JPMorgan Top Economist Glassman Says He Was `Stupid' to Criticize Senators
James Glassman, a senior economist at JPMorgan Chase & Co., said it was a mistake for him to call members of a Senate panel ignorant and to call for “grownups to step in” to the financial reform debate.
“It was a stupid thing to do,” Glassman said today in an interview after the New York-based bank apologized for his remarks yesterday. “I fell into the same trap of getting emotional about these issues, when what I meant by saying ‘the grownups need to step in’ was that we all need to cool down and find some common ground.”
Glassman, in a May 3 note to clients, criticized the “low level of economic literacy” shown as the Permanent Subcommittee on Investigations, led by Senator Carl Levin, grilled current and former executives from Goldman Sachs Group Inc. on April 27. The Senate is debating legislation aimed at restructuring financial-system oversight to head off a future crisis, including regulation of derivatives that could eliminate billions of dollars of revenue from Wall Street firms.
“There are political pressures on the bank that limit what it can say about Congress,” said Richard Bove, a bank analyst with Rochdale Securities who left Ladenburg Thalmann Financial Services Inc. last year after a disagreement over settling a defamation lawsuit against him. “There are significant limitations on the freedom given to analysts to express their opinions.”
Republicans filed an amendment today to remove language from the bill that would require banks such as JPMorgan to wall off their swaps-trading operations. Chief Executive Officer Jamie Dimon told analysts last month that the bill would cost the firm anywhere from “several hundred million to a couple billion dollars.”
President Barack Obama’s senior adviser, David Axelrod, and National Economic Council Director Lawrence Summers met with Goldman Sachs CEO Lloyd Blankfein, Dimon, and about 13 other executives on April 6 in Washington and pressed them to stop lobbying against the financial reform bill, people who attended the meeting said last month.
JPMorgan spokeswoman Jennifer Zuccarelli said in a May 4 statement that Glassman’s report “is from a single economist and does not reflect the views of our firm.
“We disagree with his characterizations, and we’re sorry,” Zuccarelli said in the statement.
Glassman, 63, said economists are often “the public face of a company,” even though he doesn’t speak for the bank. “They were right to distance from this and to issue an apology,” he said.
Analysts’ controversial views have created problems for their employers in the past.
Bove was sued in July 2008 by BankAtlantic Bancorp, which said he defamed the company by saying it might fail in a report titled “Who is Next?” Bove said at the time that he left Ladenburg because it was moving to settle the suit while Bove thought it had no merit. The case is still outstanding.
In 1990, analyst Marvin Roffman was fired by Janney Montgomery Scott Inc. after he expressed doubts about the future of Donald Trump’s Taj Mahal casino in Atlantic City, prompting Trump to threaten a lawsuit. The Taj Mahal project was forced into bankruptcy months after Roffman’s comments.
Glassman said he has received positive responses from colleagues in the financial industry to his note, which he said reflects the frustration felt as Wall Street is criticized by politicians and pundits for the housing collapse and financial crisis.
“I understand the outrage and I understand why many people in the industry feel we’re being unfairly singled out when there is plenty of blame to go around,” Glassman said. “But Wall Street was a part of the problem and bears some blame, and there are things that need to be fixed.”
Glassman said in the research note that the “ignorance” shown by senators in the Goldman Sachs hearing is also plaguing reform efforts. The present form of the legislation does little to resolve the issue of banks being “too big to fail” and rather focuses on issues that didn’t cause the crisis, he said in the note.
“The hearings exposed an unnerving ignorance of fundamental principles of market economics by folks who have a hand in remapping rules of finance that will be with us for a while,” Glassman wrote in the note. “Now that the financial reform debate is in the final innings, it’s time for the grownups to step in.”
Not everyone shared Glassman’s view of the proceedings. Berkshire Hathaway Inc. Vice Chairman Charles Munger said in an interview on May 3 that he was impressed with the senators’ understanding of the issues involved.
“I thought they were the best I’d ever seen under such circumstances in my history of watching senators,” Munger said. “I thought it was an unusually intelligent and aggressive bunch of people.”
In the note, Glassman discussed the economic troubles facing the state of Michigan and included a graph depicting the state’s employment decline since 2000 compared with that of other states, which was titled “People who live in glass houses shouldn’t throw stones.” Levin, a Democrat who was not named in the note, is the senior senator from Michigan.
Glassman said today the note was “unfair” to the senators and said his main concern is the unintended consequences that could arise from quickly pushing a financial reform bill through Congress.
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