By Jonathan Weil
Jamie Dimon is at it again. Speaking to his bank's clients yesterday during a panel discussion in Koenigstein, Germany, the chairman and chief executive officer of JPMorgan Chase & Co. said regulators and banks should come up with a system that lets lenders go broke without hurting the world economy.
"We've got to get rid of too-big-to-fail," Dimon said, according to a Bloomberg News article this morning. "We have to ensure big banks can be taken down without harming the public and at no cost to them."
Remarks such as these, coming from the head of JPMorgan, are maddening. (And Dimon has made similar comments before.) Here he is saying all the right things and making all the right moves from a public-relations standpoint. Of course we should eliminate too-big-to-fail, most of us can agree. Of course we should ensure these monster institutions can fail without harming the public.
Yet as things stand now, there's no way Dimon or anyone else could credibly argue that the sudden failure of JPMorgan could happen today without causing massive damage to others. If Dimon means what he says, he shouldn't be complaining about how society at large is obliged to fix the problem. JPMorgan should be doing something about JPMorgan to make sure it's not too-big-to-fail -- like break itself up.
That's a pipe dream. JPMorgan isn't going to voluntarily give up the reduced cost of capital and other competitive advantages that come with the federal government's backing of systemically important financial institutions.
Jamie Dimon complaining that the world must end too-big-to-fail is like Darth Vader bemoaning the intergalactic dominance of the Death Star.