Now on the culture comments…I think there are a lot of org. behavioral profs out there who do think that company culture transcends a leader…and as far as Dimon goes. He didn’t build JPMorgan…he just currently runs the show…I view him as pretty dispensable–and probably didn’t really change the culture of JPMorgan when he came on board from Bank One?? Just my perspective…

Robert Reich is doing something very-very interesting right now. He has identified health care reform, and financial reform, as the two big fights coming up for the Obama administration.

Reich’s blog is at: http://robertreich.blogspot.com/

It looks like the first “big fight” is health care reform by virtue of timing. If the health care reform is meaningful, it will bode well for financial reform.

Remember his history. As editor in chief of the Harvard Law Review he worked with opposing factions to produce a quality publication. As a community organizer he had to harmonize different interests, to resolve actual and potential conflicts. His mistake — I think it is a mistake — in dealing with his political opponents is that they are far more intractable than students or ordinary citizens. Their interest lies in foiling and defeating him, and that is an interest that he cannot reconcile. He may, in time, win some of them over, or change tactics. We shall see.

And the failures truly thing they are succeeding when all they have done besides failing to prevent this crisis is to put a temporary patch on a failed overleveraged banking system and shifted the problem to a failed over leveraged Treasury & failed overleveraged Federal Reserve. A real success story but, probably not the one Obama was looking for.

From all accounts, Dimon’s personality and demeanor are a critical determinant of the firm’s culture in general and the fact that it (partly) sat out the housing craze. Everything we know about the evolution of firms is that while some aspects of culture survive growth and a rise to predominance (and JP Morgan is now #1, in case you’re keeping score), generally attitudes change as top people change. And any rise to power brings with it potential sclerosis of various kinds – just ask Citigroup or Bank of America.”

Rule of law or rule of human beings? Civilization has advanced largely by increasing the role of law in governing our lives. But the law cannot prevent every ill without becoming a draconian burden, spawning ills of its own. In the end we cannot escape the human factor. Nor should we fear it. We are humans, not machines or cyborgs.

To many suggestions of regulatory reform we get the reply, Yes, but. Or rather, the reply that it will not work because clever executives or lawyers will find a way to evae or subvert the regulations. This reflects a corporate culture that indeed attempts to do just that. Someone pointed out on a different blog recently that if you do a web search for “citi fines” you find a record that looks like one from a criminal enterprise. That suggest both a failure of regulation and a serious defect in corporate culture.

Mr. Diamond speaks out for a responsible corporate culture, one in line with traditional American “main street” values, not the “greed is good” culture of Wall Street. His words are welcome, but that does not mean that we should not improve and strengthen regulation. We need both better regulation and cultural change.

While Diamond’s personality and character have a great deal to do with the corporate culture of J. P. Morgan, I suspect that that culture has not changed very much from how it was under J. P. Morgan, the man. Remember, it was he who took the lead in the crisis of 1907.

I applaud Mr. Diamond’s words, and hope that they have some effect upon the corporate cultures of his fellows.

Just like banking is provided by successful banks, not failed banks. And what are failed banks? Those requiring free money stolen from taxpayers to stay in business. Again as with medical care, customers & bank regulators determine which banks are successful & which have failed.

But in this case the hundreds & thousands of banking regulators, up to & including the Chairman of The Federal Reserve & Treasury Secretary, whom we have been paying to prevent bank failures for years, were too dumb to see this crisis coming. Which has been coming for years, not months.

So now the same people who were too dumb to see this crisis coming are trying to tell us they are smart enough to determine when a bank is too big to fail? How can that be? Have they gone from being too dumb to prevent a crash to smart enough to fix it? And also brilliant enough to tell us which banks are too big to fail? Have they become brilliant overnight by taking some smart pills or something? I seem to be missing something.

Obama seems to crave conciliation, however. And this has been the greatest source of criticism from the moderate left.

But we do not yet know if this is a signal of weakness… Recognize that the markets stand ready to punish – instantly – even the hint of any “anti-business” legislation, and for the last several months this has heavily constrained his activity. Consumer and business confidence mattered a lot.

Like Kirk, I suspect the next 2 months will be revealing… But I’m not quite as pessimistic. The Obama Administration already surprised us by not rolling over on the warrants repurchasing issue. Moreover, (as noted earlier) if the general public perceives Obama as having successfully stopped the recession, that lends him the credibility to take his case to Congress (and even go over Congress to the general public).

Interestingly, Obama’s failed initial attempts to win bipartisan support for several initiatives – the stimulus package among them – ended up working to his advantage when he later on pushed the stimulus package through a highly polarized Congress. He was able to say, “I tried to compromise, but they were intent on throwing up roadblocks.”

And lest we judge too quickly, remember that Teddy Roosevelt didn’t make full use of his latent talents until his second year in office.

What has bothered me most about this crisis is the absolution given to our business leaders – they were richly rewarded for terrible behaviors that led to the crash and now they pay no price, bear no burden for getting the economy back on track.

The bailout may have been essential – but it also took accountability off the table for all those who worked so hard to build up the mountain of toxic assets. They got the money to stay in business (or else!) and they got their bonuses too, for the most part. If government is to meddle at that level, we cannot continue to reward terrible behavior – that must indeed change.

I’m no Reaganite, but I think Jamie Dimon is right when he says:

“Ultimately, however, it is up to us to manage our own companies wisely. That is why we have what I call a fortress balance sheet. What that means is a significant amount of capital; high quality of capital; strong liquidity; honest, transparent reporting; and excellent risk measurement and management. We have more common tangible equity than many large financial institutions. We’ve always been that way, keeping plenty of liquidity. We have to balance risk taking with doing what’s right for our customers and shareholders. I always say my grandma could have made those crazy profits by taking more risk. But are you building a better business?”

I want the leaders of financial firms – and other American businesses – to truly focus on what it means to build a business – that’s what is missing today. Government needs to regulate – needs to determine adequate regulations so that the US Treasury Secretary never again must go to Congress and say give us trillions – or else. Regulations are needed so that our food is not needlessly contaminated in the pursuit of profit; that our drugs are safe and not deadly.

But in the end, if we are to thrive as a culture, our business leaders need to be visionaries – they need to understand that true success comes from wisely running their business, not engaging in risk for the sake of risk, common sense be damned.

We’ve been missing visionary leaders in the American business community lately (not just on Wall Street – look at the airlines, at Motorola, at GM, Chrysler, the NY Times – the list of poorly run American corporations appears endless).

If Jamie Dimon truly means what he says – and has truly acted responsibly as a leader, then I hope other leaders follow his example. Then, and only then, will we crawl out of our hole.

All the babel and chari vari bruting the false hopes and hollow promises of reform, change, transparency, accountability, equality, justice for all, liberty, human rights and dignity, and peace on earth and goodwill toward men are empty substantless words, nothing but hot noxious air, ‘…full of sound and fury, signifying nothing.”

America has shapeshifted into a nation of the predatorclass, by the predatorclass, and for the predatorclass exclusively.

People need to understand what I consider to be the fed’s true function, to maximize debt and maximize the chances of that debt getting repaid (thru taxes, interest payments, and/or bailouts). Debt should be viewed as a weapon about control and transferring wealth.