During JPMorgan Chase’s annual shareholder meeting in Tampa today a contrite CEO Jamie Dimon addressed the bank’s massive $2 billion trading loss, saying “I cannot justify it” and “all corrective action will be taken.”
Dimon, however, avoided a shareholder rebuke. His multi-million dollar pay package and dual role as chairman and CEO were approved.
The “say on pay” vote was overwhelmingly in favor of the executive compensation packages, with a vote of 91.5 percent.
There didn’t seem to be any more vitriol at this meeting compared with shareholder meetings at other big banks in recent years.
JPMorgan stock is up nearly 3 percent in trading today. The bank’s shares took a 13 percent beating after the news broke and shareholders will likely have more questions for management on how they allowed such a big mistake.
At least one top manager — investment chief Ina Drew — has lost her job and some institutional shareholders were asking that Dimon be stripped of his dual role of chairman and CEO.
The bank had $19 billion in profits last year. Clearly a $2 billion loss is not going to destroy the institution.
President Obama told the hosts of ABC’s “The View” that the bank’s risky bets exemplified the need for Wall Street reform.
“JPMorgan is one of the best-managed banks there is. Jamie Dimon, the head of it, is one of the smartest bankers we got and they still lost $2 billion and counting,” the president said. “We don’t know all the details. It’s going to be investigated, but this is why we passed Wall Street reform.”
Todd Hagerman, an analyst with Sterne Agee points out that egregious mistakes were made, but if Dimon were to step down, “who in god’s name is going to take his place?”
Separately some are calling on Dimon to step down from the board of the New York Federal Reserve. The New York Fed is responsible for regulating banks and Elizabeth Warren, who is running for Senate in Massachusetts, and Vermont Sen. Bernie Sanders say there is a clear conflict of interest.
Before this mess Dimon was widely considered to have a remarkable ability to keep close watch on his more than 250,000 employees. Now it’s clear that the Wall Street Journal and Bloomberg News learned about out-of-control trades well before Dimon did.
Dimon is facing criticism in particular because he dismissed the concerns at first, calling the press reports a “tempest in the teapot.”
The revelation of the massive loss has led to the bank being downgraded by Fitch, one of the three major financial ratings agencies.