Discuss: JPMorgan Chase cleans house but not enough
JPMorgan Chase CEO Jamie Dimon must have nine professional lives if he survives this one. After having to acknowledge that a previously underplayed bad trade cost the bank nearly three times its original estimate, Dimon now wants to reassure the public, read: banking regulators, that the bad guys have all left the bank.
Dimon hastened Friday to point out the executives left sans a chunk of their money. Managers tied to the bad trade had been dismissed without severance pay and the bank is planning to revoke two years' worth of pay from each of those executives.
Moreover, the bad trade - which still hasn't been explained clearly enough - cost the bank $5.8 billion this year. Dimon had originally placed the figure at $2 billion, a disclosure made almost offhandedly during a May conference call with Wall Street analysts.
Dimon seems to skirt around the issue of whether or not traders improperly tried to conceal the blunder. Time to see if any regulatory laws were broken and who can be prosecuted. Despite the bank's considerable reserves and an extremely profitable quarter, JPMorgan's losses can no longer be swept under the rug because, well, banks have losses all the time. A month ago Congress hauled Dimon and other executives to Capitol Hill for an explanation of the losses. At the time, Dimon did little more than apologize and promise to get to the bottom of the issue. Now would be a better time for lawmakers to hear from the banking executive.
Billionaire investor Warren Buffett owns 1 million JPMorgan shares and says he isn't troubled by the loss.
What do you think? Has Jamie Dimon cleaned house well enough for JPMorgan to get a clean bill of health.
Achenblog by Joel Achenbach
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