President Obama went on national TV yesterday to make an odd claim: “J. P. Morgan is one of the best-managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we’ve got.”
The president went on to say that “they still lost $2 billion and counting,” an argument for bank regulation. Yet papers and TV led with the first part: Obama loves Chase. It’s kind of like when he went around two years ago praising BP as “strong and viable.“
So we’ve got the queasy spectacle of a president going on national TV to endorse a company and its management. On the merits of whether Chase is “best-managed”: How does he know?
Before J. P. Morgan announced its loss last week, independent asset manager Michael Lebowitz told CFA Institute magazine that accounting rules, among other things, make it impossible to know if U.S. banks are even solvent (Lebowitz thinks not). “We do not invest in or own banks, nor do we short banks. I don’t know what they’re worth,” he said.
But Obama knows? Obama could be doing a real disservice to the investing public if they take the president’s words as some sort of endorsement. Here’s a great bank, which we’re going to regulate even better. What could go wrong?
One wonders what the proprietors of small banks think of their president hawking their too-big-to-fail competitor. Elected officials should refrain from favoring (or disfavoring) individual firms. Their job is to set the rules by which all companies abide, not to pick and choose winners.
Then we’ve got another quease-inducing layer: Obama may be a Chase investor. He may have a million dollars stashed at Chase. It’s conceivable that all of this is insured by the FDIC — if the money is split among four separate accounts in his family members’ individual names — but we don’t know if that’s the case. If not, the president has money at risk in a firm he’s touting.
Yes, yes, Mitt Romney has lots of investments, too — way more than Obama — and if you dig around enough, you’ll probably find some Romney connection to Chase. But I don’t see Romney going on the teevee to recommend the stuff.
— Nicole Gelinas (@nicolegelinas on Twitter) is a contributing editor to the Manhattan Institute’s City Journal.