Just a few years ago, Jamie Dimon was hailed as "the President's favorite banker." The New York Times praised him.
Not much later, however, Jamie was asking, "Why does The New York Times hate the banks?"
According to Jamie, that's unfair to the industry, because "not all bankers are the same." With grammatical athleticism worthy of Shakespeare, Jamie observes that "Sometimes there's a bad apple, so we denigrate the whole."
Point well taken! I'm sure Cam Fine and the ICBA could identify hundreds of community bankers who are not only revered but beloved by their customers.
So, let's look for the bad apple.
Jamie's in the spotlight, with his remarkable gift for hogging the limelight as poster boy for banks, and even for all of "the successful." He's been touted as a prospective Obama Secretary of the Treasury—although (or because?) he suggests that Washington swallow its bailout losses and butt out of telling banks what to do. Nevertheless, guess who "coordinated" the recent meeting of Fed Governor Tarullo with bankers in New York?
Apart from the tireless showboating, what's he actually done at JPMorgan Chase, where he's been CEO since 2005, having led a predecessor since 2000?
Jamie's most recent headlines revealed a $2 billion loss in Chase's chief investment office—a loss which is likely to increase, maybe double, as Chase struggles to liquidate its market-dominant position. Jamie attributes the loss to sloppy management, inadequate supervision. Maybe his eyes left the ball as he tirelessly preached to Washington and the industry.
But that's just last week's headline. Under Jamie's leadership, Chase has been successfully accused of cheating and customers in remarkably numerous and diverse ways.
Under the recent national mortgage settlement, Chase will pay over $1 billion to federal and state governments. Second only to Bank of America, which is paying largely for sins committed by Countrywide before Ken Lewis bought it.
Separately, Chase admitted to illegally foreclosing on armed services members.
In San Antonio, Jamie's rogue "legal" operation fomented suits against debtors based on incomplete or inaccurate bank records – as was extensively documented in American Banker. Do you see other banks that went this far out of bounds?
Chase has also settled a suit for illegally making automatically dialed calls to cell phones of people who didn't owe the bank money, and who had to pay for these calls.
Chase's excessively aggressive efforts to make people pay go well beyond lending. Chase paid more than $100 million in a class action settlement over allegations that it charged abusive overdraft fees. If you had a $100 checking balance and incurred a $20 debit card transaction followed by a $200 one, which Chase chose to pay, then Chase could treat the $200 transaction as having occurred first, even though it didn't—getting two overdraft fees instead of one.
Last year, Chase agreed to pay $154 million to settle SEC charges that the bank misled investors in a CDO by not disclosing that a hedge fund helped select the assets in order to short them.
Class actions, the courts and even regulators typically offer only very incomplete and dilatory relief to cheated consumers. For example, a recent settlement offers $30 ("before fees and expenses," of course) to card customers who were enrolled in Chase payment protection without their consent or knowledge. But, on a $2,000 balance, payment protection costs consumers approximately $200 per year. The $30 settlement did little for the ripped-off customers. But the class action lawyers got well paid, and Chase retains most of its ill-gotten gains.
It doesn't have to be this way. A man worked for me as head of marketing for a bank and later successfully ran a major division of a megabank. He always insisted on knowing how customers were treated. He was guided by what he called "my smell test." If it didn't smell right to him, he wouldn't do it. And I upheld those decisions, even if the lawyers said we could do it.
If Chase is so big and complicated that no CEO can apply, teach and enforce decency and the smell test—then break Chase up.
If not, then replace Jamie with a CEO who focuses on doing right by customers, delivering value to them—rather than pumping himself up as Mr. Banking and making us all look like gamblers and thieves.
Andrew Kahr is a principal in Credit Builders LLC, a financial product development company, and was the founding chief executive of First Deposit, later known as Providian.