An Industry Superstar
Jamie Dimon is the current Chairman, President, and Chief Executive Officer of JP Morgan Chase, one of the Big Four Banks of the United States. As of 2009, the “Big 4” held nearly 40% of all U.S. customer deposits. Bank of America, Citigroup, and Wells Fargo round out the “Four Horsemen.” Dimon’s pay package for fiscal 2011 topped out at $23 million, ahead of all his banking peers.
Mr. Dimon has also served as a Class A director of the Board of Directors of the New York Federal Reserve since the beginning of 2007. His overall business track record has been exemplary.
Until the third week of May, 2012.
The Perils of Trading
$3 billion in trading losses have been reported so far by Mr. Dimon and Chase. More is expected, perhaps surpassing $5 billion. Chase is a trillion dollar enterprise. However, confidence, value, transparency, and common sense must gel, ideally, into a priceless cluster when it comes to money and trust. Has this invaluable core of constructs run amok in Chase’s corporate headquarters?
Human beings are symbolic thinkers. They need to have faith and confidence in their institutions. What was Chase thinking; what were they doing with shareholder assets? On the brightest and sunniest days, derivatives are complex and difficult to understand, let alone comprehend, for even the savviest of traders. I’ve treated many very prosperous traders for years, and they confess their ignorance to me in the treatment room.
What is a bank, and what will new bank models be made of? Financial masters of the universe, economics scholars, and regulators will be struggling with these architectural issues for years to come.
The Power of Confession…
Can too much power thrive in one man’s (banker’s) hands? What was Jamie Dimon thinking? He’s a brilliant, very well respected financial professional; Harvard and Sandy Weill trained. He did the right thing: he confessed his sins. He apologized for egregious errors. But, and this is a major but, he asserted and claimed that there was almost no excuse for what happened at Chase’s trading desk on his watch. Unfortunately, in banks, in markets, and in life “where there’s smoke there’s fire.” The FBI and other government agencies have their work cut out for them.
The use of language, especially the subtleties of language, deeply reflects the inner, core thinking of people and their belief systems. The use of this six letter adverb, almost, is worth (not anymore) a billion doses of reality. Almost, frankly, has absolutely no place here: there was, never was, and never will be an excuse of this type of abuse of shareholder assets. It’s common knowledge for West Point cadets, when confronted for any violation that the proper response is: “no excuse, sir.”
What Makes Jamie Run?
We all have ghosts and demons in our psycho-social history. I do not pretend to know what his are, and frankly they’re none of my business. However, is it fair to speculate that Jamie Dimon has been a product of the Lake Wobegon Effect?
The effect refers to the all too human tendency to overestimate and overvalue one’s skills and capacities. At its base is an emotional and cognitive bias that promotes positive qualities while suppressing negative ones. If we pay CEOs, Presidents, Chairmen outrageously they must be worthy and superior. How could they not be? When all these “handles” are bundled, we have the makings of a King!
Did Jamie Dimon experience illusory superiority? Did he overestimate his bandwidth resiliency? He is clearly a gifted man with a creative spirit. What really happened here? What makes Jamie run?
Are Diamonds/Dimons Really Forever?
Last Fall, the Oppenheimer family, of DeBeers mining fame strategically divested their holdings. They sold their 40% share to Anglo-American. The history of DeBeers and details of these events can be found in The Shareholder Activist blog. For the Oppenheimers, diamonds were not forever. They had achieved considerable wealth by promoting a global, highly recognized logo: Diamonds Are Forever! Apparently not in today’s world, not in South Africa, and perhaps not on The Street. Others factors can come into play.
“They got out while the getting was good.” South African mines are facing the threat of nationalization. And perhaps the Oppenheimer family had other goals, conflicts, and issues. All families have secrets. They’re entitled to.
Secrets are not best practices in our publically owned corporations. At Chase, “Dimons” may not be forever. Time will tell. I will continue to follow Jamie Dimon’s story in an effort to determine what makes him run, and to report on the results of the myriad of investigations.
Keep ZeroHedge.com’s logo in mind: “On a long enough timeline the survival rate for everyone drops to zero.” Nothing is forever, except the proverbial: taxes and death.
Perhaps the most disturbing aspect of the Chase trading debacle is that Main Street has been betrayed yet again. Is Wall Street capable of genuine change and, if you will, emotional growth? We are still licking our wounds, and now we are clobbered: the other shoe has dropped. I have a significant stake in JP Morgan Chase. I am not just The Wall Street Psychologist; I am a deeply concerned shareholder who fully endorses and requires transparency and disclosure.
Jamie Dimon is a brilliant financial professional. He purchased Bear Sterns for a song. He’s an innovator. Wall Street personnel often fall prey to hubris. I can only hope that this phenomenon is not operating here to the point of a loss of contact with reality. Arrogance and pride can color judgment all too powerfully. Running is good for many, so is jogging. Joggers reach the finish line in due time and often in better spirits and sounder “financial health.”
To contact Christopher Bayer directly, please email Christopher.Bayer@TheShareholderActivist.com.