JPMorgan board goes soft on Jamie Dimon over whale
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
JPMorgan has gone soft on Jamie Dimon over the so-called whale trade. The bankās 132-page report into $6.2 billion-worth of losses dishes out blame to several now departed managers. But it just echoes the chairman and chief executiveās own mea culpa. The more than $10 million docked from Dimonās pay will sting, but the board could do more ā like removing one of his hats.
To be fair, Dimon didnāt shy away from his and the bankās failings. After initially calling news of the money-losing trades in JPMorganās chief investment office last year āa tempest in a teapot,ā he faced up to them, defending the bank in front of the media, lawmakers and shareholders and accepting he had not paid enough attention. The lapse was a particular blow because JPMorgan had been considered the best managed bank on Wall Street through the financial crisis.
The bankās task force report heaps a good portion of the blame on people who reported directly to Dimon, including former CIO head Ina Drew, ex-finance chief Douglas Braunstein and former Chief Risk Officer Barry Zubrow. Drew was bundled out, Zubrow is retiring, and Braunstein was replaced as finance chief. Yet when it came to Dimon, the task force said its views were āconsistent with the conclusions (Dimon) himself has reachedā about the firmās and his own shortcomings.
The board has made a statement by paying Dimon only half what he pocketed for 2011 ā though $11.5 million is still a pretty good living, and reflects the bankās record profit in 2012. Yet when a big risk management failure occurs, directors need to consider options more radical than the mostly procedural and reporting changes that have already been made.
One could be to split the roles of chairman and CEO. A well-chosen chairman provides a check on a CEOās powers. In one indication that this can work, GMI Ratings last year concluded that an executive pulling double duty can earn 50 percent more than the total pay of two people performing the top jobs separately. An independent chairman could galvanize and maybe refresh JPMorganās board. Perhaps most importantly at a complex bank, a chairman could also share the load as the bankās figurehead, allowing Dimon to spend more time making sure the next whale trade doesnāt fall through the cracks.