I've often enjoyed Rolling Stone for their political coverage. It may be like actually getting Playboy for the articles, but I get Rolling Stone for the politics, and skip past the music news.
This week Sen. Jeff Merkley showed he was a rock star, in the political sense of the term.
Here are some snippets from Rolling Stones' coverage of the Senate Banking hearing with J.P. Morgan Chase CEO Jamie Dimon:
If not for Oregon’s Jeff Merkley, who was the only senator who understood the importance of taking the right tone with Dimon, the hearing would have been a total fiasco. Most of the rest of the senators not only supplicated before the blowdried banker like love-struck schoolgirls or hotel bellhops, they also almost all revealed themselves to be total ignoramuses with no grasp of the material they were supposed to be investigating...
Merkley gets right to the heart of the problem with the hearing. Dimon had been allowed to come to the Hill and rail against the Volcker rule, arguing to one wide-eyed, gushing senator after another that putting up firewalls would prevent good bankers like himself from stoking the engine of the American economy by vigorously participating in the capital markets.
Merkley, who offered the key Volcker rule amendment in the Dodd-Frank negotiations, was the only member who pointed out the lunacy of this argument. Nobody is saying participation in the capital markets should be cut back; nobody’s trying to ban investment banking or hedge funds. The only thing anyone is suggesting is that you shouldn’t be able to bankroll a risky hedge fund with federally-insured money.
You can either be a commercial bank, with all the federal support that entails, or you can be a high-risk gambler. But you shouldn't be allowed to be both. ...
"How many companies on the planet have been offered half a trillion dollars in low-interest loans? Not many," he says. "But the basic concept of the Volcker rule is that banks are in the lending business, not the hedge fund business. Would you agree?"
Dimon, taking his time with this dangerous question, answers: "We’re not in the hedge fund business."
This is an obvious lie – that’s exactly what Chase’s CIO unit is, a giant hedge fund. Merkley goes on to point this out, noting that executives at CIO had already admitted that they were told to change their strategy and accumulate high-yield assets, and specifically risky credit derivatives, instead of safer, government-backed securities. Moreover, this was all at Dimon’s specific direction.
"That sounds like operating a hedge fund," says Merkley, "and doing so at your direction, with government-insured deposits."
Go read the full piece. It's great stuff, and makes me proud to be an Oregonian.