boehner said this week.
Fairly or not, a part of the American International Group Inc. bonus debacle is coming to rest on Geithner’s shoulders. That is a heavy burden given his earlier tax troubles and the tepid response to his still-to-be-detailed bank bailout plan.
Some Republicans are already calling for Geithner’s resignation. The odds of him being ousted by the end of the year rose this week to about 40 percent, as measured by online prediction site intrade.com.
It hasn’t helped that Geithner has had trouble filling several senior spots within Treasury that must be confirmed by the Senate.
Okay, and how would Jamie Dimon be an improvement? Unless Dimon somehow brings with him a change in policy that involves taking over the banks, arresting a whole bunch of people, and unravelling the derivative mess, he would quickly sink into the same morass as his predecessor did. And how would bringing him on make it easier to fill vacant spots in the Treasury? He would have to learn the ropes and begin determining who he wants to work with.
But worst of all, one of the biggest complaints about Tim Geither is that he was too close to Wall Street, as a protege of Robert Rubin-- despite being a civil servant his entire life. Contrast this with Dimon, a man who made $27 million in 2007 alone, and is a protege of Sandy Weill- the very man who engineered the Citibank/Travelers' Group merger/fiasco. He has been CEO since 2004 during which JP Morgan lost tens of billions of dollars and its stock price plummetted. In November, JP Morgan Chase was one of 9 banks to receive a $25 billion injection from the government.
Furthermore, as David Reilly writes, "When the housing collapse started, for example, Dimon viewed it as an opportunity to expand in the California market for jumbo mortgages. He was also slow to exit the business of purchasing mortgages originated by outside brokers."
So why is Jamie Dimon qualified to oversee the Treasury of the United States, according to Mr. Reilly? Mr. Reilly writes:
Nevertheless, Dimon has maintained a stronger balance sheet than rivals. JPMorgan’s tangible common shareholders equity was 3.4 percent of assets at the end of last year. This has become a key measure of balance-sheet health for investors. While not necessarily stellar, JPMorgan’s level compares with about 2.7 percent at Wells Fargo & Co., second biggest after JPMorgan in market value among U.S. banks.
He also has "self-assurance". So did George W. Bush. So does Mike Tyson. He also "isn’t from Goldman Sachs Group Inc.". Neither are hundreds of millions of other Americans. Oh and he is a Democrat. So is practically everyone who posts on this site.
So basically the only reason Bloomberg (and Marketwatch, whose David Weidner as of Oct. 14 last year thought "he is clearly the best choice to fill the job"-emphasis mine, and "has a track record of success"-JPM's stock price dropping 40% since 2004 apparently equals success now) think Dimon is the best choice for the next Treasury Secreatry is that he's the best that Wall Street can do.
That is the subtext of these Dimon stories from Marketwatch and Bloomberg, spanning October to now. What infuriates me is that they assume that the Treasury Secretary can only be a Wall Street leader. Only Wall Street leaders can be Treasury Secretary, ergo, the best that Wall Street can do (Dimon) is "clearly the best choice for the job."
Timothy Geithner (2009- ) President of the Federal Reserve Bank of New York
Hank Paulson (2006-2009) Chairman and CEO of Goldman Sachs
John Snow (2003-2006) Chairman and CEO of CSX Railway Corporation
Paul O'Neill (2001-2003) Chairman and CEO of industrial giant Alcoa
Lawrence Summers (1999-2001) Deputy Secretary of the Treasury
Robert Rubin (1995-1999) Co-Chair and Co-Senior Partner of Goldman Sachs
Lloyd Bentsen (1993-1995) United States Senator
Nicholas Brady (1988-1993) Chairman of investment bank Dillon, Read & Co.
James Baker (1985-1988) White House Chief of Staff
Donald Regan (1981-1985) Chairman and CEO of Merrill Lynch
G. William Miller (1979-1981) Chairman of the Federal Reserve Board of Governors
Michael Blumenthal (1977-1979) Chairman and President of Benedix International
Bill Simon (1974-1977) Deputy Secretary of the Treasury
George Shultz (1972-1974) Director of the Office of Management and Budget
John Conally (1971-1972) Governor of Texas {position ended in 1969}
David Kennedy (1969-1971) Commission on Budgetary Concepts; most of his career was served with the bank Continential Illinois
Joseph Barr (1968-1969) UnderSecretary of the Treasury
Henry Fowler (1965-1968) UnderSecretary of the Treasury; Senior Partner at Fowler, Leva, Hawes and Symington
Clarence Douglas Dillon (1961-1965) UnderSecretary of State
Robert Bernard Anderson (1957-1961) Deputy Secretary of Defense
George Humphrey (1953-1957) President of steel manufacturer M.A. Hanna
John Snyder (1946-1953) Director of War Mobilization and Reconversion
All in all, I find no evidence that the Treasury Secretary must come from Wall Street of an investment bank. Prior to the appointment of Michael Blumenthal in 1977, all 9 Treasury Secretaries had come from other parts within the government, and prior to the appointment of Donald Regan in 1981, none had come from an investment bank and only one (David Kennedy) had come directly from a bank. But even recently, Secretaries of the Treasury have come from industrial companies, politics, and other parts of government as well as Wall Street.
The assumption of the last few years among the media and the Washington establishment has said that the Treasury Secretary MUST be a Wall Street guy. This assumption is unfounded.