It was another instance of bad execution. In an act of public contrition, Jamie Dimon, the most overrated banker in America, fell on his sword -- and missed. The tip of his sword only grazed his side before it pierced the heart of Ina Drew, JP Morgan Chase's chief investment officer and the bank's fourth highest paid officer, who had been tapped to take the fall with him -- or, rather, for him.
Only days before this happened, as Wall Street Journal recounts, Dimon was telling colleagues that he didn't have the heart to fire her: "What if this were your sister after 30 years of great performance and you said: 'You're out of here.'"
Well, he went ahead and fired her. And no matter, for afterword there were hugs all around. This is how the WSJ described the scene in its banner story on Friday, May 18 ("Inside J.P. Morgan's Blunder: CEO Dimon blessed the concept behind disastrous trades"):
On Monday [May 14], Mr. Dimon accompanied Ms. Drew to the firm's trading floor to announce her departure, and then to the operating committee meeting, where Ms. Drew apologized, attendees say. Mr. Dimon gave her a bear hug on the way out, they say.
Jamie had called the trades that led to $2 billion or more in losses "sloppy" and "stupid." He has described the transactions as "self-inflicted" wounds. Most observers might think that would be enough.
Nevertheless, Jamie, a long-time Democrat, seems oddly determined to play the part of Icarus -- the Greek wonder boy of an earlier time who perished as a result of flying too close to the sun. Could it be that Jamie is playing this role for the express benefit of his friend -- the full-time presidential candidate, sometime president, and all-star banking analyst Barack Obama?
"JPMorgan is one of the best-managed banks there is," the president said last week. "Jamie Dimon, the head of it, is one of the smartest bankers we've got, and they've still lost $2 billion and counting.… You could have a bank that isn't as strong, isn't as profitable managing those same bets and we might have had to step in."
Who after all would know more about banking than a former community organizer who provided legal advice to ACORN, an organization that excelled in extracting money from banks for failing to make as many loans as they should to poor credit risks?
And of course there are other facts to consider: JP Morgan's losses haven't cost the taxpayers any money ("not a single dime," as the president might say); they haven't caused any of its customers to lose money; and they do not seem to have placed the bank in any danger of insolvency.
From start to finish, the WSJ article of May 18 dramatized the idea of unregulated exuberance in soaring too close to the sun. And it did so with the seeming connivance of Jamie Dimon and his top lieutenants -- given all the attention-getting quotes attributed to "attendees" at key meetings:
For the first time [on April 30], Mr. Dimon saw all the positions, how they were connected, and how complex they were. It made him queasy, he told colleagues.
He immediately set up a war room on the 48th floor of J.P. Morgan's Park Avenue headquarters in Manhattan, led by Morgan's risk chief John Hogan. Financial, risk, and regulatory managers gathered in offices and conference rooms there, assembling documents and scribbling on white boards.
Mr. Dimon told the group "We're in a major storm," attendees say. "We've got to get to the bottom and come clean.
Poor Jamie. He didn't sleep well that night. Nor the next several nights either. Entering, it would seem, the Dimons' bedroom, we learn that Jamie "confided" in his wife: "I missed something bad."
Then came the most memorable scene of all. This was not the May 10 conference call in which Jamie and the bank disclosed $2 billion in losses. It was next evening, when Jamie's crisis management team moved from the "war room" to his office for some late night drinking and bonding:
Late that Friday night, several executives gathered in Mr. Dimon's office. Messrs. Dimon and [Mike] Cavanagh drank vodka. Others had wine. They told their boss of how they had let down the firm, attendees say. "We all did," Mr. Dimon replied, according to attendees. "Put on your JPM jerseys and get ready. We are going to take a lot of hits. We'll draft our best team and get through this."
Perhaps Jamie was thinking that his band of bankers needed a bit of same kind of rhetorical flourish that Henry V gave his soldiers as they prepared to go into battle on St. Crispin's eve. You remember the lines from Shakespeare's play:
We few, we happy few, we band of brothers
For he today that sheds with blood with me
Shall be my brother…
And gentlemen in England now-a-bed
Shall think themselves accurs'd that they were not here
And hold their manhoods cheap.
Still, I can't help thinking that Jamie's call for his colleagues to "put on their JPM jerseys" falls a little short of Henry V's speech.
At the close of business May 18, JPMorgan's stock stood at $33.49 per share. That is down 16% from $39.71 on Dec. 30, 2005, when Jamie took over as chief executive officer.
It seems pretty clear that Jamie is still the president's favorite banker. However the JPMorgan saga plays out, it seems more than likely that Barack will go on calling him the smartest man on Wall Street. But Jamie's own shareholders are feeling restive at the poor performance of the stock. And some would like him to give up the role of chairman and accept some adult supervision from a new chairman.
So Jamie may just go on crying a river… for himself if no one else.
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