Jeffrey Epstein's dealings with JPMorgan Chase are the focus of extensive articles in today's Wall Street Journal ("Dimon Accused of Having Discussed Epstein") and New York Times ("JPMorgan Denies Fault for Epstein").
In each article, a lawyer for JPMorgan Chase is mentioned.
From the Wall Street Journal:
In his deposition, Dimon said that it was General Counsel Stephen Cutler's job to approve or terminate Epstein as a client and that other JPMorgan executives, including Mary Erdoes, could have also terminated the bank's relationship with Epstein.
Lawyers asked Dimon about an email from 2011 in which Cutler wrote that the bank should not do business with Epstein. "This is not an honorable person in any way. He should not be a client," Cutler wrote.
When asked why Epstein remained a client, Dimon said, "I have the utmost respect for Steve Cutler. He's one of the finest individuals and lawyers I know. He had the ability to override it. If he allowed them to make that judgment, it's because he didn't step in and say, you have to go. But he could have done that."
Dimon also said he thought Cutler and Erdoes were "trying to do the right thing," and that he trusts both.
Cutler, whose office was next to Dimon's for several years and left JPMorgan in 2018, declined to comment through a lawyer.
From the New York Times:
Mr. Dimon also said Stephen Cutler, the bank's general counsel from 2007 to 2015, never raised any concerns with him about Mr. Epstein. He said that he believed Ms. Erdoes and Mr. Cutler "were both trying to do the right thing" with the information they had at the time.
Stephen Cutler's name rang a bell with me. From FutureOfCapitalism in 2011 ("JP Morgan's Stephen Cutler"):
Another example of the regulatory revolving door comes from today's Wall Street Journal, in an article headlined, "What J.P. Morgan Knew About Madoff":
But on Tuesday, the bank's general counsel Stephen Cutler stood before a group of analysts and said J.P. Morgan "did not know about or in any way participate in the fraud" and vowed not to litigate the case in the media. Mr. Dimon then took the microphone and said: "You can imagine what I would say."
The Journal, alas, doesn't mention it, but this is the same Stephen Cutler who, until 2005, "was Director of the US Securities and Exchange Commission's Division of Enforcement. During his six-year tenure at the SEC, Mr. Cutler oversaw 1,100 employees and led the agency's investigations of numerous financial reporting matters, as well as its actions involving exchange specialists, research analysts and mutual funds."
If Mr. Cutler didn't figure out Mr. Madoff was a fraud while Mr. Cutler was at the SEC, how was Mr. Cutler supposed to figure out Mr. Madoff was a fraud while Mr. Cutler was at J.P. Morgan Chase? Nothing against Mr. Cutler, who by all accounts is a fine fellow, Phi Beta Kappa and summa cum laude from Yale and an editor of the Yale Law Journal. It's a complicated situation, and the Madoff victims and their lawyers have an interest in finding deep pockets from whom to recover. But one of the themes we've been hitting frequently around here is this concept of the revolving door between the regulators and the regulated, and this is a fine example.
Cutler is now of counsel at Simpson Thacher. Dimon, meanwhile, is being touted by Bill Ackman as a presidential candidate. From Ackman's Twitter:
Jamie Dimon is one of the world's most respected business leaders. Politically he is a centrist. He is pro-business and pro-free enterprise, but also supportive of well-designed social programs and rational tax policies that can help the less fortunate. He is extremely smart, thoughtful, and pragmatic, and he knows how to bring opposing parties together. He is highly respected by the Right, the Left, and the Center....
There is only one better job for Jamie than CEO of JPM and that's POTUS. Jamie just needs a push from people he respects and from the broader electorate. If you agree that he should be our next POTUS, give him a call, send him an email or go see him, and like and retweet this tweet. This will be one of the most important elections in our country's history. Jamie is more likely to run if we build a groundswell of support for him. Let's do our civic duty and make it happen.
My politics are probably closer to Jamie Dimon's than to either Donald Trump's or Joe Biden's, and I agree that Dimon has done a generally impressive job of managing a large organization through perilous times. Everyone makes mistakes, and the best of us learn from them and get better. But the idea that voters are going to wave Dimon into the White House after his and his bank's failings in both the Madoff and Epstein cases seems highly implausible to me. Does Jamie Dimon really want to endure tens of millions of dollars worth of negative television advertising linking his name permanently in the minds of Americans to Madoff and Epstein? My guess is that Dimon will find other ways to engage in public service that don't require him to spend the next 18 months revisiting those two cases.
