Who will speak for Wall St.?

  • Article by: DAWN KOPECKI , Bloomberg News
  • Updated: August 21, 2012 - 8:04 PM

Jamie Dimon has taken some hits. No one appears ready to step in for him.

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Not long ago, JPMorgan Chase CEO Jamie Dimon had the standing to take on Ben Bernanke. Now, after his bank lost billions on risky trades, he’s “stumbling around like an ordinary mortal,” one wag says.

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Wall Street, the global financial community reeling from public outrage and increased regulation, is proving incapable of finding a champion to replace sidelined JPMorgan Chase & Co. Chief Executive Jamie Dimon.

Dimon, 56, one of the industry's most forceful advocates, has lost stature as his bank, the largest in the U.S. by assets, juggles multiple investigations and a $5.8 billion trading loss on wrong-way bets on credit derivatives. His peers at other big lenders are hobbled by poor performance, tarnished reputations or a reluctance to step into the breach.

Bankers across the Atlantic, including former Barclays PLC CEO Robert Diamond and Peter Sands of Standard Chartered PLC, have been muted by allegations that their firms rigged interest rates or were involved in money laundering.

"What you're seeing in the financial services industry is a lack of any kind of credible statesmen," said Rakesh Khurana, a management professor at Harvard Business School in Boston. Dimon's diminished ability to defend the industry publicly "basically leaves a vacuum," he said.

Onslaught of regulation

That means the industry is without an advocate to resist the most vigorous onslaught of regulations since Congress separated investment and commercial banking with the Glass-Steagall Act in 1933. It coincides with the lowest level of consumer confidence in U.S. banks since Gallup Inc. began polling on the question in 1979. The percentage of Americans saying they had a "great deal" or "quite a lot" of confidence dropped to 21 percent in June from 41 percent in 2007 and more than 60 percent in 1980.

Dimon, whose bank sailed through the financial crisis without a quarterly loss, offered advice and assistance to U.S. presidents, Treasury secretaries and regulators.

He was unapologetic in his criticism of Washington policies and policymakers. He said former Federal Reserve Chairman Paul Volcker, for whom a new rule curtailing proprietary trading is named, doesn't understand capital markets. Bankers will need psychiatrists to evaluate whether trades qualify as hedges, he said. Last year he took on Fed Chairman Ben Bernanke in a public forum, asking whether anyone has "bothered to study the cumulative effect" of regulation on the U.S. economy.

Now Dimon is "stumbling like an ordinary mortal," said Thomas Stanton, a former senior staff member for the Financial Crisis Inquiry Commission and author of "Why Some Firms Thrive While Others Fail," published last month. "He's no longer seen as a purely brilliant manager."

The industry has a powerful presence in Washington even without a visible leader. Commercial banks spent $61.4 million lobbying Congress and regulators last year, almost double the $36.1 million in 2006, according to the Center for Responsive Politics, a nonpartisan, nonprofit campaign watchdog.

"They're spending all this money because they know they are in the eye of the storm," said Bob Biersack, a senior fellow at the Washington-based group.

While Dimon played a key role, "there isn't one singular voice representing the financial sector," said Rob Nichols, CEO of the Financial Services Forum, a Washington-based lobbying group.

'No moral authority'

Still, the lack of a statesman leaves the industry vulnerable, said Greg Donaldson, chairman Donaldson Capital Management in Evansville, Ind.

"The banks have no moral authority at the moment," Donaldson said. "Jamie Dimon had it, but that's done. The government is piling on the banks. They're just being hammered, and it doesn't help our economy. Somebody has to fight the damn thing."

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