Scott Brown Should Put His JPMorgan Money Where His Mouth Is

[Cross-posted from the ProgressMass blog.  Like ProgressMass on Facebook and follow on Twitter.]

Republican Scott Brown’s inextricable ties to Wall Street – succinctly put, being one of Wall Street’s “favorites” – have been well-documented.  He has watered down Wall Street regulations, and Wall Street and the securities & investment industry have donated millions of dollars to his campaign coffers.  However, Brown routinely putting Wall Street before Main Street might hurt him at the polls, so he’s offering up some tough talk for Wall Street.

JPMorgan Chase CEO Jamie Dimon testified today before the Senate Banking Committee regarding JPMorgan’s billions in recent losses on risky investments.  Republican Scott Brown used the opportunity for some political posturing:

Senator Scott Brown of Massachusetts called on the top executive of JPMorgan to take back the bonuses and any other financial incentives reaped by those responsible for the trading debacle that led to the company’s $2 billion loss. […]

“The way for Jamie Dimon to demonstrate his seriousness about the mistakes that led to JPMorgan’s $2 billion trading loss is to take back the bonuses and incentive compensation from those who were involved in the failed London trades, including himself as CEO,” Brown said in a statement distributed by his Washington office.

“The only way to change the culture on Wall Street is to hit people where it hurts – in the wallet. Perhaps then the big banks will think twice about taking unnecessary risks that undermine public confidence in our financial system.”

Republican Scott Brown says that, to demonstrate “seriousness about the mistakes that led to JPMorgan’s $2 billion [and rapidly growing] trading loss,” those responsible for the failed trades should return money that they got from JPMorgan.

On that exact point, Republican Scott Brown should lead the way as one of those responsible for JPMorgan’s losses, and put his JPMorgan money where his mouth is.

How is Republican Scott Brown one of those responsible for JPMorgan’s losses?  Well, what did JPMorgan CEO Dimon have to say about the Volcker Rule?  Bloomberg Businessweek reports:

Dimon Says Volcker Rule May Have Cut Credit-Derivatives Loss

JPMorgan Chase & Co. (JPM) (JPM) Chief Executive Officer Jamie Dimon said a proposed U.S. ban on proprietary trading may have limited the bank’s derivatives-trading losses of at least $2 billion.

“It may very well have stopped parts of what this portfolio morphed into,” Dimon said, referring to the so-called Volcker rule during testimony at the Senate Banking Committee today. “It’s possible. I just don’t know.”

Dimon acknowledges that a strong Volcker Rule may have prevented at least part of the billions in losses faced by JPMorgan.  Quick refresher: why did Wall Street enjoy a watered down Volcker Rule, featuring a “series of exemptions”?  Oh, right:

When Massachusetts Republican Scott Brown addressed supporters after his upset victory in January, he declared there would be “no more closed-door meetings or back-room deals by an out-of-touch party leadership.”

Some would argue that’s exactly what he just did in the final push on Wall Street reform.

After private talks with Treasury Secretary Timothy Geithner, Senate Banking Committee Chairman Chris Dodd and other top Democrats, Brown scored a series of exemptions from the “Volcker rule” — which would bar certain forms of proprietary trading — a provision pushed by big Massachusetts banks and financial firms, including State Street Corp. and Mass Mutual.

Republican Scott Brown scored “back-room deals” to water down the Volcker Rule (and continued to lobby the U.S. Treasury Department for loosened rules even after the passage of the financial reform bill).  JPMorgan CEO Dimon acknowledges that a stronger Volcker Rule may have saved JPMorgan from itself and stemmed at least part of the billions in losses.  To summarize, Republican Scott Brown watering down the Volcker Rule contributed to JPMorgan’s titanic losses.

Since Republican Scott Brown said today that those responsible for JPMorgan’s losses should return JPMorgan’s money, shouldn’t he follow suit?  As ProgressMass has noted, Brown was the landslide winner in the JPMorgan Chase Primary.  The latest tally has Brown’s fundraising take from JPMorgan sources at $60,155.  How about it, Senator Brown?  You want the traders to return their tainted JPMorgan money.  Will you do the same?

In fact, take it a step further.  Republican Scott Brown likes to claim that he’s an “independent” voice.  The claim entirely falls apart when one puts Brown’s work to water down Wall Street regulations alongside the fact that his fundraising haul from the securities & investment industry is over two million dollars.  It would be an undeniably powerful statement of independence if Brown were to return the $2,007,700 he’s taken from the securities & investment industry.

But I’m not holding my breath.  After all, Republican Scott Brown is not independent of Wall Street.