YVES SMITH, nakedcapitalism.com
Jamie Dimon is on deck tomorrow before the Senate Banking Committee to explain how a so-called hedge produced losses that are almost certain to exceed the $2 billion the bank has ‘fessed up to. But this is likely to be at most a ritual roughing up.
First, the hearing is only two hours, and that includes the usual pontificating at the start of the session. By contrast, Goldman executives were raked over the coals for 10 hours over their dubious collateralized debt obligations. The comparatively easy treatment is no doubt related to the fact that JP Morgan is a major contributor to the five most senior committee members. Per American Banker:
JPMorgan is Banking Committee Chairman Tim Johnson’s second-largest contributor over the last two-plus decades, according to the Center for Responsive Politics, which analyzes campaign giving from companies’ employees and their political action committees since 1989. The same is true for the committee’s top Republican, Sen. Richard Shelby, and its second-ranking Democrat, Sen. Jack Reed.
The committee’s number-two Republican, Sen. Mike Crapo, and its third-ranking Democrat, Sen. Charles Schumer, are not far behind their colleagues, with JPMorgan ranking third and fourth, respectively, among their contributors.
Second is that the format of these hearings, with each Senator getting only five minutes each per witness, makes it difficult for a questioner to pin an evasive or clever witness. It won’t be hard for Dimon to either run out the clock or bamboozle his interrogators. But he might, as he did in his hastily-called press conference announcing the losses, make more admissions to the effect that he and senior management weren’t on top of what the group was doing. That would support the notion that JP Morgan’s risk controls were inadequate, which would mean that Dimon’s Sarbanes Oxley certification for 2011, and potentially earlier years, was false.
In the hope of improving the caliber of questions, Occupy the SEC and the OWS Alternative Banking Group drafted a joint letter to the Senate Banking Committee chairman, Tim Johnson. It consists of a general discussion, and then some background for each of its questions. This letter came out of last Sunday’s Alternative Banking meeting and the signers of the letter did the heavy lifting of creating a final document.
link to letter is: http://www.scribd.com/webber3292/d/96864392-Occupy-the-SEC-Alternative-Banking-Letter-to-Senate-on-JP-Morgan
[Comments to the article on the link, will provide excellent answers and perspective on this most important hearing ... ]



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