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Newly installed Comptroller Tom Curry faced a barrage of criticism over how JPMorgan lost more than $2 billion from trades in London and why regulators were not more aware of the severity of the threat.
June 6 -
Bank industry experts this week offered several suggestions for how Jamie Dimon should go about repairing JPMorgan Chase's reputation, after a London trader's bets lost the bank at least $2 billion.
May 24
WASHINGTON — When the Senate Banking Committee meets Wednesday to question Jamie Dimon about the massive trading loss at JPMorgan Chase (JPM), its five most senior members will have one thing in common: a heavy reliance on campaign contributions from the politically connected New York bank.
JPMorgan is Banking Committee Chairman Tim Johnson's second-largest contributor over the last two-plus decades, according to the Center for Responsive Politics, which analyzes campaign giving from companies' employees and their political action committees since 1989. The same is true for the committee's top Republican, Sen. Richard Shelby, and its second-ranking Democrat, Sen. Jack Reed.
The committee's number-two Republican, Sen. Mike Crapo, and its third-ranking Democrat, Sen. Charles Schumer, are not far behind their colleagues, with JPMorgan ranking third and fourth, respectively, among their contributors.
But campaign contributions are just one manifestation of JPMorgan's intense, enduring involvement in both Democratic and Republican politics in Washington. The bank's long political shadow will hang over Wednesday's hearing, although several observers were skeptical that it will buy Dimon any favors in such a high-fprofile public setting.
"Contributions are useful, but they do not protect you when you have gotten in trouble in a high visibility way," said Larry Sabato, director of the University of Virginia's Center for Politics. "That description fits Dimon just now."
Still, the hearing places numerous senators, Senate staffers, and former staffers in an uncomfortable position, in part because it puts a spotlight on the revolving door between the Senate Banking Committee and K Street.
Dwight Fettig, who currently serves as a top aide to Johnson as the Banking Committee's staff director, is a former lobbyist at Porterfield & Lowenthal who did work for JPMorgan in 2009 and 2010. In addition, a former top aide to Johnson, Naomi Camper, is one of JPMorgan's chief lobbyists.
Sean Oblack, a Banking Committee spokesman, released a statement Tuesday defending Johnson's record with respect to JPMorgan, noting the South Dakota Democrat was the first committee chairman to call Dimon to testify about the firm's trading loss. "While Senate and House Republicans, along with Mr. Dimon, have fought to weaken or repeal the Wall Street Reform Act, no one has been a stronger defender of the law than Chairman Johnson," the statement said.
The statement also noted: "Dwight Fettig has served for more than 16 years on Chairman Johnson's staff, and the chairman has complete confidence in his integrity, judgment and independence."
It is not just Johnson who has close ties to JPMorgan, which declined an opportunity to comment on the record for this article. In-house lobbyists for the bank include Kate Childress, a former aide to Schumer, and Steven Patterson, a former Republican staff director of a Senate banking subcommittee.
Additionally, three outside lobbyists for the bank have formerly worked for the Banking Committee or one of its members, according to information compiled by First Street Research Group, which publishes reports on Washington lobbying.
Jason Rosenberg, a lobbyist for The Glover Park Group, is a former aide to Democratic Sen. Jon Tester, who sits on the Banking Committee. Jenn Fogel-Bublick, a lobbyist at McBee Strategic Consulting, is a former Democratic counsel on the Banking Committee. And Mike Chappell, a lobbyist for Fierce, Isakowitz & Blalock, is a former press assistant to Republican Sen. Roger Wicker, also a member of the Banking Committee.
Dimon, who has been chief executive officer of JPMorgan since 2006, has a reputation as a savvy political player, and the bank's lobbying expenditures have increased under his leadership.
During Dimon's tenure, the bank has taken a studiously bipartisan approach both to lobbying and to campaign contributions. Of the 11 former Hill staffers who are now in-house lobbyists for JPMorgan, six used to work for Democrats, and five were employed by Republicans.
In the 2006 and 2008 election cycles, JPMorgan's contributions favored congressional Democrats, but since then, as the GOP's electoral fortunes rose, so did the share of the bank's donations that went to Republican candidates.
In the last three election cycles, Tester and fellow Democratic Sen. Mark Warner have joined Johnson, Schumer and Reed as among the top recipients of the bank's campaign spending.
On the Republican side of the committee dais, JPMorgan has given heavily in recent years to Sens. Mark Kirk and Bob Corker in addition to Shelby and Crapo.
Not all senators on the Banking Committee have significant ties to JPMorgan.
Republican Sens. Mike Johanns and Jerry Moran and Democratic Sens. Jeff Merkley, all of whom entered the Senate in 2008 or later, have not received contributions to their Senate campaigns from the New York bank. Longer-serving Democratic Sens. Daniel Akaka and Herb Kohl have not received any contributions from JP Morgan since at least 1990, according to the available records. Four other members of the committee — Democratic Sens. Sherrod Brown, Kay Hagan and Robert Menendez and Republican Sen. Pat Toomey — have received less than $5,000 from JPMorgan in the last three election cycles.
Merkley, Brown and Menendez were among the senators who asked tough questions of banking regulators at last week's Banking Committee hearing on the JPMorgan losses.
At Wednesday's hearing, observers of the Senate Banking Committee expect sharp questions for Dimon both from members who have close ties to JPMorgan and those who do not.
"No member of Congress can necessarily run a reelection campaign on being cozy with the big banks," said Edward Mills, a financial policy analyst with FBR Capital Markets. "Do I anticipate anyone getting special treatment? Not necessarily."
Brian Gardner, a policy analyst with Keefe, Bruyette & Woods, Inc., said that Democrats and Republicans will use the hearing to advance their favored narratives about financial reform.
"I think the JPMorgan story plays into a lot of different political arguments, be it in favor of Dodd-Frank or skeptical of Dodd-Frank and wanting other approaches like the Republicans do," Gardner said.
Lisa Donner, executive director of Americans for Financial Reform, which is often on the opposite side of the policy debate from JPMorgan, nonetheless expressed an upbeat view about the likely tone of Wednesday's hearing.
"When we have these moments when people are watching, that's when despite the fact that the public interest is way overmatched on resources, this is when our side gets to have our moment," she said. "And I hope that members use it to ask hard questions with policy follow-through."
