Last week, Treasury Secretary Tim Geithner had a much-publicized spat on Capitol Hill with Rep. Kevin Brady (R-TX), who told Geithner that “the public has lost all confidence in your ability to the do the job,” and asked if Geithner would “step down.” Geithner responded by telling the Republicans calling for his head that “I can’t take responsibility for the legacy of crises you bequeathed the country.”
Democrats have been critical of Geithner’s performance in recent weeks as well, with Rep. Peter DeFazio (D-OR) also calling for him to resign. And according to the New York Post, as Geithner gets battered, “JPMorgan Chase CEO Jamie Dimon is emerging as a potential replacement”:
Sources tell The Post that a number of policy makers have begun mentioning Dimon as a successor to Geithner, whose standing in Washington has suffered…[Dimon] has achieved rock star status during the financial crisis, having navigated JPMorgan through the recession and being a go-to guy when Uncle Sam last year needed Wall Street’s help during the collapses of Bear Stearns and Washington Mutual.
The Post cites “people familiar with Dimon’s thinking” as saying he “would love to serve his country.” No source in the article was willing to go on the record though, so who knows what their motivation for floating Dimon’s name was. As Laura Tara LaCapra wrote at The Street, “[Dimon's] name has been tossed about speculatively — and at times jealously — by those in the industry for some time.”
But politically, if such a personnel switch did come to pass, it would strike me as odd. Geithner’s problem is that he is perceived as being too cozy with Wall Street, and is blamed for the dichotomy between Wall Street’s resurgence and Main Street’s continued time in the doldrums. The failure of the “bailout” to translate into wider recovery is, fairly or not, laid on his doorstep, with 42 percent of Americans saying that “has done a poor job handling the credit crisis and federal bailout programs.”
If that is the case, how would the problem be assuaged by plucking a CEO directly from Wall Street to take over? For his part, Dimon has been very careful to applaud efforts at regulatory reform (aside from panning the idea of a Consumer Financial Protection Agency), and even penned a Washington Post op-ed fully supporting a robust resolution authority for taking apart failed financial institutions. He is also supportive of efforts to help troubled homeowners receive mortgage modifications, telling investors who were bashing the administration’s effort that “they should get over it.”
Dimon has also said that “tax cuts should go to lower paid citizens, not the wealthy.” But he does not support limits on bank size, and JP Morgan is part of a Wall Street trifecta (including Goldman Sachs and Morgan Stanley) that is on pace to pay out $30 billion in bonuses, an increase of 60 percent from last year.
So if the perception is that Geithner is coddling the banks, would that change with Dimon, as opposed to someone without ties to Wall Street? I’m not sure that case can be made. But on the plus side, Dimon hasn’t characterized anything that he’s done as “God’s work.”