JPMorgan Chase CEO: Bank Took TARP, 'Because We Were Asked to' by Treasury Secretary

June 18, 2012 - 6:07 PM

Jamie Dimon, CEO of JP Morgan Chase

Jamie Dimon, CEO of JPMorgan Chase, testifies on Capitol Hill, Wednesday, June 13, 2012. (AP photo)

(CNSNews.com) – Jamie Dimon, the president and CEO of JPMorgan Chase, told the Senate Banking, Housing and Urban Affairs Committee last week that his bank took Troubled Asset Relief Program (TARP) funds back in 2008 only “because we were asked to” by the Treasury Secretary.

Dimon got into a verbal tussle with a liberal Democratic member of the committee, Sen. Jeff Merkley (D-Ore.), about how JPMorgan Chase came to take federal TARP money, during testimony at a committee hearing last Wednesday on Capitol Hill.

Merkley suggested that JPMorgan Chase, one of the world’s biggest banks, had benefitted from “half-a-trillion dollars in low-cost federal loans” -- including “$25 billion in TARP funds” and “untold billions indirectly through the bailout of AIG that helped address your massive exposure in repurchase agreements and derivatives.”

But Dimon was quick to fire back, labeling Merkley’s assertions as “factually wrong.”

“I think you were misinformed,” Dimon said. “And I think that misinformation is leading to a lot of the problems we’re having today.

“JP Morgan took TARP because we were asked to by the Secretary of the Treasury of the United States of America. Put the FDIC in the room; the head of the New York Fed, Tim Geithner; chairman of the Federal Reserve, Ben Bernanke.

He added: “We did not, at that point, need TARP. We were asked to, because we were told, I think correctly so, that if the nine banks there, and some may have needed it, take this TARP, we can get it into all these other banks and stop the system from going down.”

Sen. Jeff Merkley (D-Ore.)

Sen. Jeff Merkley (D-Ore.) (AP photo)

Merkley, meanwhile, accused Dimon of trying to take over the hearing, after the CEO firmly refused to allow the Oregon Democrat to say JPMorgan Chase had been bailed out by AIG, the failed insurance group and investment that was first bailed out in 2008 and then acquired by taxpayers.

Here’s a transcript of the entire exchange:

Sen. Jeff Merkley (D-Ore.): In 2008-2009, your company benefited from half-a-trillion dollars in low-cost federal loans -- $25 billion in TARP funds, untold billions indirectly through the bailout of AIG that helped address your massive exposure in repurchase agreements and derivatives. With all of that in mind, wouldn’t JP Morgan have gone down without the massive federal intervention, both directly and indirectly in 2008 and 2009?

Mr. James Dimon, president & CEO of JP Morgan Chase: I think you were misinformed. And I think that misinformation is leading to a lot of the problems we’re having today. JP Morgan tookTARP because we were asked to by the Secretary of the treasury of the United States of America. Put the FDIC in the room, the head of the New York Fed, Tim Geithner, chairman of the Federal Reserve, Ben Bernanke.

Mr. Dimon: We did not, at that point, need TARP. We were asked to, because we were told, I think correctly so, that if the nine banks there, and some may have needed it, take this TARP, we can get it into all these other banks and stop the system from going down --

Sen. Merkley (intrerrupting): -- I’m going to let you --

Mr. Dimon (continuing): -- We did not borrow from the Federal Reserve, except when they asked us to. They said, ‘Please use these facilities, it will make it easier –

Sen. Merkley (interrupting): -- We would all like to be asked --

Mr. Dimon (interrupting): -- And we were not bailed out by AIG. OK, if AIG itself, we would have had a direct loss of maybe a billion or 2 billion dollars if AIG went down. And we would have been OK.

Sen. Merkley: Then you have a difference of opinion with many analysts of the situation who felt the AIG bailout did benefit you enormously. And I’m not going to --

Mr. Dimon (interrupting): They’re factually wrong --

Sen. Merkley (interrupting): -- Sir, this is not your hearing. I’m asking you to respond to questions, and I also only have five minutes. So, let’s agree to disagree, but I think that many analysts have reached the conclusion that if you had applied that Old Testament justice in 2008 and 2009, JP Morgan would have gone down and you would have been out of a job. And it goes to the enormous frustration –how many companies in the history of the planet have been offered half-a-trillion dollars in low interest loans? Not many.”

JPMorgan Chase paid back the $25 billion in TARP funds in 2009.