May 4th, 2010
07:24 PM ET
13 years ago

Controversial memo sends financial giant backtracking

[cnn-photo-caption image= caption="A top JPMorgan Chase executive authored a memo critical of members of congress earlier this week."]Washington (CNN) – A JPMorgan Chase spokesperson is apologizing Tuesday after a top executive at the firm authored a note implying that senators displayed a "low level of economic literacy" at last week's Goldman Sachs hearings.

"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," JPMorgan Chase Managing Director and Senior Economist James E. Glassman wrote Monday in a memo obtained first by the Huffington Post.

JPMorgan Chase spokesperson Jennifer Zuccarelli, in a statement to CNN, distanced the company from Glassman's May 3 analysis.

"The report is from a single economist and does not reflect the views of our firm," she said. "We disagree with his characterizations, and we're sorry."

Glassman took aim at the senators following the much publicized testimony given by former and current Goldman Sachs officials during the committee hearing looking into the company's investment practices.

"The financial reform debate is in the final innings with much at stake," he wrote, later adding that the "legislation in its present form seems likely to do little to fix the flaws" and that "it's time for the grownups to step in."

Glassman directs much of his ire at Sen. Carl Levin, a Michigan Democrat who chairs the Permanent subcommittee on Investigations. While not mentioning Levin by name, the memo includes a chart entitled: "People who live in glass houses shouldn't throw stones" that details Michigan's ongoing unemployment woes.

"Where are the hearings about the shameful story in the figure below?" Glassman asks, referring to Michigan's unemployment. "Michigan's problems began long before the first swap transaction was introduced in 1981."

The subcommittee, headed by Levin, is examining Goldman's role in the financial crisis last year and allegations it sold mortgage-backed securities to clients that the firm later bet against.

The release of Glassman's memo comes as the Senate considers financial reform legislation, a priority for the Obama administration. The House has already passed its version of the bill.

Filed under: Congress • Wall Street
soundoff (21 Responses)
  1. John

    This schmuck and his arrogant company should get a gigantic foot up their rear end.

    May 4, 2010 07:30 pm at 7:30 pm |
  2. George of the jungle

    the guy votes republican. Nuff said

    May 4, 2010 07:32 pm at 7:32 pm |
  3. M

    Totally agree with Glassman. I was hoping that each committee member would have had to take a 10 question quiz on basic finance and macro econ. Question one: What is GDP?

    May 4, 2010 07:40 pm at 7:40 pm |
  4. Randolph Carter, I'm no expert, but....

    "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,"

    This coming from the guys who almost drove the world economy over a cliff. Pot, Kettle. Have a nice day!

    May 4, 2010 07:41 pm at 7:41 pm |
  5. paul

    Speak the truth get a slap on the hand..... too bad Glassman didn't use the word that rhyms with spitty to describe their economic acumen like our trusted public offical did 12 times in questioning with Goldman.

    May 4, 2010 07:46 pm at 7:46 pm |
  6. Robert Warner

    Wall Street executives, after screwing up the economic system of the entire planet, might want to hold off criticizing others' economic theories.

    May 4, 2010 07:48 pm at 7:48 pm |
  7. Biased

    My goodness, you get the truth from someone finally and now the company has to run out and be apologetic. Listen to TV channels that are not Obama and democratic apologists and you will hear a lot of financial analysts and experts say that this current financial reform does little and the democrats are pointedly avoiding including for some reason Fannie and Freddie, who were a major player in the housing bust. Is it at the point that companies are afraid to say an opinion lest they fear retribution from the lawmakers, and if they are then that says more about the state of government than anything else in that they are running the country in an atmosphere of disagreement reaps you punishment? .

    May 4, 2010 07:56 pm at 7:56 pm |
  8. Dann

    Congress shows a low level of literacy about everything. Why would economics be any different? They are over-officious jerks on a power trip.

    May 4, 2010 08:00 pm at 8:00 pm |
  9. right on

    He was right, most politicians don't have the business sense to run a lemonade stand and make a profit. Look what they have done to this country. It does not take a whole lot of brainpower to do their job, just a good line of bs.

    May 4, 2010 08:03 pm at 8:03 pm |
  10. Steph

    The stupidity of the big wigs at Goldman amazes me!

    May 4, 2010 08:05 pm at 8:05 pm |
  11. Michael

    How little respect these parasites have for the very people who saved their worthless butts only months ago.
    In China, they would have just hanged these guys.

    May 4, 2010 08:09 pm at 8:09 pm |
  12. bobden

    What these creeps did has nothing to do with economics. What they did was pure gambling. But they used our money instead of using their own money.

    May 4, 2010 08:10 pm at 8:10 pm |
  13. A keen observer

    JPMorgan Chase Managing Director and Senior Economist James E. Glassman illustrates the arrogance of senior managers on Wall Street. I guess he doesn't realize that it is a bad idea to antagonize those who can shape your destiny.

    May 4, 2010 08:19 pm at 8:19 pm |
  14. Michael

    Mr. Glassman hit the nail on the head. The ignorance of the vast majority of Senators on this subcommittee regarding these structured products and derivative contracts was "mind bottling"! Senator Levin and the Senator from my state of Missouri, Claire McCaskill, were worst of all in showcasing their lack of knowledge and preperation. Sen. Levin, whose state's reputation is that of making horrible cars, the worst city in America, and a state where people are leaving in droves because of unemployment better stick with just being the DC lap dog for the UAW.

    May 4, 2010 08:24 pm at 8:24 pm |
  15. Charles

    It really irks me when the upper brass at JPM won't stand behind their people. Has anyone every WATCHED one of these hearings, like Greenspan or others? The politicians are just asking irrelevant rhetorical questions that seem to show no understanding of how the markets or the economy works. This guys is spot on; more power to him for calling it like he sees it!

    May 4, 2010 08:29 pm at 8:29 pm |
  16. JP

    Dodd and Frank were telling everyone that Fannie May and Freddie Mac were just fine and they are involved in this fix of the system. God help us.

    May 4, 2010 08:30 pm at 8:30 pm |
  17. vgal

    Ummmm... but how can this guy not be RIGHT??? What experience, exactly, do senators have to make them intelligent on economic principals? The guy didn't say that Gold Sachs wasn't irresponsible – he just stated the obvious truth – senators are not experts.

    May 4, 2010 08:31 pm at 8:31 pm |
  18. MCD

    I believe that the Senators have enough knowledge to know that whatever the greedheads have been doing IS NOT WORKING for the majority of the American People!

    May 4, 2010 08:46 pm at 8:46 pm |
  19. Henry Miller, Libertarian, Cary, NC

    So a professional, almost certainly highly educated, economist says something about the economic ignorance of a non-economist that's almost certainly true, and then gets beaten up for it?


    Politicians need to be reminded more often that winning a popularity contest bestows neither wisdom nor learning.

    May 4, 2010 08:50 pm at 8:50 pm |
  20. Dan

    Why apologize for the truth!?!?!!!
    We know our politicians are lazy, corrupt mildly-educated, ambitious fellows from the top to the bottom.

    May 4, 2010 08:50 pm at 8:50 pm |
  21. Right Leaning Independent

    Ba Ha Ha Ha!!! He tells it the way it really is!! We all think this and Glassman put it in a memo for the dummies to see!! Yes senators, we agree with Mr. Glassman!!

    May 4, 2010 08:54 pm at 8:54 pm |