News Journal: Let’s stop the pity act for ‘poor’ Jamie Dimon

A usually well-informed friend asked me last week, “Why is the government picking on Jamie Dimon?”

I shouldn’t have been surprised. I’ve been watching the well-oiled Wall Street public relations machine at work for too many years.

Most of you have read about the most recent proposed settlement reached by Dimon’s JPMorgan Chase Bank with the Justice Department.

Briefly, if approved, the fine will be for $13 billion and end a number of DOJ investigations into civil and criminal conduct by JPMorgan and the two banks it acquired in the midst of the 2008 financial meltdown –Bear Stearns and Washington Mutual. As part of the settlement, JPMorgan would admit to wrongdoing. DOJ is reportedly holding open the possibility of possible criminal charges against the bank.

Given those facts, you might think the financial press would be harshly critical of Dimon and his bank, especially since this was just the latest in a number of large cash settlements the bank has made with U.S. and foreign regulators. Think again.

It seems the press believes it wasn’t really JPMorgan’s fault, because the government had pressured Dimon back in 2008 to acquire the two distressed banks. Here is just a small sampling of the comments:

•The Wall Street Journal’s editorial page: “A shakedown … Federal law enforcers are confiscating roughly half of a company’s annual earnings for no other reason than because they can.”

•CNBC’s Jim Cramer: “A jihad against JPMorgan … The Justice Department feels like it needs some scalps.”

•CNBC’s Larry Kudlow: “What is up with this incredible $13 billion dollar shakedown of JP Morgan? … This is an arbitrary and political hosing!”

•Fox News’ Andrew Napolitano: “I think it’s a sophisticated shakedown.”

•Fox Business Channel’s Charlie Gasparino: “The Obama administration is at war with American business.”

•CNN’s Erin Burnett “Just because [JPMorgan] can afford it doesn’t make it right. Going after companies, of course, should be based on wrongdoing.”

Under the present terms, of course, JPMorgan would be admitting wrongdoing. Didn’t she get that part?

All of these financial reporters were echoing Jamie Dimon’s current argument, that what Bear Stearns and Washington Mutual did shouldn’t be blamed on JPMorgan. The problem with that argument is that there is a very substantial record of what all these people were saying back in 2008.

Dimon told JPMorgan stockholders, “We believe the amended terms are fair to all sides and reflect the value and risks of the Bear Stearns franchise.”

After the Washington Mutual deal Dimon said, “Our eyes are not closed on this one … Any liability related to the assets … will come with us.”

Steve Black, then co-head of investment banking at JPMorgan, said the bank “got something that has far more value than the price we paid.”

If they were victims of government coercion, they were certainly more than willing to cooperate.

As for the financial press, take a look at what the inimitable Jim Cramer, who five years later was screaming about a government jihad, was saying on March 18, 2008.

From the transcript of his program that day: “There’s no word in the English language that captures the ruthless brilliance of what Jamie Dimon, the CEO of JPMorgan, accomplished this weekend … Dimon masterminded a deal that’s amazing for JPMorgan and makes me wanna say, BUY BUY BUY! … Dimon totally outfoxed the Fed! … There’s no denying it was a steal. I’d even call it theft, in the best sense of the word. Or maybe a shakedown, if the legal department will let me. … It’s practically criminal, and I mean that as a positive.”

I don’t know if I would have been quite as enthusiastic as Mr. Cramer (who can be?), but there is no question both acquisitions were made on terms extremely favorable for JPMorgan.

Dimon paid $1.9 billion for Washington Mutual and received $40 billion in stockholder’s equity.

He knew at the time there would be losses and wrote down Wamu’s assets by $30 billion to inoculate his bank against those losses.

His initial offer for Bear Stearns was so low it had to be renegotiated; in the end JPMC paid just over $1 billion, about the value of the Bear Stearns headquarters building alone.

Cut through all the noise about poor Dimon and how he is being mistreated and you know you are hearing the results of a massive, sophisticated, and relentless public relations and lobbying campaign waged by Wall Street and willingly parroted by too many in the financial media.

We can’t stop it, but we ought to be aware of how well it works.

Ted Kaufman is a former U.S. Senator from Delaware.