🏦 The Vault: D.C.’s Dimon deficit

IN THIS EDITION

Wall Street’s Dimon deficit in Washington and the tax battle to come

Can banks find another Jamie Dimon?

Is Norquist’s tax pledge the cudgel it used to be?

The Vault Power Matrix

K Street is getting ready — and paid — for a tax fight

THE TOP

Wall Street’s Dimon deficit in Washington and the tax battle to come

Welcome back to The Vault.

Things tend to stay the same in Washington until they change, fast. In this issue, we’re going to focus on that change where we understand it best — the people and the policy.

Because change is a-comin’ to Washington, and we’re not talking about the election.

After nearly two decades in power, the nation’s most prominent banker is preparing to retire. JPMorgan Chase may be America’s largest bank, but its political influence has as much to do with its balance sheet as its CEO, Jamie Dimon.

Dimon’s retirement poses a big problem for the banking sector. No one has epitomized and mobilized the American banking industry like he has. And when it comes to working over the nation’s capital, Dimon does it better than any CEO in living memory.

The trick for the industry will be finding someone who can do the same. It’s just not clear that’s possible. The banking sector will have some time — Dimon, 68, put the timeline for his departure at less than five years — but the clock is now ticking.

Meanwhile: There’s a fight on the horizon that could reshape the tax code as we know it and looming angst over rising debt. As Republicans navigate those waters, Grover Norquist’s famed tax pledge still holds weight, but there are tensions complicating what’s long been party orthodoxy.

And about that 2025 expiration of much of the Trump tax cuts — expect K Street to be ready for battle. The downtown community is ramping up for what could be a big clash between Democrats and Republicans over taxes.

The banking world and the tax code could both look pretty different a couple of years from now. Let the game theory begin.

— Brendan Pedersen and Laura Weiss

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WALL STREET x WASHINGTON

Can banks find another Jamie Dimon?

The question of who succeeds Jamie Dimon as CEO of JPMorgan Chase might be corporate America’s favorite parlor game right now.

But the real question, for us, is who succeeds Dimon as the face of banking in Washington? It’s a political question with trillion-dollar stakes in the years to come.

This is a role Dimon has cultivated over nearly two decades leading JPMorgan, now almost a $4 trillion commercial banking behemoth. He’s one of the few Wall Street executives to emerge from the 2008 financial crisis with his reputation intact. In the years since, Dimon has used that standing to help shape national banking policy at several crucial junctions.

To wit: Bank lobbyists widely credit Dimon’s public and private bombardment of Basel III capital reform proposals as a key ingredient in the industry’s shockingly successful campaign against the changes.

But the question of who could follow Dimon is complicated. Bank executives tend to be risk-averse, particularly in public. Dimon’s pugilistic style is an exception.

Put differently, Jamie Dimon is a phenomenon of Jamie Dimon. Who comes next will probably be different.

The contenders: There isn’t an obvious successor to Dimon’s role in Washington.

Most insiders start with the safe confines of other megabank CEOs. That includes Bank of America’s Brian Moynihan, Citigroup’s Jane Fraser and Wells Fargo’s Charlie Scharf. But they also rattle off notes of caution for each of these contenders.

By size and profile, Moynihan’s bank is probably the closest analog to Dimon’s. But the BofA CEO’s approach has been described as “cautious” and “low-key” when it comes to the banking business as well as public affairs. Dimon has a tendency to grab headlines each time he speaks publicly.

Citigroup’s Fraser is charismatic and well-regarded in Washington, but she’s not considered a creature of U.S. politics. (The number of industry people who explained this point by saying “she’s British” was…. not zero. She was born in Scotland.) Then again, some insiders argue she is far more politically engaged than former Citigroup CEO Mike Corbat.

More to the point, Citigroup is a big, complicated bank with meaningful business and regulatory problems. That makes its leader a less-than-perfect industry spokesperson.

Speaking of regulatory problems, Wells Fargo carries similar, heavier baggage. Since 2018, the bank has been locked down by an asset cap tied to an infamous fake accounts scandal. Scharf, who joined the bank in 2019 after smooth leadership runs at BNY Mellon and Visa, hasn’t been tarnished by his time leading Wells. But until the California bank truly gets its act together, Scharf isn’t going to be the best banking spokesperson.

There are also candidates within JPMorgan and its next CEO. Succession politics are ongoing, but consumer and community banking CEO Marianne Lake is a clear contender with Washington ties. Other JPM CEO contenders include President and COO Daniel Pinto, CFO Jeremy Barnum and investment banking co-CEOs Jennifer Piepszak and Troy Rohrbaugh.

Weird Venn diagram: No lawmaker on Capitol Hill would dispute Dimon’s relevance over the last 20 years. While no darling of progressives or the far-right, Dimon has long received bipartisan plaudits from Congress.

But Republicans and Democrats alike suggested they don’t want another megabank CEO taking over the bully pulpit from Dimon.

For some, like Sen. Elizabeth Warren (D-Mass.), the desire for change is no surprise. “The idea that the guy who runs a multibillion-dollar bank somehow speaks for American bankers has been a rotten notion from the start,” Warren said, adding:

Over on the opposite side of the political spectrum sits Rep. Andy Barr (R-Ky.), who is a top contender to be the next Republican leader on the House Financial Services Committee. When we asked Barr for his thoughts, the Kentucky Republican heaped praise on one regional banking executive in particular: Fifth Third Bank CEO Tim Spence.

“He’s very young. He’s very charismatic. He knows banking. And he’s an innovation leader,” Barr told us. “He’s gonna be a superstar.” Barr also nodded to PNC Bank CEO Bill Demchak as “very well respected” and said he “really” liked Truist CEO Bill Rogers.

As a second thought, Barr didn’t want to shortchange the megabank CEOs either. “Gosh, it’s hard. They’re all smart. They’re all capable people,” he said.

Suffice to say, it’s clear that regional bank executives carry more clout in Washington today than they once did. That’s something to keep an eye on as Dimon heads to the exits.

— Brendan Pedersen

TAXES AND THE RIGHT

Is Norquist’s tax pledge the cudgel it used to be?

Few — if any — figures loom larger over the last few decades of Republican tax maneuvering than Grover Norquist.

Since his Reagan-era rise, Norquist and his group, Americans for Tax Reform, have worked to secure tax cuts and force lawmakers to keep them. For Republicans, the tax-cutting orthodoxy remains a north star, but there are some tension points amid escalating worries about debt and deficits.

The main point of conflict? GOP interest in a fiscal commission. ATR opposes that and argues it’s a trap to get Republicans to raise taxes. Focus on the issue has risen within the House Republican conference in particular. That’s led to some friction.

Norquist’s innovation: At the root of ATR’s influence is its Taxpayer Protection Pledge. It asks federal officeholders to promise they’ll go against any efforts to raise individual or business income taxes and to oppose any net increase in taxes from getting rid of tax deductions or credits. The pledge allows that deduction or credit cuts could be offset by dollar-for-dollar rate cuts.

Signing it is about as routine for a Republican as filing the paperwork for their candidacy. The vast majority of Republicans in Congress have made the pledge.

But that doesn’t mean there aren’t some complaints.

The conflict: House Budget Committee Chair Jodey Arrington (R-Texas), who got a fiscal commission bill through his panel this year, told us that while he agrees with ATR’s principles and keeping taxes low, he’s got problems with the ironclad nature of the pledge. He isn’t signed on.

Arrington pointed to the need to address the debt and that the pledge makes it impossible to address a “special interest giveaway” or “loophole” in the tax code and use those savings to lower deficits. Here’s more:

Rep. Blake Moore (R-Utah), a Budget member who signed ATR’s pledge, told us a fiscal commission was one of the most talked about things during the House GOP’s speaker debates last year.

“If that’s something that the Norquist team doesn’t support and it was one of the most talked about things, that tells you something too,” Moore said. He told us he’s otherwise in lockstep with ATR.

Norquist, though, doesn’t see any problems. He told us in an interview that current deficit pressure doesn’t compare to what lawmakers were feeling in 2010 and 2012, adding that “people were much more panicked then than now.”

Norquist also pointed to Speaker Mike Johnnson’s comments on CNBC when Johnson said “the catch” for a fiscal commission is it shouldn’t begin with the idea that tax increases are on the table. Norquist said that’s the prevailing GOP opinion.

There’s now “a more united Republican Party today than ever in history,” Norquist said, saying he believes Republicans at the presidential, congressional and state level are more locked in against tax increases.

ATR also says it supports a commission focused specifically on spending reduction. Vice President of Communications John Kartch said in a statement that the group “has long worked to establish a spending-cut-only committee, an anti-appropriations committee modeled after the one that existed from 1941-1974,” adding that effort achieved major spending cuts.

What’s working for Grover: At the end of the day, even critics of the pledge see no clear successor for the sort of work Norquist has done. Several sources told us perhaps only former President Donald Trump wields more power from outside Congress over GOP economic policy debates.

Norquist also continues to hold his weekly “Wednesday Meeting” in Washington convening conservative activists, leaders and lawmakers, which have been part of ATR’s playbook since the 1990s. He told us that he’s spending about half his time working on state policies too, and sees significant movement at the state level toward tax cuts.

And of course, top tax writers are squarely in ATR’s corner.

Sen. Mike Crapo of Idaho, the Finance Committee’s top Republican, said he believes the pledge has retained its power and that it’s a principle the GOP should stick to.

House Ways and Means Committee Chair Jason Smith (R-Mo.) said the pledge still holds the same power for him. “So I would hope that it does with others,” Smith said. “I’m not one about raising taxes.”

Norquist and other conservative leaders will have no shortage of work to do with the 2025 expiration of the Trump tax cuts coming up. In a recent post on X, Norquist called on every GOP candidate for Congress to pledge to make the 2017 law permanent.

— Laura Weiss

WHO’S UP, WHO’S DOWN

The Vault Power Matrix

— Brendan Pedersen and Laura Weiss

2025 TAX PREP

K Street is getting ready — and paid — for a tax fight

As loyal Vault readers know, the lead-up for Washington to confront the expiring Trump tax cuts at the end of 2025 is in full swing.

That’s already playing out at full speed in the lobbying world, giving a hint of the frenzy to come and the money on the line next year. Big business groups are springing into action, and the downtown community is already watching key lawmakers’ every move.

It all spells business for Washington’s influence industry. Here’s a flavor of the lobbying registrations filed so far this year to give a sense of the intense interest already in the 2025 tax debate:

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A handful of hires have directly cited the 2025 debate. Synopsys listed “preparation for the 2025 tax debate and R&D tax amortization” among issues in its Brownstein hire. Boston Scientific hired Hollier & Associates for issues including “reauthorization of TCJA” – a.k.a. the 2017 Trump tax cut law – and the American Property Owners Alliance brought on brand-new firm Phronesis DC for “TCJA expiration.” Blackstone’s recent hire of Hogan Policy Advisors lists “tax reform” among issues.

→	Then there are the companies bringing on lobbying power from the Trump world. Take the Business Roundtable’s hire of Tim Pataki, a Trump legislative affairs staffer now at CGCN, to work on “business tax issues, including the corporate tax rate.”

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Plenty more hires list corporate taxes as a lobbying issue. That’s always a big one, of course, but companies are hyper-aware that if Democrats win any power in November, the 21% income tax rate is in jeopardy. Corporate tax issues are cited in registrations like Marathon Petroleum’s hire of FTI Government Affairs and Target’s hire of Stewart Strategies and Solutions.

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Unsurprisingly, there’s no shortage of hires that mention reviving a bigger tax break for businesses’ research and development spending. Plus, the National Beer Wholesalers Association brought on Ingram Group and cited permanence for the 20% deduction for pass-through businesses, which is among the Trump tax cut provisions expiring next year.

Beyond K Street: Lawmakers are getting ready for the tax tussle too. House Ways and Means Committee Republicans set up “tax teams,” and panel members are having meetings with guest speakers, as we scooped. Senate Finance Committee Republicans have six working groups set up.

Finance panel Democrats are set for their own meeting today to launch their talks on 2025, which we scooped here.

And then there’s the lawmakers angling to flex their muscles ahead of next year’s showdown. That list ranges from Sen. Elizabeth Warren (D-Mass.), who laid down a marker with her tax speech this week, to GOP opponents of the cap on deducting state and local taxes, who are thinking about how to battle their colleagues on the $10,000 limit.

It’s going to be a long, winding road to whatever happens with the expiring Trump tax cuts. Join us for the ride!

— Laura Weiss