In Jamie Dimon’s testimony before Congress today, the JPMorgan CEO delivered a message on the economy that is getting lost in what one observer called the “political theater.”
Dimon, now the target of Senate questions about the bank’s $2 billion trading loss, is largely regarded as one of the smartest bankers on Wall Street.
He says the U.S. is risking a fiscal crisis sooner than many people anticipate, because policy makers are deadlocked on the budget — with Bush-era tax cuts set to expire at year’s end and automatic spending cuts looming as a result of the last debt-ceiling increase. Dimon said lawmakers’ inability to reach an agreement on budget issues “helped cause a little downturn last year.”
“The one thing to keep in mind about the fiscal cliff is it may not wait until Dec. 31,” Dimon told the Senate Banking Committee, according to a report by Bloomberg’s Noah Buhayar. “Markets and businesses may start taking actions before that, that create a slowdown in the economy.”
He urged approval of a compromise similar to the Simpson-Bowles plan, issued by the co-chairmen of President Barack Obama’s fiscal commission, which includes spending cuts and tax increases to balance the budget.
Dimon spent much of his time at the hearing challenging federal regulations and saying how it would be tough for federal agencies to set a version of the so-called Volcker rule that would ban proprietary trading for a bank’s own account.
Scrutiny around Washington has made Dimon’s appearance “political theater,” Gary Townsend, a founder of Hill-Townsend LLC, told Bloomberg TV’s Erik Schatzker today.