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Trump team begins its Wall Street overtures

After an election filled with rhetoric about big and brash bankers running amok on Wall Street, Donald Trump has turned to the biggest and the brashest of them all: Jamie Dimon, chairman and chief executive of JPMorgan Chase.

The transition team of the president-elect called Mr Dimon on Wednesday night to sound him out about serving as Treasury secretary, according to a Reuters report that the FT has been unable to confirm.

News of the approach prompted shock — and some amusement — on Wall Street. Why would Mr Dimon, a long-time donor to the Democrats, want to cap his career by joining the Trump administration?

“People are concerned about what a chaotic environment this may be,” said one Washington lawyer. “Do you really want to put your career and family at risk to work with such a person?”

By Friday morning there was louder chatter around Jeb Hensarling, chairman of the House Financial Services Committee and a close ally of Mike Pence, Mr Trump’s deputy.

But for now, said analysts, Mr Dimon’s name may have an important signalling effect. It means that America’s next president is unafraid of reconnecting Washington and Wall Street.

Over the past few months, as the Clinton camp limbered up for government, anyone with ties to the big banks was deemed to be off-limits as the next Treasury secretary. Elizabeth Warren, the senator from Massachusetts, has always been a critic of the “revolving door” that sees powerful bank executives shuffling into government and sometimes back again. In a speech in September Ms Warren went so far as to name three firms — Citigroup, Morgan Stanley and BlackRock — as companies from which the government should not recruit.

That was an obvious shot at Larry Fink, the BlackRock chairman who appeared to be manoeuvring for the role, but also drew a line through names such as Gary Gensler, the ex-Goldman Sachs banker who ran the Commodity Futures Trading Commission. Roger Ferguson, the mild-mannered CEO of TIAA, the teachers’ retirement fund, was seen as the best compromise candidate: close, but not too close.

Under Mr Trump, however, that could be changing. Consideration of the JPMorgan chief shows that, eight years on from the crisis, the period of bashing banks is drawing to a close.

Lobbyists welcomed the connection. “Folks with the relevant industry experience should not be excluded,” said Rob Nichols, head of the American Bankers Association, which bills itself as the voice of the nation’s $16tn banking industry. “In fact, those saying you shouldn’t have experience, that is misguided public policy.”

If Mr Dimon really is in the frame it marks a “seismic shift”, said Isaac Boltansky, an analyst at Compass Point in Washington. “We’ve gone from former Wall Street employees having the scarlet letter on their lapel to a wide-open consideration of resetting the regulatory regime.”

A spokesperson for JPMorgan declined to comment.

A move for Mr Dimon, a trim and fit 60-year-old, would certainly add glamour. Other names doing the rounds are distinctly low-wattage: Steve Mnuchin, Mr Trump’s campaign finance chief; Tim Pawlenty, the former Minnesota governor turned bank lobbyist; John Paulson, the hedge fund chief who made his fortune shorting mortgage bonds.

And Mr Dimon has harboured political ambitions. After a recent speech in Washington he said in response to a question that he’d “love” to be president, saying he was frustrated with the state of political discourse and the inability of warring politicians to find common ground. “We need policy. We need thoughtful people,” he said.

On Wednesday morning, hours after Mr Trump’s victory, he put out a memo to JPMorgan’s 240,000 staff about divisions and healing and coming together — textbook language from any campaign trail.

A move into government could also be lucrative if Mr Dimon takes advantage of a tax break designed to ensure that the wealthy are not deterred from public service. These include avoiding capital-gains taxes on any assets he would have to sell to avoid a conflict of interest, as long as proceeds are reinvested in certain assets within 60 days. The same breaks applied to Hank Paulson, the former Goldman chief who became the 74th Treasury secretary in 2006, and Citigroup’s Robert Rubin, the 70th.

Floating Mr Dimon’s name is consistent with talk of easing the burden on bankers, said Mr Boltansky, noting that shares in JPMorgan and the rest have been rocketing all week.

“The market right now is pricing in the complete removal of the regulatory realities of the current system,” he said.

Via FT