Reading about the latest foibles of JPMorgan Chase, the largest bank in the United States, one cannot help but chuckle. CEO Jamie Dimon initially reported a trading blunder had cost the bank a mere $2-billion and dismissed concerns as a "tempest in a teapot." He now admits the tempest may have cost the bank $5.8-billion and that's not the end of it. He further admits that if financial markets go south, the bank's loss could run up to $7.5 billion. So the loss is some number of billions ... give or take a couple of billion. His lack of precision must be less than reassuring to his shareholders.
But at least Mr. Dimon has now been chastened. No more tempests in a teapot—he now recognizes the tempest is in the real world. After appearing before Congress to apologize and explain
himself, he says the affair has "shaken our company to the core" and points out that heads are rolling. Not his, actually, but those managers in the London office responsible for the trade have been
dismissed without severance and will forfeit two years'
And some pay it is. The most important head to roll is that of Ina Drew, JPMorgan's chief investment
officer, who oversaw the division responsible for the loss and who resigned shortly after the disclosure. Ms Drew received about $29 million in total
compensation for 2010 and 2011, and retired with about $57.5 million
in stock, pension and other pay, so she should still be left with multimillions after the clawback.
The bank now seems to be suggesting its traders may have acted fraudulently, but not quite so fraudulently as to have broken any laws. Just enough innuendo to provide a scapegoat, but not enough to actually land anyone in jail, perhaps? Ah, the world of bankers—how did a group once so stereotypically dull become so entertaining?