Back to basics?

Conventional wisdom has it that Congressional hearings rarely shed new light and devolve quickly into a stream of sound bites that members can use in their re- election campaigns.

By that measure, Jamie Dimon’s appearances before the Senate Banking Committee and House Financial Services Committee — in which the JPMorgan Chase & Co. chief executive officer had to explain how his bank lost more than $2 billion on a poorly executed proprietary trade — mostly didn’t disappoint.

For instance, at the very end of the House hearing, after most of the other representatives had left and Dimon was itching to get back to New York, Al Green, a Texas Democrat, managed to elicit from Dimon a promise the banker surely hopes he’ll never have to keep. After Green explained his concept of “too small to live off” — his idea that too many people in the U.S. live below the poverty line while executives on Wall Street rake in tens of millions of dollars in compensation — Dimon said he would show up “any place that you’d like” to discuss it further.

“What I want to talk to you about,” Green said, “is this: $47,000 is what it costs a family of four to live off in Houston. The poverty level is $23,000 a year. The average janitor, working full time, will make about $18,000 a year. That’s working full time and living below the poverty line.”

What the annual compensation of an average janitor living in Houston has to do with why Dimon allowed his traders to take huge risks with his depositors’ money is not at all clear, but the exchange should give you a feel for what the hearings were like, in case you had better things to do. (Still, I enjoyed that Green said he would pay his own way to get to wherever they continue their discussion and not use any “congressional funds,” while Dimon will probably resort to his private jet — assuming he has to travel to the meeting.)

There was at least one five-minute period that cut through the pointlessness. For that, we can thank U.S. Rep. Gary Ackerman, a Democrat from New York who is retiring after this term, his 15th. Ackerman did a bit of pontificating, but he also made a whole lot of sense when he got his hands on the microphone.

“I used to think that all of Wall Street was on the level,” he explained, “that it facilitated investing, that it allowed people and institutions to put their money into something that they believed in and believed would be helpful and beneficial and grow and make money and especially help the economy and, on the side, create a lot of jobs and be good for our country and good for America.”

Then he picked up steam. “Now, a lot of what we’re doing with this hedging — and you could call it protecting your investment or whatever — but it’s basically gambling,” he said. “You’re just betting that you might have been wrong. It doesn’t help anything succeed anymore. It doesn’t encourage anything anymore.”

Fully warmed up, Ackerman got to his point about what all the hedging on Wall Street accomplishes. “I don’t see how that creates one job in America,” he said. “I don’t see how it helps the American economy. I don’t see how it helps the housing market or the building market or the let’s-make-steel or widgets market.”

Ackerman is right. The only beneficiaries of hedges, if they work out, are the bankers and traders who profit from a gamble they took with their depositors’ and shareholders’ money in the first place.

He continued: “What it helps is — if you were right a majority of the time — then it makes a bunch of money for the guys who did it and doesn’t help the company, the industry, the economy or the country at all. And if you were wrong, it puts systemically everything at risk. And when I say everything, I mean the confidence that the American people, the public, the investment community and everybody else has in the system. And that’s a loss you can’t hedge against.”

By then, Ackerman’s time was up. Dimon responded sheepishly with some pablum about all the loans JPMorgan Chase has made and all the people the company has hired. It wasn’t until the end — right before Green confronted him — that Dimon, too, started making some sense about how the focus should be on making Wall Street work for the American people and the economy, not just for the people lucky enough to work there.

He made this point in the context of the so-called Volcker rule, which would limit the ability of banks to make proprietary trades.

“People should actually get in a room, talk about what they’re trying to accomplish, go through the specifics and not pretend that they’re either for Volcker or against Volcker,” Dimon said. “You may all want to get rid of it, but we have to deal with it, and it’s a very detailed thing. And I remind people, we do have the best capital markets in the world. You should go home at night and say that we sit upon the best economy in the world, the best capital markets in the world, the best job creator of the world.”

Yes, we would all like to go home at night and feel that way, Jamie. But it’s been too long — since well before the bottom fell out in 2007 and 2008 — that Wall Street has given us any reason to do so.

Although Dimon has talked about it before, notably to Charlie Rose at the Aspen Ideas Festival in July 2008, should it really have taken him so long to acknowledge the essential connection between what banks do and national productivity?

Sounds to me that instead of spending time with Green (as fascinating as that would be), Dimon should get in a room with Ackerman and start hammering out the new rules of engagement on Wall Street — rules that will stop encouraging banks such as JPMorgan Chase to take foolish risks with other people’s money, improve the job prospects for millions of out-of-work Americans and start making our world-class capital markets respected again.