While news of Timothy Geithner’s exit from the Administration as Treasury Secretary reverberates throughout the political spectrum, Jamie Dimon, CEO of investment bank JP Morgan, is quickly becoming the new leader in the race for this unelected position.
There is very serious concern surrounding Jamie Dimon’s appointment as Treasury Secretary. Should he be the next in line for the very powerful position, it would confirm once more that it is Goldman Sachs and JP Morgan that call the shots in the White House. Hank Paulson was a Sachs alumni, and Geithner worked with both Rubin and Paulson, both Goldman alumnus. Geithner’s toughest decision might have been allowing the failure of Bear, AIG, and Lehman Brothers—all of which could be described as investment banking operations—while allowing JP Morgan and Goldman Sachs to avoid failure on the public’s dime.
Tangling Business and Government
Jamie Dimon is an interesting example of a future Treasury Secretary. He served as CEO at Bank One—a subprime lender all its own—before going to JP Morgan and buying out his previous employer. During this time, he also spent time at the Federal Reserve, which would surely enable him to see how the US Treasury, already working in tandem with the private bank, could better funnel cash from Main Street to Wall Street.
Dimon is well adjusted to a position in government. A Democrat and well-known in Chicago’s political circles, he’s also very close to Geithner. Dimon was among three banking CEOs who have been given near absolute access to Geithner during the events of the financial crisis.
Not Much a Stickler
Politically, Dimon has nothing going for him that Main Street might find alluring, which does help him in his possible role as US Treasury Secretary. He recently gained fame in standing up to Bernanke, charging the Fed and government both with creating too much regulation that, in his view, would restrict the banks from financing a future American recovery.
Interestingly, that view disagrees with his position just weeks after receiving a Federal bailout. After receiving $25 billion, JP Morgan Chase announced its interest in a new policy of acquisitions, hoping to suck up smaller, less politically connected banks, just as the firm had done a century earlier. Lest we forget that it was the original JP Morgan, the man and banker himself, who received millions from the US government to “solve” the panic of 1907. The banker’s solution, of course, was to buy up every bank that he would let fail.
It’s hard to see why Jamie Dimon won’t become the next Treasury Secretary. Few people know who he is, only the bank that he runs. No one will get to vote on the matter, as it is a position for nomination, not election. And if Timothy Geithner can earn a position in government—in the Treasury, no less—after failing to pay his taxes in full, Dimon’s entrance into the position should be nothing more than a cakewalk.
Whether Dimon will create any lasting change, or have any real influence, remains to be seen. However, any way you slice the next nomination, you can be sure that the old policies of the Secretaries past will not be going anywhere any time soon.
By Dr. Jeff Lewis
Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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