Let’s say you’ve earned $10,000 in the past three months, and that you lose $3,000 of that money at the local casino. What do you tell your family? If you’re a devotee of JPMorgan Chase CEO Jamie Dimon, you might say “Just look at how much we still have,” and go on about your business.
And if your family is following the JPMorgan playbook, they’ll reward you with a steak dinner and congratulatory pat on the back.
The big bank and the media have repeated endlessly the fact that earnings for the quarter were nearly $6 billion; hence, it was argued, the $2 billion loss would cause hardly a ripple in the balance sheet. Please. It’s one-third of JPMorgan’s earnings for the quarter, just as the $3,000 loss at the casino is about a third of your personal quarterly income. Why does one loss seem so devastating while the other is treated as trivial?
Jamie Dimon left this week’s shareholders’ meeting with his $23 million annual salary intact, and with general praise regarding his risk management ability. Again, please. Here is a “too big to fail” bank that was bailed out by the taxpayers just a couple of years ago (remember TARP?) and is now okay with dropping billions in bad bets without the slightest sense of humility. There’s something wrong with this picture.
If JPMorgan shareholders were truly “owners” of the company in which they invest, then they surely would have fired or– at the very least– disciplined Mr. Dimon for his immense failure. In case you think we owe Mr. Dimon the benefit of the doubt because he’s managed so well up until now, keep in mind that in business doing your job properly is the expectation. And when you’re paid an eight figure salary, that bar should be mighty high.
However, as Maureen Dowd wrote in the New York Times:
“...there wasn’t much ire at the JPMorgan Chase annual shareholders meeting in Tampa on Tuesday. It was over quickly and painlessly, despite — or maybe because of — Dimon’s admission on ‘Meet the Press’ that his team was ‘sloppy’ and ‘stupid’ and used ‘bad judgment’ in incurring the loss, which has led to the rolling of three heads at the bank, an F.B.I. investigation, and a Congressional ramp-up for more chiding hearings.”
An error like Dimon’s (and yes, he is responsible because he’s the CEO) is simply unforgivable. For a lesser worker at the bank (such as Ina Drew, the woman who headed up risk-management for JPMorgan), it’s curtains. But not for the bank’s shining star, Mr. Dimon. He’s granted a king’s ransom and sent back to his lush Park Avenue office suite to strategize even more ways to risk shareholder and taxpayer money.
One of the reasons Dimon gets away with so much is that he’s very well connected in Washington. In fact, Dowd points out that he’s President Obama’s “favorite banker,” and that the first family has a large chunk of change stashed in the JPMorgan Chase vaults. So when Dimon and his bank take a casino-sized hit on a risky trade, they just skate on by. The rest of us have to take our lumps.