JPMorgan CEO Says He Was 'Dead Wrong'
Sunday, May 13, 2012
Jamie Dimon, CEO of JPMorgan Chase, appeared on a Sunday morning talk show to continue damage control over a $2 billion loss the company suffered.
Appearing on NBC's "Meet The Press" Sunday, Dimon said he should not have dismissed analysts' concerns about the bank's trading last month when he described it as a "tempest in a teapot."
"I was dead wrong when I said that. I obviously didn't know, because I never would have said that," Dimon said.
On Thursday, after markets closed, Dimon held a conference call to announce that the U.S.'s largest bank had lost $2 billion on what he described as a hedging strategy gone wrong. His decision to publicly announce the loss after the close "was because we wanted to say, you know what, we told you something that was completely wrong a mere four weeks ago. We took a two billion dollar loss and we made it clear it could get worse before it gets better."
Investors punished JPMorgan's stock Friday, shaving off nearly ten percent.
Dimon said given the magnitude of the loss, federal regulators would be justified in looking into the bank's trading practices.
"Regulators should look at something like this. That's their job. So we are totally open to cooperating with regulators and they will come to their own conclusions," he said.
As far as the bank's own investigation into what went wrong, Dimon said, "We intend to fix it, learn from it and be a better company when it's done."
Lawmakers and critics of the banking industry have seized on the $2 billion loss to argue banks still take too much risk more than three years after the financial crisis.
A piece of financial regulation, known as the Volcker Rule, would prevent banks from certain kinds of trading for their own profit. Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.
But Rep. Barney Frank, D-Mass., told ABC's "This Week" that he hopes the final version of the Volcker Rule will prevent the type of trading that led to the massive loss at JPMorgan.
Dimon conceded to NBC that the bank has "hurt ourselves and our credibility," and he expects to "pay the price for that."
Asked what the price should be, Sen. Carl Levin, D-Mich., said that banks will lose their fight to weaken the Volcker Rule.
Levin told NBC, "This was not a risk-reducing activity that they engaged in. This increased their risk."
Addressing public anger toward Wall Street, Dimon said he wants a more equitable society and does not mind paying higher taxes. But he said attacking all of business is "very counterproductive."