I have a lot of respect for JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon. Unlike most of his Wall Street peers, Dimon not only avoided the bulk of the financial disaster, but also spent years fortifying JPMorgan's balance sheet in case the Big One hit. When it did, he came out looking like one of the savviest bankers of all time.

His recent 28-page letter to shareholders, however, contains perhaps one of the biggest hypocrisies I've seen in a while.

In a section that begins, "Perhaps the largest regulatory failure of all time was the inadequate regulation of Fannie Mae and Freddie Mac," Dimon explains -- rightly so -- how Fan and Fred royally screwed things over the years. Among his chief complaints:

These government-sponsored entities had grown to become larger than the Federal Reserve … And, amazingly, a situation was allowed to exist where the very fundamental premise of their credit was implicit, not explicit. This should never happen again.

Well said, but these have hardly become outlying circumstances. There are actually four financial institutions whose balance sheets have been allowed to grow larger than the Federal Reserve: Freddie Mac, Fannie Mae, Bank of America (NYSE:BAC), and … brace yourself for the irony ... JPMorgan Chase.

Here's the latest burgeoning balance-sheet data for the top financial institutions -- including the Federal Reserve.


Total Assets

Fannie Mae

$3.1 trillion*

Freddie Mac

$2.2 trillion*

JPMorgan Chase

$2.2 trillion

Bank of America

$2.5 trillion

Citigroup (NYSE:C)

$1.9 trillion

Wells Fargo (NYSE:WFC)

$1.3 trillion

Goldman Sachs (NYSE:GS)

$885 billion

Federal Reserve

$2.15 trillion**

*Includes amounts guaranteed on mortgage-backed securities sold to third parties.
**Total factors supplying reserve funds, as of April 16, 2009.

Another strange reality lies within the government-insured credit for which Dimon condemns Fan and Fred (again, rightly so). Last fall, the FDIC began several programs to help stabilize the banking sector, not the least of which was a government guarantee on newly issued senior bank debt. While less ambiguous than the backing Fan and Fred enjoyed, its impact is virtually the same: private companies operating with the backing of public guarantees.

And what bank is tied for first place in taking advantage of this program? Mmm-hmm, JPMorgan Chase.

Again, I admire Dimon for the dominant bank he's created, but the lethal forces he laid out regarding Fannie and Freddie's demise largely permeate the entire banking world -- including his own institution. As Dimon himself said of Fannie and Freddie, "This should never happen again." Yes, but how about exploding investment banks? I'd appreciate it if that never happened again, either.

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Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. The Fool has a disclosure policy.