Dimon Best to Lead Treasury in Crisis, Buffett Says
“If we did run into problems in markets, I think he would actually be the best person you could have in the job,” Buffett said in response to a question about Dimon from Charlie Rose, according to the transcript of an interview that was scheduled to air yesterday on PBS. “World leaders would have confidence in him.”
President Barack Obama is seeking to replace Treasury Secretary Timothy F. Geithner, who had said he planned to step down. Dimon, 56, testified before Congress and shuffled top managers this year after the bank disclosed a loss, now of more than $6.2 billion, stemming from a wrong-way bet on credit derivatives. Buffett has described Dimon’s annual letter to shareholders as a must-read.
“Obviously, you know, there was a failure of control,” Buffett, 82, said to Rose about the trading loss. “If you run an army, if you run a church, if you run a government, any large institution, people will go off the reservation sometimes.”
Dimon, once dubbed Obama’s “favorite banker” by the New York Times, said in a 2011 CNBC interview that he could never work as Treasury secretary and was “not suited to politics.”
Dimon has criticized elements of the Dodd-Frank Act and the expense of financial regulations. He publicly questioned Federal Reserve Chairman Ben S. Bernanke on regulatory costs last year. In January, he said that if he were in charge, he would fix the U.S. housing market by locking mortgage lenders and regulators behind closed doors until they figured it out.
Dimon has urged lawmakers to solve the so-called fiscal cliff, the package of automatic spending cuts and tax increases scheduled to take effect in January.
Four current and two former administration officials earlier this month named two other likely candidates for Treasury secretary: White House Chief of Staff Jack Lew and Erskine Bowles, who was President Bill Clinton’s chief of staff.
Buffett held 1 million JPMorgan shares in his personal account, according to a transcript from a July 13 Bloomberg Television interview.
Buffett reiterated his call for lawmakers to raise taxes on the rich as part of a deal to address the U.S. budget deficit and avoid the fiscal cliff, which would impose more than $600 billion in tax increases and spending cuts starting in January. Buffett said the economy could withstand a failure to meet that deadline if lawmakers were working toward a fix.
“I don’t think it will do that much,” Buffett said when Rose asked about the cliff. “People will assume that a solution will be found quite promptly.”
The remarks contrast with comments Dimon made in June when the banker told a Senate panel that the government could risk an earlier-than-expected fiscal crisis if policy makers were deadlocked on taxes and the budget.
“The one thing to keep in mind about the fiscal cliff is it may not wait until Dec. 31,” Dimon told the Senate Banking Committee. “Markets and businesses may start taking actions before that, that create a slowdown in the economy.”
Buffett, who has been conducting media interviews to promote a book about him by Carol Loomis of Fortune magazine, said in a separate interview today on MSNBC that the ability of some of the highest earners to avoid federal taxes shows why laws should be changed so the wealthy pay more.
“They were the moochers, and they paid zero,” Buffett said on MSNBC. “The way they get at them is a minimum tax and it’s very simple to do.” Buffett said in a New York Times opinion piece yesterday that higher taxes on the wealthy won’t thwart investment.
Mitt Romney, the defeated Republican presidential candidate, said in comments broadcast on CBS’s “60 Minutes” in September that low rates are “the right way to encourage economic growth, to get people to invest.” Romney, speaking to campaign donors at a private fundraiser in May, said Obama’s support came from the 47 percent of Americans who see themselves as “victims,” dependent on government.
Buffett said today that among the 400 with the highest incomes in the U.S. in 2009, the average income was about $200 million, and that six people in that group paid “nothing at all.”
“They were in Romney’s 47 percent,” Buffett said.
Buffett’s tax bill for 2010 was about $6.9 million, or 17 percent of taxable income, he wrote in the Times last year. He said that’s a lower rate than the other 20 employees in Berkshire’s office in Omaha, Nebraska, and that the wealthy benefit from favorable treatment of capital gains and dividends, compared with wages. Buffett’s salary is $100,000 a year.