When it comes to the economy, the color of wisdom is orange. Some students at Syracuse University are protesting the selection of JPMorgan Chase CEO Jamie Dimon as their commencement speaker. They’re absolutely right: Dimon’s a poor role model. We should be proud that these students don’t want life guidance from someone who has made a career of plundering the economy in the pursuit of non-productive wealth.
An op-ed in the school’s paper, the Daily Orange, spells out the students’ concerns: “(T)he bank and its officials still represent a system that is failing the American people. Although Dimon humored us by adopting a $1 salary, he also took about $17 million in bonuses for 2009.”
Dimon’s leading the charge to block meaningful financial reform. His company profited richly from public assistance when it acquired Bear Stearns, yet this week he sent a minion to blame homeowners and oppose checks on banker greed – an act for which said minion, global mortgage head David Lowman, was summarily chased from the Hill by an irate mob of mortgage holders.
Should the government help struggling homeowners? No way, says Dimon. But when it provided the capital for his company to become even more “too big to fail” he was only to happy to take it. Dimon’s got, in the words of the old Southern saying, “a handful of gimme and a mouthful of much obliged.”
The Syracuse students grasp the moral and economic realities of the economy because they’re living in the real world. Syracuse is not a nest of aristocratic privilege. Even their fabled basketball team (also called the Orange) did it the American way this year – through hard work. As sports columnist Mike DeCourcy put it, they had “not a single elite recruit, and yet the Orange won the Big East title and might have reached the Final Four were it not for a key injury.”
Dimon, on the other hand, is a case study in elite privilege. Under his leadership JPMorgan Chase received $25 billion in TARP loans, although the common story is that they didn’t need or want the money. What his defenders gloss over is the additional public support JPM received through the Fed , which lent $29 billion for the acquisition of Bear Stearns using only Bear Stearns’ bad paper as collateral. That move led Paul Volcker to say that the Fed was acting at “the very edge of its lawful and implied powers” and altering the moral landscape of American finance.
You can bet it was a good deal for Jamie, though, no matter how many claim that he was the “rescuer” in this scenario. And how did JPMorgan Chase repay the American taxpayer for its generosity? It immediately announced that it wasn’t going to use the money to make more loans to the taxpaying public, but would use it instead to take advantage of market difficulties in order to aggressively buy other companies. Said an executive, “it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling.”
“Opportunistic” is the operative word. But that’s not all Dimon’s company did with your money. It also made plans to spend $138 billion on on corporate jets and hangars. And it expanded its outsourcing to India by 25% to handle all the new business the American people sent its way.
How have Jamie Dimon and JPMorgan Chase become so powerful that they can stick it to the American people with such impunity? The $49,000,000 they spent on lobbying over ten years probably came in handy. So did the $15,000,000 they spent on campaign contributions during the same period. That money buys a lot of influence. It also buys a lot of politicians willing to say you did the public a favor by taking $54 billion of its money to make your company more powerful.
Star forward Wes Johnson may be the only Syracuse student with bright job prospects this year. He’s entering the NBA draft. The others aren’t so lucky, and they know it. In fact a recent focus group, conducted in conjunction with a broad national Harvard student survey (pdf), showed that 60% of participants “are concerned with meeting their current bills and obligations.” 84% of students in the survey said they felt it would be difficult to find a job when they graduate.
Sadly, they’re probably right. Small businesses won’t be there to hire them, in part because they still can’t get the loans they need … from institutions like JPMorganChase. JPM, on the other had, just had a terrific first quarter. Dimon made the right pious noises about supporting the goal of helping middle-class borrowers but, as the Los Angeles Times observed, “the big profits are coming not from the retail bank but from the firm’s elite investing activities, which provided over two-thirds of the bank’s profit.”
That Harvard student survey showed that only 11% of the students surveyed trusted Wall Street bankers to “do the right thing” all or most of the time. (That’s one-fourth of the level of trust shown in the President,\ and less than half that given to members of Congress.) A broader poll of adults recently showed that 79% of Americans were angry about bank bonuses and 77% thought bankers hadn’t done enough to make amends for their actions. These numbers confirm it: The protesting Syracuse students speak for the nation.
WIthout meaningful reform – reform that Jamie Dimon opposes – students face poor job prospects, tight credit, and the continuing risk of future depressions caused by runaway bank greed. No wonder they don’t want to hear from Dimon: He has nothing to tell a roomful of young people who want to lead meaningful and productive lives in any field, including business.