I am not a Marxist, but a man named "Marx" had something to say about monopoly capitalism, and a man named "Lenin" also sometimes wrote about finance capitalism in particular.
Let’s remember that among the large banks the Fed has Citi and Wells in the penalty box and Goldman politically cannot be offered any special opportunities. This leaves BoA and JPMC who were both advantaged over large regional bank buyers for FRC as they have branches in the same places FRC does, allowing for cost cuts and economies of scale. BoA was not interested in FRC, leaving JPMC.
JPM’s current pre-eminence is a matter of happenstance and good fortune. JPMC had purchased Bank One in 2003 and was in consolidation mode, actively trying to reduce its balance sheet in 2004 and 2005 when other banks were starting to build their balance sheets aggressively as the real estate and credit bubble kicked off.
By 2007-2008 JPM was ready to grow again and Dimon made a bid for Wamu in early 2008 (pre-failure). Wamu’s board rejected the bid. If Dimon had been successful JPM would have been hurt like Wachovia and BoA who foolishly bought bad assets before the crash and Dimon would have been sacked within a year like their CEOs.
Better to be lucky than smart.
Even so, all the big banks have recovered from their self-inflicted harm of 2008-2009, even BoA and Citi. JPMC started with a better balance sheet and no doubt is a well-run bank (I was an MD there for nearly a decade pre-GFC and still have friends there) with excellent franchises but it has been a relatively easy last 10-13 years for all the big banks. The prior 15 years 1995–2009 had several huge EM crises, the TMT collapse, Enron, dot com collapse and the GFC. Lots of sailors look like geniuses with calm seas and favorable winds.
I see below where several commentators have criticized your coverage of the present banking situation. I want to know, "What are the proposed remedies to this situation, and what institutions do you feel could replace the present ones." One of the most significant flaws in capitalism is its inability to apportion profits among its participants fairly, and JPMC might be an example of this flaw.
Adam Tooze keeps catering to his hypocritical upperclass followers by endlessly babbling about a parasitic class of rentiers, monopoly captalists and their governmental henchmen like the present state of societies and the rotten mechanisms of a financialized world is something worth preserving
I agree with comments about what a great summary/review of the power of JPMC in the US. In particular, the concluding remarks about its movement toward further global influence. Probably another segment, but I was interested in the prominent position of Chinese banks. We’re now talking about US banks, specifically JPMC as the “non-Chinese banking sector.” A unique new perspective. It seems. Does this suggest the once unquestioned dominance of US finance has been radically diminished? Could that “slippage” explain some of the current anti-China focus seen in US foreign policy? Wars are waged on many fronts. Anyway, a very thought provoking article!
The more I see almost everyone missing the 100,000 foot macro view of this mess, the more scared I get. Our current civilisation is in 1:1 correspondence with our insane financial system. You cannot have one without the other. The human world does not function or appear as it does today without it. Therefore it is the economic paradigm that we must be prepared to change, not just whatever apex parasite JPM XYZ that currently sucks at the firehouse coming out the top of the terminal pyramid scheme we call the “global economy”.
There is no version of growth-based capitalism that doesn’t lead to this same endgame. We need to jettison the steam-age economic dogmas and think of pathways to a new model right now. It may be impossible at this point, but let’s at least try and change the game itself instead of forever arguing over the colour of the player’s jerseys?
But since the 2019 repo crisis the Fed has taken on a significant role as a funder in the reverse repo market. To what extent has it replaced JPMorgan chase as the most significant market party?
Some of the commentary depicts JPMorgan Chase as an "apex predator." At best it is a scavenger cleaning up the carcasses of failed banks with the Federal Governments approval when no other "scavenger" pays more for the pieces. Because of its size JP Morgan Chase is not permitted under Federal regulations from buying other banks in the merger market. It can only be a scavenger and in that way provides a public service as long as it pays the most to the Government for the pieces.
I enjoy, mostly, your range of curiosity with your topics and observations. At times you appear to embrace the ilk of progressive, liberal, and libertarian. While at times a bit deep into progressive causes & illusions I find your points well documented and even keeled. Well done 👍
I thought it was commonly suspected that JPM is one of the owners of the Federal Reserve. As such Dimon would have inside information on the challenges befalling the Fed. Having said that, I feel that the Fed really does a massive juggling act between the public, private, and government needs, and is highly tuned to all of them. Many feel that it’s the other way around, but I doubt it. If a revolution falls on Washington, it’s an existential problem for the Fed (and it’s member banks). As such it appears bounded by certain measures -- 2% inflation target, reasonable unemployment, stable equities market (where public pensions are kept), and government deficit spending (making sure there is always money for the Treasury). Once the tools of the Fed are understood, then one can anticipate opportunities. Right now there appears to be conflict between ongoing financial repression and a strengthening dollar, given the shrinking money supply. Regional banks are having difficulty raising capital, it appears.
I am not a Marxist, but a man named "Marx" had something to say about monopoly capitalism, and a man named "Lenin" also sometimes wrote about finance capitalism in particular.
Interesting, thanks.
Let’s remember that among the large banks the Fed has Citi and Wells in the penalty box and Goldman politically cannot be offered any special opportunities. This leaves BoA and JPMC who were both advantaged over large regional bank buyers for FRC as they have branches in the same places FRC does, allowing for cost cuts and economies of scale. BoA was not interested in FRC, leaving JPMC.
JPM’s current pre-eminence is a matter of happenstance and good fortune. JPMC had purchased Bank One in 2003 and was in consolidation mode, actively trying to reduce its balance sheet in 2004 and 2005 when other banks were starting to build their balance sheets aggressively as the real estate and credit bubble kicked off.
By 2007-2008 JPM was ready to grow again and Dimon made a bid for Wamu in early 2008 (pre-failure). Wamu’s board rejected the bid. If Dimon had been successful JPM would have been hurt like Wachovia and BoA who foolishly bought bad assets before the crash and Dimon would have been sacked within a year like their CEOs.
Better to be lucky than smart.
Even so, all the big banks have recovered from their self-inflicted harm of 2008-2009, even BoA and Citi. JPMC started with a better balance sheet and no doubt is a well-run bank (I was an MD there for nearly a decade pre-GFC and still have friends there) with excellent franchises but it has been a relatively easy last 10-13 years for all the big banks. The prior 15 years 1995–2009 had several huge EM crises, the TMT collapse, Enron, dot com collapse and the GFC. Lots of sailors look like geniuses with calm seas and favorable winds.
It also helps when you could borrow from the Fed at .5% and turn around and use that money to buy T-bills then paying 4.5%.
Just a fantastic piece of analysis. Can't say anything more.
Of course there aren't any oligarchs in the West, amirite?
I see below where several commentators have criticized your coverage of the present banking situation. I want to know, "What are the proposed remedies to this situation, and what institutions do you feel could replace the present ones." One of the most significant flaws in capitalism is its inability to apportion profits among its participants fairly, and JPMC might be an example of this flaw.
Adam Tooze keeps catering to his hypocritical upperclass followers by endlessly babbling about a parasitic class of rentiers, monopoly captalists and their governmental henchmen like the present state of societies and the rotten mechanisms of a financialized world is something worth preserving
Aberrant takes:
https://unlimitedhangout.com/2023/03/investigative-series/the-rise-of-jamie-dimon/
https://rudy.substack.com/p/turn-off-your-tape-recorder
Very informative article
Fascinating. Thank you.
I agree with comments about what a great summary/review of the power of JPMC in the US. In particular, the concluding remarks about its movement toward further global influence. Probably another segment, but I was interested in the prominent position of Chinese banks. We’re now talking about US banks, specifically JPMC as the “non-Chinese banking sector.” A unique new perspective. It seems. Does this suggest the once unquestioned dominance of US finance has been radically diminished? Could that “slippage” explain some of the current anti-China focus seen in US foreign policy? Wars are waged on many fronts. Anyway, a very thought provoking article!
Phenomenal writeup 👏🏻
So Jamie Dimon = neo John Malone?
The more I see almost everyone missing the 100,000 foot macro view of this mess, the more scared I get. Our current civilisation is in 1:1 correspondence with our insane financial system. You cannot have one without the other. The human world does not function or appear as it does today without it. Therefore it is the economic paradigm that we must be prepared to change, not just whatever apex parasite JPM XYZ that currently sucks at the firehouse coming out the top of the terminal pyramid scheme we call the “global economy”.
There is no version of growth-based capitalism that doesn’t lead to this same endgame. We need to jettison the steam-age economic dogmas and think of pathways to a new model right now. It may be impossible at this point, but let’s at least try and change the game itself instead of forever arguing over the colour of the player’s jerseys?
This is a detailed and important commentary.
But since the 2019 repo crisis the Fed has taken on a significant role as a funder in the reverse repo market. To what extent has it replaced JPMorgan chase as the most significant market party?
Some of the commentary depicts JPMorgan Chase as an "apex predator." At best it is a scavenger cleaning up the carcasses of failed banks with the Federal Governments approval when no other "scavenger" pays more for the pieces. Because of its size JP Morgan Chase is not permitted under Federal regulations from buying other banks in the merger market. It can only be a scavenger and in that way provides a public service as long as it pays the most to the Government for the pieces.
I enjoy, mostly, your range of curiosity with your topics and observations. At times you appear to embrace the ilk of progressive, liberal, and libertarian. While at times a bit deep into progressive causes & illusions I find your points well documented and even keeled. Well done 👍
In the modern era, who controls whom? I’m sure there are boundaries on either side.
I thought it was commonly suspected that JPM is one of the owners of the Federal Reserve. As such Dimon would have inside information on the challenges befalling the Fed. Having said that, I feel that the Fed really does a massive juggling act between the public, private, and government needs, and is highly tuned to all of them. Many feel that it’s the other way around, but I doubt it. If a revolution falls on Washington, it’s an existential problem for the Fed (and it’s member banks). As such it appears bounded by certain measures -- 2% inflation target, reasonable unemployment, stable equities market (where public pensions are kept), and government deficit spending (making sure there is always money for the Treasury). Once the tools of the Fed are understood, then one can anticipate opportunities. Right now there appears to be conflict between ongoing financial repression and a strengthening dollar, given the shrinking money supply. Regional banks are having difficulty raising capital, it appears.