On Wednesday, JP Morgan CEO Jamie Dimon said of Massachusetts Senator Elizabeth Warren (D), “I don’t know if she fully understands the global banking system.”
By Thursday, Warren already had a response. Speaking on the Huffington Post’s “So, That Happened” podcast, she said, “The problem is not that I don’t understand the global banking system. The problem for these guys is that I fully understand the system and I understand how they make their money. And that’s what they don’t like about me.”
Warren’s résumé comes with nearly 20 years of experience teaching corporate law at Harvard University, publishing nine books, chairing the Congressional Oversight Panel that oversaw the bank bailouts in 2008 (of which JP Morgan was a beneficiary), and coming up with the idea for and helping to create the Consumer Financial Protection Bureau, which has already helped consumers avoid numerous predatory lending schemes and recouped more than $4.8 billion through its enforcement actions.
She has also become widely known for her tough critiques of the banking industry. She has questioned why the government didn’t break up the biggest banks, like JP Morgan, when it offered bailout money in 2008 and joined a group of Senators in 2013 to propose reinstating a Depression-era rule that separated commercial and investment banking. She’s been a staunch supporter of the 2010 Dodd-Frank financial reform bill and stood in opposition to Republicans’ attempts to roll parts of it back.
She’s long criticized regulators’ reluctance to go after the biggest banks for their misconduct. She questioned the Securities and Exchange Commission, Justice Department, and Federal Reserve on the lack of prosecutions for banks’ misdeeds that led up to the financial crisis, saying, “If large financial institutions can break the law and accumulate millions in profits and, if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.” She proposed a bill that would have made settlements between banks and these regulators more transparent in an effort to tamp down on the government’s exaggerations. Just last week, she sent a letter to the SEC chairman voicing her disappointment in the agency’s failure to enforce existing rules governing the financial industry and its slow pace in writing new rules as mandated by Dodd-Frank.
And she’s also stuck it to JP Morgan itself. In 2013, the bank announced that one of its traders in London, who came to be known as the “London Whale,” had made a series of bad bets that ended up costing the bank $6 billion. The bank was eventually made to pay $900 million in fines and “admit its traders acted recklessly” when it was found the trades violated rules against banks making such bets with their own capital and against market manipulation.
As the episode unfurled, Warren said it made the case for a return to “boring banking” and the institution of the Volcker Rule, which would separate investment and commercial banking, in order to alleviate the risk such trades pose to the industry as a whole.
Dimon’s remarks aren’t the first time businessmen have doubted her. In March, Berkshire Hathaway CEO Warren Buffett said she is too “angry” and “violent” in her critiques of Wall Street. Banks have also been fighting viciously against her, threatening to withhold campaign donations to all Senate Democrats to protest her. JP Morgan told Democrats that donations hinged on a friendlier atmosphere for banks.