The whispers are getting louder with the New York Post reporting that JP Morgan Chase CEO Jamie Dimon is emerging as the replacement for beleaguered Treasury Secretary Tim Geithner. According to the Post, sources say policy makers are canvassing Dimon as a successor to Geithner whose reputation has taken a real hammering.
Now, while Dimon looks like a good replacement, he is by no means a certainty for the job. For a start, Dimon has taken a very different stance from the White House economic team on the question of banks that are “too big to fail”. Writing in the Washington Post earlier this month, Dimon says the too big to fail idea is “economically and ethically bankrupt”. At the same time, however, he argues that capping the size of a bank would create problems because it would stop banks from developing the kind of scale that would benefit shareholders and, in any case, it would not prevent risk.
And there is the problem in selecting Dimon. First, his views would create all sorts of ructions in this administration and secondly, the ex-CEO of JP Morgan Chase would be in a difficult position arguing that the White House should not limit the growth of banks because that would inevitably draw criticism that he is biased and talking up the book of his former employers.
If that’s right, the Obama administration might want to think about the danger of jumping from the fry pan into Vesuvius.