With the U.S. government shut down for the second straight day President Obama met with JP Morgan (JPM) CEO Jamie Dimon, Goldman Sachs (GS) CEO Lloyd Blankfein, and other top financial industry leaders today to discuss the shutdown as well efforts to raise the federal debt ceiling. In somewhat related news New York is reportedly preparing to take Wells Fargo (WFC) back to court, accusing the nation's largest home mortgage lender of flouting the rules of a settlement reached last year.
Last week Dimon had a meeting with Attorney General Eric Holder at which the two reportedly discussed the details of a potential $11 billion settlement of civil and criminal charges against JP Morgan.
America's relationship with the financial industry is nothing if not complicated. The banks are the preferred villains in every morality tale related to the housing crisis. If Snidely Whiplash hadn't been preoccupied with tying damsels to train tracks he would be in a Gulfstream-550 rubber-stamping plea bargains on allegations of securities violations. In a sense bankers are the perfect people to consult the Obama on the debt ceiling debate since they clearly know where the bodies are buried when it comes to U.S. financial system.
On the other hand, seriously? The President is really going to get advice on what to do about the financial crisis from bankers?
"If that's the advisory committee we're going to listen to to solve all these Washington woes, we're in trouble," snarks Jeff Kilburg, founder & CEO of KKM Financial and CNBC contributor. More seriously Kilburg says the best interests of Wall Street and Main Street are aligned, if only in this specific instance. "The whole thing that the Fed has done has been to prop up housing. Now it's at risk because the mortgage payments won't go to the banks and the banks won't make money," he states.
Of course the banks have the advantage of being able to backstop the mortgages by foreclosing on homes. Still, the reality is the banks are still dealing with too much housing inventory five years after the start of the financial crisis. It's very much in our mutual best interests for the banking industry to broker some sort of deal on the debt ceiling before things get totally out of hand.
The moral debate over whether or not guys writing 10-figure checks to settle criminal accusations should be allowed to roam freely in the Oval Office will just have to wait for another day.
More from Breakout:
- Financials Industry
- President Obama
- Jamie Dimon
- Goldman Sachs