Jamie Dimon Will Have His Comeuppance in 2012

The race for Treasury Secretary Tim Geithner’s replacement was a dead heat as recently as late last summer. Two financial services thoroughbreds – Jon Corzine and Jamie Dimon – were touted as equally likely candidates. Only a scratch or a spectacular mid-race collapse would disqualify either of them from serious contention.

The Treasury Secretary buzz for Jon Corzine was so strong MF Global juiced the bonds his comeback firm issued in August with special terms in the event he was selected. Investors would receive a higher interest rate if Corzine, viewed by the markets as indispensable to MF Global’s success, had to leave his Chairman, CEO, and (now we know) Chief European Sovereign Debt Trader position to serve the President.

Jamie Dimon, CEO of JP Morgan Chase, has successfully sustained the myth, even in the wake of new claims by mortgage bondholders, that his bank is “facing fewer mortgage problems than competitors,” according to The Wall Street Journal. Despite the fact that Bear Stearns/EMC and Washington Mutual –  originators, securitizers, and servicers JP Morgan Chase inherited during the crisis –  face huge amounts of litigation, Dimon’s charm has so far insulated his bank from the kind of investor skepticism plaguing Citigroup and Bank of America.

It’s not a stretch to imagine that Jon Corzine’s days as a wealthy free man may be numbered. The longer the mystery of the missing MF Global $1.2 billion goes on, the more we see him bob and weave in front of angry legislators, the more arrogant and entitled his excuses for knowing nothing sound, the more likely it is prosecutors will make him the poster boy for criminal prosecutions of Wall Street banksters.

Until recently Corzine was viewed as untouchable given his gold-plated, triple-crown of former titles – Senator, Governor, and Goldman Sachs CEO.  He has also been one of the Democratic Party’s and President Barack Obama’s staunchest political and financial supporters. Last month he made back-to-back appearances in the Senate and the House where, instead of pleading  the Fifth, he hemmed and hawed, neither admitting nor denying responsibility while claiming no knowledge of anything that went on at MF Global outside the range of his Blackberry and the Bloomberg screen.

Last week the rollback of support for Corzine from the Obama administration began. According to BusinessWeek, “Corzine was one of 41 donors who bundled more than $500,000 this year for Obama’s re-election effort, according to documents released by the campaign Oct. 14.” On Dec. 24 the magazine reported that President Obama’s re-election campaign returned $70,000 of Corzine’s personal campaign contributions.

So my first prediction is an easy one: This is the beginning of the end for Corzine. It’s gloves-off time. Look for an indictment by the Department of Justice’s Preet Bharara before the end of 2012 for criminal misappropriation of customer funds at MF Global.

My next prediction isn’t so obvious.

I think the Obama administration will pull Jamie Dimon down along with Jon Corzine.