Jamie Dimon, the CEO of JPMorgan, took a different approach to the recent $2 billion trading loss the bank suffered. In the other cases: Barings (Nick Leeson), Société Générale (Jérôme Kerviel), UBS (Kweku Adoboli) it was blamed on the rogue trader. In JPMorgan’s case Dimon took responsibility. “We are sorry” he said. “We let a lot of people down.”
JPMorgan’s “fortress” balance sheet saw the bank through the 2008 crash and repay the $25 billion loan from the government in under a year.
Now things are a little different. Dimon is testifying to the US Senate Banking Committee, answering how and why the loss happened. How hard will he be grilled?
There is concern that he will get off lightly because the five most senior members of the Committee have a heavy reliance on campaign contributions from the politically connected New York bank.
The bank’s long political shadow hangs over the hearing, although several observers were skeptical that it will buy Dimon any favors in such a high-profile public setting.
“Contributions are useful, but they do not protect you when you have gotten in trouble in a high visibility way,” said Larry Sabato, director of the University of Virginia’s Center for Politics. “That description fits Dimon just now.”
The sub-text here is that if it weren’t such a high profile matter, JPMorgan would get special treatment because of the contributions.
There is a clear a conflict of interest, and members should have recused themselves. How will we know whether they have probed as deeply as they could. How do they, in their own minds, know that.
There is already a clue. A big question is whether the $2 billion figure covers the full extent of the losses. Dimon has successfully evaded the question, and the Senators have not pressed him. If he knows that the $2 billion is the total of the loss, there is no reason not to answer – so either he does not know – which is very bad, or he knows that it’s bigger and isn’t telling, which is worse.
The American voters have a right to something better.
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