Is Jamie Dimon a Prophet?

The Bankers and the Department of Justice

May 31, 2023

The embattled banking sector has seen three banks fail this year, and the even more embattled media sector is pushing hard for Americans to dismiss comparisons to 2008 – while continually making comparisons to 2008.

For sure there are similarities. Banks are failing. Regulators are taking criticism and making promises. Investor uncertainty is wreaking havoc on markets.

But the media is working overtime to downplay the crisis, ensuring the American people “know” that, while these similarities exist, the current crisis may not pose the same level of systemic risks as the 2008 financial crisis.

The faces of finance also want to downplay the crisis. JPMorgan Chase Chief Executive Jamie Dimon told a Bloomberg reporter earlier this month,

“As for the banking crisis, I believe it will eventually sort itself out. It's not like the crisis in 2008 or 2009.” — Jamie Dimon, Bloomberg Interview, published May 11, 2023

This will come back around, wait for it.

Is This 2008 All Over Again?

From CNN on May 11, 2023, “But similarities between the two crises are deceiving, experts say. The current banking crisis is a separate, much smaller beast than in 2008.”

The talking points are in Axios, Fortune, and others, and cite three primary differences between 2008 and 2023: Scale, Root Cause, and Overall Impact on the Banking System.

Let’s break these down.

Scale

In 2008, a greater number of banks failed, with 25 collapsing initially and nearly 400 banks failing over the next three years. So far in 2023, only three banks – Silicon Valley, Signature, and First Republic – have failed per the FDIC failed bank list.

To their credit, both the NY Times and NY Post are reporting that the number of banks is less important than the volume of assets, and that the three banks that failed this year are worth more in inflation-adjusted assets than 2008’s 25 banks combined.

Together, Silicon Valley, Signature, and First Republic held $532B in assets which is, per the NY Times, “more than the $526 billion, when adjusted for inflation, held by the 25 banks that collapsed in 2008 at the height of the global financial crisis.”

Root Cause

The difference being asserted here is that, in 2008, banks failed primarily due to risky lending practices and the spread of faulty loans “packaged as safe investments.” In 2023, analysts claim the cause is the banks’ faulty business models and the failure to effectively adapt to the Federal Reserve’s rapidly increasing interest rates.

On this “difference,” I call foul.

Both crises can be traced back to the domestic policy of the United States Congress and the monetary policy of the private central bank, the Federal Reserve. In the years leading up to the 2008 crisis, the Fed loosened monetary policy and lowered interest rates to stimulate the economy. At the same time, government policies were aimed at promoting homeownership and expanding access to credit. And that combination created the housing bubble, which popped when people stopped paying their loans.

In other words, for both 2008 and 2023, we can trace the root cause to the equitable domestic policies of the US government and the monetary policies of their private central bank.

Overall Impact

In 2008, the interconnectedness of banks triggered a domino effect throughout the financial system. In 2023, the regime argues, the failed banks are not as interconnected, and there are fewer secondary markets tied up in risky assets.

This is just ‘hopium.’ It’s too early to understand the overall impact of our current banking crisis, and those downplaying the impact of this year’s bank failures may be in for a rude awakening.

Hey, Weren’t You in Titanic?

These are the similarities and differences highlighted in the regime talking points that are making their way around the world. But there is another similarity between 2008 and 2023 that we must discuss:

The role of JPMorgan Chase.

JPMorgan Chase is the largest bank in the United States and third largest bank in the world, second to Industrial and Commercial Bank Of China Ltd. and China Construction Bank Corp.

According to their boilerplate,

“JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America (“U.S.”), with operations worldwide. JPMorgan Chase had $3.7 trillion in assets and $303 billion in stockholders’ equity as of March 31, 2023.” — JP Morgan Chase & Co. Media Boilerplate, 2023

In the 2008 crisis, Washington Mutual — which was the largest savings and loan association in the US and was heavily involved in risky mortgages — was seized by the government and then sold to JPMorgan Chase for around $1.9B. That same year, JPMorgan Chase acquired Bear Stearns, one of the largest investment banks in the United States, for about $1.2B.

This acquisition of Bear Stearns was facilitated by the Federal Reserve in an attempt to prevent its collapse.

In addition to Washington Mutual and Bear Stearns, JPMorgan Chase bought up other significant financial assets in the midst of the crisis, including: Bank of NY Mellon shareholder services for $16.5B; RBS Sempra Commodities’ global oil, gas, metals, and agricultural trading operations for $1.7B; and MF Global's Stake in the London Metal Exchange for $39.1M.

What about now?

Well, earlier this month, JPMorgan Chase bought First Republic Bank.

“Our government invited us and others to step up, and we did.”
“Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”
“This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.” — Jamie Dimon, JPMorgan Chase & Co Press Release, Mar 1, 2023

According to the firm’s press release, the key elements of the deal include:

“Acquisition of the substantial majority of First Republic Bank’s assets, including approximately $173 billion of loans and approximately $30 billion of securities
Assumption of approximately $92 billion of deposits, including $30 billion of large bank deposits, which will be repaid post-close or eliminated in consolidation
FDIC will provide loss share agreements covering acquired single-family residential mortgage loans and commercial loans, as well as $50 billion of five-year, fixed-rate term financing
JPMorgan Chase is not assuming First Republic’s corporate debt or preferred stock.”

But unlike 2008, despite the firm’s inorganic and opportunistic growth strategy that led to $3.7 trillion in assets under management, Dimon says he isn’t buying any more failed banks.

Speaking to Bloomberg, he claimed:

“People always look at the financial deal. Forget the financial deal. We have 800 people working around the clock. 10,000 people deployed to consolidate systems, risk, fraud, credit, payments, branches, real estate, vendors, technology, it’s a lot of work.” — Jamie Dimon, Bloomberg Interview, published May 11, 2023

He’s not wrong. During my time in corporate America, I worked on more than a dozen post merger integration projects, and it’s all-consuming.

But whether you’re acquiring a failing company or a sound one, it’s a lot of work. The level of risk may vary, but needing to “consolidate systems, fraud, credit, payments, branches, real estate, vendors, (and) technology” is expected for any acquisition.

JPMorgan Chase was “built on the foundation of more than 1,200 predecessor institutions that have come together through the years to form today's company,” according to their website, and I’d be highly surprised if the firm didn’t have a time tested integration playbook and approach for integrating banks.

When Dimon says he isn’t acquiring any additional banks, is he referring only to failing banks in the current crisis? In other words, is Dimon signaling a broader shift in JPMorgan Chase’s foundational strategy of growing through mergers and acquisitions?

I can’t say for sure, but given the current moment in money and the changing landscape of financial services, it’s an interesting question. The financial services industries are in the midst of intense transformation – from a changing regulation landscape to digitization and tech modernization to the rise of new asset classes – and the Banking Cartel always tends to make moves that further consolidate and centralize their power.

Regardless of the banking giant’s growth strategy, Dimon wants us to believe he is bullish on banking.

Hey, Stop Shorting Banks, Or Else!

Here’s where it comes back around.

Dimon said he believed the banking crisis was going to “sort itself out,” right?

In the same Bloomberg interview mentioned above, Dimon forgot himself, dropped the facade, and went full communist:

"The SEC has the enforcement capability to look at what people are doing by name in options, derivatives, short sales … they should go after them, and vigorously, and they should be punished to the full extent the law allows it." — Jamie Dimon, Bloomberg Interview, published May 11, 2023

Dimon admitted that he has no evidence of wrongdoing. Instead, he flexed on the importance of going after potential wrongdoings.

Welcome to Minority Report:

“Regarding short sellers, my team has informed me that it's not the primary issue. Analyzing stocks and short sales, it doesn't seem to be a significant problem. However, there might be unscrupulous individuals using other means to go short. The SEC should enforce existing regulations and go after anyone engaging in wrong practices, collusion, or spreading false information about banks.” — Jamie Dimon, Bloomberg Interview, published May 11, 2023

What does he mean by wrong practices? Is that a legal standard?

Wait, is Dimon a prophet?

Dimon made those remarks to Bloomberg on May 11, 2023. Less than two weeks later, on May 24, 2023, Reuters reported, "US action on short-sellers likely in 'next few months' -DOJ official":

“Short-selling, the practice of seeking to profit off bets that a stock will fall, is a key focus for U.S. prosecutors, and there will be more activity by the Justice Department in coming months, a top department official said on Wednesday. The recent rout in shares of U.S. regional banks brought fresh scrutiny by criminal prosecutors and regulators of short sellers, who had previously come under review in the wake of the “meme stock” craze of 2021, Reuters and other media outlets have reported.” — Reuters

Someone better tell the shitcoiners.

Short selling is a legitimate investment strategy. Talking smack about banks online is legitimately protected First Amendment activity. But the implication here is that if you have a short position on a bank security, AND you spread fear/uncertainty/doubt about that bank security online, you’re engaging in market manipulation, collusion, wrong practices, etc.

When Jamie Dimon speaks, he moves markets.

Apparently, he now also moves the investigative priorities of the US Department of Justice. This is more than slightly concerning considering that, on Friday, Dimon was set to be privately deposed in the US Virgin Islands Epstein case. The suit alleges that, “Human trafficking was the [principal] business of the accounts Epstein maintained at JPMorgan.”

While most Americans aren’t shorting banks, the Banking Cartel’s current offensive strategy cannot be ignored. On Thursday’s Badlands Media Economy Update, Sean Morgan and Kirk Elliott reported about a bank in London that is now requiring customers to rationalize — in writing — any withdrawals greater than 2,000 British pounds.

It may be a little while until your American bank requires written justification of how you plan to spend your own money before they will allow you to access it. But it’s naïve to think that moment is not coming.

Indeed, for those holding short positions on banks, that moment is already here.

Will Merrick Garland examine Jamie Dimon’s investment portfolio against his public statements?

Of course not. It’s a banker’s world, and we’re just living in it.

Badlands Media articles and features represent the opinions of the contributing authors and do not necessarily represent the views of Badlands Media itself.

Ashe in America hosts Culture of Change on Badlands Media, Sundays at 6PM ET. If you enjoyed this contribution to Badlands Media, please consider checking out more of her work for free at Ashe in America.

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