Jamie Dimon, Obama, and the London Whale
President Obama is a potential victim of the announcement by JPMorgan Chase CEO Jamie Dimon, who earned $23 million last year, that his firm had suffered at least $2 billion in trading losses related to the so-called "London Whale" in a move that Mr. Dimon conceded was "poorly reviewed, poorly executed and poorly monitored."
White House visitor access records show at least 18 visits to the White House by Mr. Dimon during the Obama administration. The most recent disclosed visit, according to the visitor access records on the White House site, appears to have been January 21, 2012, when Mr. Dimon, accompanied by his wife Judith and daughters Julia, Kara, and Laura, attended a White House holiday open house.
Mr. Obama's relationship with Mr. Dimon had been the subject of press scrutiny even before the disclosure of the trading losses. In a January 26, 2010 press briefing, White House Press Secretary Robert Gibbs was asked, "what sort of message does it send that on Friday the President -- last week the President says he's fighting against Wall Street, but then today he has Jamie Dimon here for lunch as part of the group of six CEOs."
Mr. Dimon, again accompanied by his wife Judith, was a guest at President Obama's January 19, 2011, state dinner for the president of China, Hu Jintao. Politico's Josh Gerstein has reported that in 2010, Mr. Dimon had "a one-on-one with Obama in the Oval Office."
Campaign finance records at the Federal Election Commission show Mr. Dimon gave $2,000 to Mr. Obama's Senate campaign in 2004; $2,000 to the campaign of future Obama chief of staff Rahm Emanuel in 2007, $28,500 to the Democratic Senatorial Campaign Committee in 2007, $10,000 to the Democratic Congressional Campaign Committee in 2006, and $4,600 to Hillary Clinton's presidential campaign in 2007. He has also given to the campaigns of some Republican senators, including $2,000 in 2009 and $2,000 in 2010 to Rob Portman, a Republican of Ohio; $2,000 in 2007 to John Cornyn of Texas; and $2,500 in December 2011 to Mitch McConnell, the Senate Republican Leader.
President Obama's favorite businessman, Warren Buffett, told CNBC in February 2012 that Mr. Buffett owns shares of JPMorgan for Mr. Buffett's personal account.
Mr. Dimon devoted a significant portion of his annual letter to shareholders, released April 5, 2012, to arguing that his company's stock was undervalued. "Normally, we don't comment on the stock price," Mr. Dimon wrote. "However, we make an exception in section VIII of this letter because we are buying back a substantial amount of stock and because there are many concerns about investing in bank stock." The letter went on to say that the stock, which at the time the letter was written was trading at $45 a share, was "attractive." In after-hours trading following Thursday's disclosure of the trading losses, shares were trading at about $38.
JPMorgan Chase participated in the TARP program, and in the thick of the financial crisis some complained that Mr. Dimon was able to use his strong relations with government officials to take over the assets of Bear Stearns and Washington Mutual at favorable prices.
The firm says it is profitable even with the trading losses, and the price of the stock may eventually rise beyond $45 a share. But right now, with Mr. Dimon declaring, "we have egg on our face," it may be a while before Mr. Dimon gets another high-profile White House invitation.
And if you wonder whether Mitt Romney, with his business background, will be willing to try to capitalize on any of this, don't put it past him. "I don't want to save any Wall Street banks," Mr. Romney said in one Republican debate, and he has been talking against crony capitalism.
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