Tuesday, June 05, 2012

Mangled Spoons to Grill Jamie Dimon: Lights! Cameras! Gotcha!

 Jamie Dimon’s trip to Capitol Hill next week to explain his bank’s multibillion-dollar trading debacle could quickly devolve into Washington Gotcha Theater.
 But it shouldn’t. It should be used to draw out some real answers that will help inform the public and lawmakers about the risks of our banking system…

 So begins Andrew Ross Sorkin’s quite reasonable, and well-written, DealBook Column, "Some Questions to Ask Mr. Dimon," which you can read here.
 The questions Sorkin fantasizes Congresspersons asking are all good, and it would be great fun and most interesting to hear them asked as written, without histrionics, so that Jamie can answer them, without histrionics.
 But they won’t be asked—at least the way they’re written.
 That’s because the Congresspersons asking the questions generally have the intelligence of spoons—and not just your basic cereal spoon, but spoons that have gotten caught in the garbage disposal and are mangled beyond recognition.
 Of course, mangled-spoon-intelligent though they might be, Congresspersons have one instinct that preserves their electability and drives their behavior: to get on TV.
 I know, because I testified before Barney Frank’s finance committee just prior to the 2008-9 financial meltdown.  The hearing was about whether hedge funds could cause a market collapse.  They didn’t ask about Lehman Brothers.
 In fact, they didn’t ask much that they didn’t want to hear.
 They came in (they never stayed for anything but their own turn in the spotlight); they made a statement; then asked something rhetorical; then made a pretense of listening to the answer; then left.
 It was all about theater, and not a bit about substance—except one guy, who I’ll get to.
 The most intellectually dishonest as I remember it was a New York rep, Caroline Maloney, but they were all pretty bad, Republicans playing Republicans and Democrats playing Democrats.
 The only exception was a guy from Mississippi who sat there the entire session—he was the only one who stayed from start to finish—and asked very straight, non-TV-camera-oriented questions about what would happen, for example, to the retiree from “the pipefitters union” if a hedge fund they’d invested in went down.  He didn’t know much but, unlike Maloney and the rest, he didn’t pretend to know.  And he listened to your answers and then asked another question.
 I wasn’t completely surprised at the mangled-spoon quality of the I.Q. quotient in the room—I once got a call from a Congressperson-friend on a financial sub-committee before the crisis when they were debating something to do with Wall Street.  The conversation literally—literally—went like this:
“I'm going into a session...now, remind me, ‘fixed income’ is what?”  “Debt.”  “Okay.  And equity is...” “Stocks.”  “Right, okay, thanks.”  I am not making that up.

 If the guy from Mississippi is still there, Jamie Dimon will get some good questions.  Otherwise, the Maloney types will do their best to bring out the worst.


Jeff Matthews
Author “Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett”
(eBooks on Investing, 2012)    Available now at Amazon.com

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4 comments:

Anonymous said...

Who was the "guy from Mississippi"? Was he an elected official? I would like to know his name. He deserves recognition.

Anonymous said...

Who was the "guy from Mississippi"? Was he an elected official? I would like to know his name. He deserves recognition.

Anonymous said...

Kind of a pointless hearing, don't you think Jeff? When the best question comes from Chuck Schumer you know it was a hoot: How could Jamie say it was "unrealistic for a risk committee to identify this" and not be probed further? These were the same clowns investigating steroids in baseball as we headed towards The Great Recession so I should not be surprised but still...

Rich

Anonymous said...

Looks like the House took this theatre a little more seriously, however canned the outrage appeared to be. Our country loses the equivilant to Jamie's "loss" in 2 days but where is the outrage from these same characters - steroids in baseball, indeed. Speaking of which: How about Clemens?

Keep up the good work Jeff!

Rich