Bloomberg provides an update on the Elizabeth Warren-Jamie Dimon spitting contest:
U.S. Senator Elizabeth Warren shot back at criticism from JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, saying bankers don’t dislike her because she knows too little but because she knows too much.
“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 told the Huffington Post in a podcast interview released Friday. [Emph. added.]
Remember Donald Rumsfeld’s famous “unknown unknowns?” I think we may have stumbled on a case of that here. If Sen. Warren really “fully understands the system” as well as she says she does, perhaps she can describe how a bank computes its loan loss provision—or, for that matter, what the difference between a loan loss reserve and a loan loss provision even is. She could enlighten us on the accounting implications of holding a security for sale versus holding it to maturity. And I’d be especially interested to hear her views on the calculation and reporting of other comprehensive income.
You’re thinking I’m being condescending and pedantic here, but you’re only half right. The fact is that the banking industry can be extremely complex, and its accounting rules wide-ranging and arcane. It shouldn’t be too much to expect, I don’t think, that as strident an industry critic as Elizabeth Warren to at least acknowledge that. Instead, she says that she “knows too much” about banking, which is one of the many reasons why bankers like Jamie Dimon dislike her so. First off I doubt Jamie Dimon dislikes Elizabeth Warren. I bet he just wants to arrive at some sort of meeting of the minds with her. But secondly, no, Sen. Warren doesn’t “fully understand how banks make their money.” Which is to say, getting back to Don Rumsfeld, she doesn’t know what she doesn’t know. That’s the main reason so many banking executives have such a problem with her.
What do you think? Let me know!