"Banks are under assault.”
That was the resounding message from Jamie Dimon, CEO and President of JPMorgan Chase, in a conference call with reporters on Wednesday, announcing a fourth quarter decline in profits for the nation’s largest bank.
"We have five or six regulators coming at us on every issue,” he said, adding that this spoke of a general wrong directed at his industry: “You all should ask the question, ‘How American that is? How fair that is?”
Yet for some, Dimon’s grievance narrative may fall on deaf ears.
Despite a fourth quarter downturn, business is booming for JPMorgan — and the banking industry as a whole.
JPMorgan made a $21.8 billion dollar profit in 2014, up from the $17.9 billion it made the year before. It was the highest ever profit for the bank.
And while bank regulations have increased somewhat in the aftermath of the 2008 financial crisis, thanks to provisions in the landmark Dodd-Frank Financial Reform Bill of 2010, part of the reason JPMC has found itself in the shadow of federal oversight is because it has, on numerous occasions, broken the law. And it has the receipts for the money paid out in fines and settlements to prove it.
JPMorgan has paid billions to federal regulators as recompense for its actions in the lead up to the 2008 financial crisis, when the bank ... I mean investment house ... I mean bank was said to have misled investors on numerous occasions, especially in selling substandard mortgage-backed securities. JPMC has also paid fines for its roles in manipulating prices in energy markets, a Bernie Madoff–related Ponzi scheme, the “London Whale” scandal, and in a separate currency case in which its traders allegedly manipulated foreign currency markets.
The exact amount that JPMorgan has paid for legal fees is unclear, but Reuters put the total from 2013 and 2014 at a combined tally of $14 billion. While financial disclosures from the company reported by the Financial Times indicate the bank has set aside $25.6 billion since the beginning of 2010.
However, as the bank’s annual profit suggests, those fees have yet to seriously degrade the institution’s large market share. Nor have they adversely affected Dimon’s own lucrative position within his company: The same year that his company settled with Federal prosecutors to the tune of more than $20 billion dollars, 2013, Dimon received a 74 percent pay raise from the previous year, giving him a cool $20 million a year of executive pay.
Meanwhile, in response to the increase in regulations as a result of the aforementioned financial reform bill, banks like Dimon’s have fought tooth and nail to scale back many of the bill’s provisions — and in just the last few weeks they have achieved some impressive gains.
In December, the lame duck Congress passed a spending bill that, in return for keeping the federal government largely funded and operating through 2015, gave Republican and Democratic legislators a bevy of pet projects in the form of riders. Tucked into so-called CRomnibus bill was language to repeal part of the Dodd-Frank legislation, which prevented large banking institutions from betting on exotic financial investments with federally insured assets, like consumer deposits.
While on Wednesday, the same day as Dimon’s conference call, the House of Representatives overwhelmingly passed a bill to further ease regulations imposed by Dodd-Frank, an effort that would delay banks’ compliance with a requirement called the Volcker Rule, which, among other things, requires banks to sell off certain risky investments knows as collateralized loan obligations.
.According to a report by the New York Times on Wednesday, which detailed Wall Street’s ongoing full-court press against Dodd-Frank, the Securities Industry and Financial Market Association (SIFMA), the largest lobbying organization for Wall Street, spent $5.8 million through September of last year, the most recently available data — an amount already 12 percent greater than the organization spent in all of 2013.
What all that adds up to may well be an assault, but Dimon may have had his nouns confused — it’s those banking reforms, rather than banks, that appear to be on the defensive at the moment.