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The Five Dumbest Things on Wall Street This Week: June 15

1. Dimon's Self-Inflicted Disaster

What a difference a year and a $2 billion (and counting) loss makes. Right Jamie Dimon?

JPMorgan Chase's (JPM - Get Report) CEO found himself before a Senate panel this Wednesday with the uncomfortable task of explaining why and how his London-based Chief Investment Office lost billions when it was supposed to be hedging run-of-the-mill risk for the bank's excess deposits.

Of course, the reason why this appearance was less pleasurable for Jamie than his previous jaunts to Washington -- the ones where he played Congress' prize pupil sitting in a pew full of naughty, bailed-out bank CEOs -- was because in this case Dimon set the witness table for himself.

In other words, Jamie's own hubris came back to bite the government's former golden boy in the ass. And sadly, that's the real dumb part of this whole affair, not so much the loss, which, although sizable by Main Street standards, is barely a blip for a company with $1.1 trillion in deposits, $700 billion in loans and $18 billion in profits last year.

It was a year ago this week, if you recall, when the follicly-blessed bank chieftain traveled to Atlanta, the home of baseball's Braves mind you, for the sole purpose of waving a hatchet at the already-scalped Fed Chairman Ben Bernanke. Why Dimon literally and figuratively went off the reservation to heckle the fairly even-minded Bernanke is beyond us. But there he was in the crowd during the Q&A session, braying about the government's stepped-up efforts to clamp down on the banking industry.

"I have this great fear that someone's going to write a book in 10 or 20 years, and the book is going to talk about all the things that we did in the middle of a crisis that actually slowed down recovery," said Dimon, who then asked Bernanke, "Is this holding us back at this point?"

Ouch. Wish you could that one back, don't you Jamie? Just like you wish you could time travel and strike April's "tempest in a teapot" line about this particular loss from the record as well. Sadly, not even your so-called "fortress balance sheet" is enough to buy you that luxury.

All that said -- and we've said a lot -- we will cut Dimon a slight bit of slack, but not for owning up to his bank's mistakes. Certainly we would not have heard a peep from Dimon if the so-called hedge had gone JP Morgan's way, so why on earth should we celebrate Dimon publicly admitting the "self-inflicted" nature of the loss. Seriously, what else is the guy to do after spending the last year taunting poor government officials over their plans like the Volcker Rule to protect bankers like Dimon from themselves?

No, the break we will grant Dimon is that his ego-inflation was not entirely his own fault. The truth is, the very folks now pillorying him deserve a lot of the blame for puffing him up.

As Dimon rightly reminded the panel during the hearing, it was the government that gifted him $25 billion in TARP funds even though his bank didn't require the cash. And speaking of gifts, it was Uncle Sam who guaranteed $29 billion in losses so he could buy a busted Bear Stearns, or what Andrew Ross Sorkin called "Jamie's deal" in his book Too Big To Fail. It was also that same Uncle Sam who blessed his deal to buy WaMu for a paltry $1.9 billion.

Put it all together and it's clear to see that JP Morgan had a great deal of assistance from Washington as it snowballed into the colossus it is today. And it was those same silly folks who gave Dimon the false confidence to think that a single man could hold it together.

-- Written by Gregg Greenberg in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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