Jamie Dimon is glad it’s Facebook Friday. After a week where JPMorgan Chase revealed a $2 billion trading loss, saw questions about the reputation of the bank and its CEO mount, experienced a drop in financial value and heightened attacks from the pro-regulation camp, was sued by shareholders, and became the subject of an FBI investigation, the man is probably longing for a day off and a stiff drink. With the IPO happening, he can take a breather.
“For a bank viewed as a strong risk manager that never reported a loss throughout the financial crisis, the errors are embarrassing, especially in light of Dimon’s public criticism of the so-called Volcker rule to ban proprietary trading by big banks, and could lead to more heat from Washington on the sector,” wrote CNBC. Yikes.
The question now is what can be done to turn things around.
Even with continued the losses that are sure to pop up, JPMorgan earns many billions of dollars and isn’t going anywhere. The people directly responsible have already been named; CIO Ina Drew has been forced into retirement and replaced, and the “London Whale” Bruno Iksil whose work is at the center of the issue is said to be on his way out. But perception is important, particularly now when trust in Wall Street and its leaders is still in the toilet.
Dimon has agreed to appear before a Congressional panel at some point in the coming weeks, which will afford him an opportunity to speak about how the bank plans to do business going forward. A problem, of course, is that he first called warnings about the losses a “tempest in a teapot.” And, although he has admitted that he has “egg on his face” over the situation, he has continued to push back on calls for tighter bank regulations. Though the Wall Street Journal does note: “But he said he supports most of the proposed regulatory rules, including some of the so-called Volcker rule, which would bar banks from making bets with their own money.
“It [the tempest comment] was one of the main reasons that Dimon was so blunt in admitting just about everything was wrong with the situation — he said the hedging strategy was ‘flawed,’ there was ‘sloppiness’ and that ‘egregious mistakes’ had been made,” Reuters reports in an article about the crisis comms response. Experts, including Goldman Sachs’ former PR head Lucas van Praag, praised Dimon’s response so far.
But, the experts also say that Dimon must proceed with caution. In his statements before lawmakers and his future comments, he’s going to have to balance the need to appear contrite and aware with the need to be confident that the bank is still a good place to do business. Problem is, there were signs of what was to come and everyone — lawmakers, the banks, and the public — have seen and heard this all before and we’re all really tired of the unethical, self-serving, disgusting behavior.
“…[I]t’s going to take a long while for him to be respected and to get his credibility back,” said Fraser Seitel, a PR consultant and a former public affairs director at Chase Manhattan Bank in the 80s. And with stories about how this crap-tastic sausage was made now coming to light (he was “queasy” when he finally saw the numbers, the Journal writes), there still may be a little farther for Dimon to fall.
Thank goodness the financial community already had a ton of credibility problems, so the bar has been set pretty low.