A Mobilization in Washington by Wall Street

[alp227]

Source: The New York Times

After a year of clashing with Washington over new financial reforms, the country’s most powerful bankers have found common ground with regulators in the hard-fought effort to lift the debt ceiling and avoid a default.

Wall Street is no longer watching from the sidelines as the most polarizing political fight in years plays out on Capitol Hill. In the last few days, top executives have been in close contact with Washington in a last-ditch attempt to prod lawmakers toward a compromise by Tuesday, the administration’s deadline to reach a deal.

On Friday, Jamie Dimon, JPMorgan Chase’s chief executive, raised concerns with Treasury Secretary Timothy F. Geithner about whether government checks would still be good if federal payments were disrupted. Mr. Geithner made it clear that the Treasury and Federal Reserve had taken precautions so that payments for food stamps, military wages and other federal obligations would not bounce, according to people briefed on the call.

In addition, more than a dozen chief executives from the nation’s biggest financial services firms wrote a joint letter to President Obama and members of Congress on Thursday warning of “very grave” consequences for the economy and the job market if an agreement wasn’t reached.

Read more: http://www.nytimes.com/2011/07/31/business/wall-street-mobilizes-to-raise-debt-ceiling.html?pagewanted=all

[grasswire]

1. what's this part?

"Mr. Dimon’s call to Mr. Geithner Friday was prompted by the possibility that even a brief disruption in federal payments might force JPMorgan and other big banks to lay out billions of dollars to food-stamp recipients, Navy members, and other beneficiaries of the government, unnerving both banks officials and customers.

A Treasury spokeswoman, Colleen Murray, declined to comment on the conversation, but in a statement said the government would not authorize any payments it could not cover."

So JPMorgan insures government obligations? Dimon is referred to in the next paragraph as the "insurer".

I've never heard anything about this before.

[saras]

2. Well, that explains who owns who...

[PoliticAverse]

4. JP Morgan is the largest processor of SNAP (food stamp) payments...

But I don't see the word "insurer" in the article.

[Chan790]

6. No, it's complex in the details but can be explained simply.

Fed. Reserve Regs require banks operating within the US to assume "the full faith and credit of the United States" is good. Also JPM and most banks now credit all checks they have reason to believe are valid next-day and reverse the funds later if it bounces as a convenience to the clients. (It's also a huge money maker for the bank in the form of bounced-check fees, charge-off fees and NSFs (provided they can recoup), don't let that get lost in the static.)

So what Dimon is upset about is having to extend credit to people, if they deposit a government check which JPM credits to an account then later has to reverse; having to insure all deposits through FDIC at increasing rates (the rates go up the more likely you are to default) as the health of the bank degrades from carrying too much unsecured debt on books in the form of millions or billions in bounced government checks...banks treat all negative balances on the books as outstanding unsecured loans for the purposes of their own bookkeeping. That debt has to be reflected on the balance sheets same as any other business.

He's pissed that the government is about to personally cost him billions for things he has no control of...welcome to the club, Jamie.

(All Banks and Credit Unions insure obligations, both government and private, indirectly though FDIC and NCUA premiums on those deposits.)

Edit: PA hit the simple one I mentally glossed right over looking at the complicated answer. I don't work for JPM so I didn't even think about that.

[roguevalley]

14. might be forced to help people in trouble. oh. my. aren't they

something? Their karma must be awesome

[DeSwiss]

3. I'm not surprised.....

...because Washington is one of Wall Street's best investments. Even after all these years of ownership, it's still paying big dividends.

- K&R

[No Elephants]

15. Notice the handshake Dimon is inflicting on President Obama.

Notice the four fingers digging into Obama's hand and the squeeze between Dimon's thumb and forefinger.

Someone shook my hand that way once. It is designed to be as painful as the hand squeezer can muster.

Dimon may as well have lifted his leg on Obama's desk.

It's the move of a real a-hole who is not secure in who he or she is, trying to establish dominance on the very first contact. Ditto the stare directly into the eyes.

If a large dog stares you in the eye that way, you may be in trouble. When Dimon does it, it's just lame, though obviously not intended that way.

[woo me with science]

5. This is ALL about Wall Street, folks. This is ALL about the banks.

This is not a simple story of Republican versus Democrat anymore. This is all of us against the bankers who have bought into both political parties, the election system, and the media. Yes, there are more principled Democrats left than principled Republicans...but we are at risk of having our futures traded away by members of BOTH parties who answer to a corporate Master.

When you hear Third Way Democrats rationalizing cuts in Medicare, Medicaid, and Social Security, you hear the influence of banks. When those same Third Way Democrats justify extending war to yet another country, you hear the banks. The BANKS profit from American empire that runs on expensive, borrowed money, and the BANKS are the ones who profit from the debt of everyday Americans. The BANKS are the ones behind this indefatigable march to transfer wealth from all of us into their own pockets, the pockets of the top five percent. And for the banks, the pool of money represented by Social Security is an enormous waste, going to those who are not feeding their machine.

Remember Robert Reich's cartoon. We are distracted by the tableau of a Republican and a Democrat screaming at each other, while a rich man picks all of our pockets.

This is us against the banks.

[flamingdem]

7. They've certainly done very well this year .. nt

[Kaleko]

8. An extra K&R for this post.

[NCcoast]

13. Well said

[No Elephants]

16. +1

I did not see the cartoon, but I did read 1984 all the way to the end. Similar principle.

"A plague on both your houses" is not quite as rabble rousing as Dem v. Pub, though, is it?

I must confess, giving Republicans a virtual drubbing on a message board is somehow more gratifying than putting the sports team, er, political party, I've rooted for since I was five in the same pocket as the ones I've believed were my enemy and my team's enemy all my life.

Sure hope New Englanders never find out that the Boston Red Sox and the Yankees have been rigging a rivalry since Ruth to drum up ticket sales for both teams.

[annabanana]

21. +1. .The picture becomes clearer each and every day. . . .n/t

[sarcasmo]

23. Right on, woo me with science. Neither side budge until the bankers stepped in.

[NCcoast]

9. Maybe I'm reading too much into this but....

...they're raising concerns with Geithner and Obama? What exactly are they supposed to do? Bend over even further since the GOP has lost control of the lunatic mob it incited with years of propaganda and disinformation. There's no compromise in them. They've put themselves and us in God's hands like a bunch of Appalachian snake handlers. I'd really like to see these people get what they deserve. Unfortunately we're all going to share their fate. God I'm so sick of the batsh*t crazy American right.

[ixion]

10. Wall St. never "watches from the sidelines". Ever. Period.

[No Elephants]

17. But we do, so shame on us.

[ixion]

20. We're not even in the staduim

to continue the metaphor.

[No Elephants]

22. True dat. I've just realized that I keep blaming us while at the same time

saying we should not blame the victim.

We don't not have the money, the organization or the power held by politicians and those who buy them.

[unkachuck]

11. "...attempt to prod lawmakers toward a compromise..."

....what's the matter wall street bankster scum, are things getting out of your control? Are those unwashed masses fucking up your global con-game? Are they interfering with your scheduled anti-people austerity-rape of the world? Are we to witness through default that the mighty-global-corporate-money-machine of planet earth needs a major tune-up or possibly a complete overhaul?

....you say default by August 2nd will have 'very grave' catastrophic consequences. But do you know what I believe you fear the most? Should August 3rd, 4th, 5th, arrive and absolutely nothing happens....boogie, boogie, boogie....

[roomfullofmirrors]

12. The market is down 500 points. If I were a billionaire banker, I'd be licking my chops

at all the money I was going to make on my discounted blue chips once the market corrects itself.

[No Elephants]

18. Funny, that. I called Geithner with my questions and concerns, but I couldn't get through to him.

But Dimon can get Timmeh on the horn, even the Friday before the Monday the world is supposed to end?

[AndyTiedye]

19. I Hope They Are Using One Of These on Cantor

In the last few days, top executives have been in close contact with Washington in a last-ditch attempt to prod lawmakers