Data Management

12:14 PM
Phil Albinus
Phil Albinus
Commentary
Connect Directly
Twitter
RSS
E-Mail
50%
50%

Dimon Denial: Not Too Big To Fail

Despite the terrible losses, the PR nightmare and the firings of senior managers, JPMorgan CEO Janie Dimon still thinks his bank is just the right size.

In a revealing earnings call where more than a few bombshells were dropped the CEO of JP Morgan Chase still seems to be in denial. The investment bank confirmed media reports that their Bad Bet, made by a head trader in the UK known as The London Whale, has ballooned from $2 billion to $5.8 billion. Net income fell 9 percent to $4.96 billion in the second quarter, according to media reports.

Read Ivy Schmerken's analysis, What Went Wrong: J.P. Morgan to Disclose Details on Multibillion-Dollar Derivatives Loss.

A chastened Jamie Dimon was grilled by reporters in a stark contrast to the tongue bath he received from US lawmakers when he appeared before the Senate banking committee last month. One exchange of the earnings call stood out when a pair of reporters asked if JP Morgan was, in essence, too big to fail. On both occasions, Dimon brushed away the question.

Here are some (lightly edited) highlights of the Wall Street Journal's live blog:

During the Q&A portion Mike Mayo, an analyst with CLSA, asked Dimon about Too Big To Fail "I'm wondering if the firm as a whole has reached some sort of tipping point in terms of size or complexity that makes it more difficult to manage," Mayo asked.

Dimon replied, "No"

Mayo probed Dimon with "Have you lost a step?" The crowd on the conference call laughs and someone shouts out "Are you too old?"

Dimon will have none of it, saying "Mike, this company is the same company went from '06, '07, 2010, 2011, Bear Stearns, while Mike, we had a record last year."

Later, a reporter asks a question about splitting up J.P. Morgan's consumer bank. The WSJ reports that Mike Mayo made this same point passionately at investor day and was widely rebuffed by the entire J.P. Morgan management team. "What has to happen to you and the board to finally say we are a great institution and we own a lot of great businesses but are too big to manage?" asked the reporter.

Dimon: "I beg to differ ... There is huge strength in this company."

Questioner follows up and wonders if CIO would have been caught in a smaller company.

Dimon fires back: "Hundreds of smaller banks have gone bankrupt. Monolines went bankrupt. You can argue the other way there is a huge source of strength for how strong this company. The CIO was a mistake and we are sorry."

Clearly, JP Morgan Chase will not break up voluntarily.

Phil Albinus is the former editor-in-chief of Advanced Trading. He has nearly two decades of journalism experience and has been covering financial technology and regulation for nine years. Before joining Advanced Trading, he served as editor of Waters, a monthly trade journal ... View Full Bio
Comment  | 
Print  | 
More Insights
More Commentary
Why Settle for Less in the Front Office?
Recent research shows that sell-side firms are less than satisfied with their order management system (OMS) technology. Many front offices, however, continue to make do with their current solutions. Are they selling themselves short?
BYOD Policy: Don't Reinvent the Wheel
Financial firms still feel overwhelmed by BYOD risks and challenges. But these can be addressed by a good policy, and the guidelines are already out there.
The BYOD Challenge
Having a policy in place to manage mobile devices used by employees for work purposes is necessary in this current day.
Getting Onboarding Right in the Age of the Customer
Disparate “Frankenstein” systems slow down the onboarding process and impede customer service, says Pegasystems.
Performance Monitoring Key to Smooth Infrastructure Modernization
As banks consider how to shift infrastructure and storage solutions, they can’t afford to lose visibility into performance.
Register for Wall Street & Technology Newsletters
White Papers
Current Issue
Wall Street & Technology - July 2014
In addition to regular audits, the SEC will start to scrutinize the cyber-security preparedness of market participants.
Video
5 Things to Look For Before Accepting Terms & Conditions
5 Things to Look For Before Accepting Terms & Conditions
Is your corporate data at risk? Before uploading sensitive information to cloud services be sure to review these terms.