Jamie Dimon Blames $2 Billion Loss on Sloppiness, Stupidity

By
Jamie Dimon.
Jamie Dimon. Photo: Bloomberg/2011 Bloomberg

Last night, MSNBC aired an interview with an unusually contrite Jamie Dimon, who once again admitted that mistakes were made over at JPMorgan's London office, which — in case you missed it — just lost $2 billion in a hedge gone wrong. "We know we were sloppy, we know we were stupid, we know there was bad judgement," he told Meet the Press's David Gregory. He added that he was "open" to the SEC's newly opened investigation into the mess. Either way, "We intend to fix it, learn from it, and be a better company when it's done." Even if the probe doesn't uncover anything illegal, the vocally anti-regulation CEO will still have to deal with a lot of fallout (minus $2 billion.) "Have you given regulators new ammunition against the banks?" asked Gregory. "Absolutely," Dimon responded, a chucklelike sound escaping from his mouth. "This is a very unfortunate and inopportune time to have this kind of mistake, yes." 

As New York's Jessica Pressler explained yesterday, so-called Dimonfreude is up and trending (at least in many corners of Washington and among the chattering class.) Dimon nemesis Barney Frank was quick to point out that the loss was "five times the amount they claim financial regulation is costing them." South Dakota Senator Tim Johnson, who is chairman of the Senate Banking Committee, called the episode "evidence that our banking regulators must remain vigilant" and an example of "why opponents of Wall Street reform must not be allowed to gut important protections for the financial system and taxpayers." The Obama campaign seized on the issue, as well, putting out this statement: 

"Rolling back Wall Street reform, as Mitt Romney proposes, would be reckless. Returning to the failed policy of letting Wall Street write its own rules would put all of us at greater risk of another financial crisis and leave us vulnerable to another taxpayer-funded bank bailout like the one shortly before President Obama took office.

The loss resulted in a 9.3 percent decline in value for shares of JPMorgan on the New York Stock Exchange on Friday, and a subtraction of nearly 30 points from the Dow Jones Industrial Average. 

After the end of regular trading, Fitch Ratings cut its credit rating on J.P. Morgan to A-plus from double A-minus. The rating firm cited "potential reputational risk and risk governance issues." Standard & Poor's said it might downgrade the bank.

According to The Wall Street Journal, JPMorgan executives have concluded that "holding people accountable" will play a key role in getting this to blow over. In addition to Bruno "London Whale" Iksil, attention is being paid to his boss, Achilles Macris, the head of the chief investment office's operations in Europe. They're also looking at his boss, Ina Drew, the bank's investment chief. There's no word yet on whether the internal review will include her boss, Jamie Dimon.