Jamie Dimon, JPMorgan Chase (JPM)
Jamie Dimon has had a rough couple of years, but JPMorgan (JPM) shareholders have stuck with him anyway.
Since taking the helm at the end of 2005, the banking wunderkind who built Citigroup (C) with mentor Sandy Weill back in the 1980s and ’90s, has enhanced the global financial services company’s valuation (to a $214.9 billion market cap) and assets (now $2.46 trillion) despite the Great Recession and the eurozone debt crisis. JPM stock has gained 44% during his tenure.
So why do so many people want Jamie Dimon’s head on a plate right now?
JPM’s $4 billion increase in litigation expenses during the second quarter broke a 17-quarter streak of earnings growth by U.S. banks, according to an FDIC report released Tuesday. JPM also reported its first quarterly loss on Dimon’s watch — a consequence of having to set up a $23 billion reserve for its wide-ranging legal expenses.
Those are some of the reasons the banking industry’s fair-haired boy has morphed into the whipping boy for JPM’s many recent missteps — most notably the “London Whale” scandal where rogue derivatives trades served up some $6 billion in trading losses and nearly $1 billion in fines.
Last week’s record $13 billion DOJ mortgage-backed securities settlement can’t completely be laid at Dimon’s feet — most of the MBS belonged to the troubled Bear Stearns and Washington Mutual, which JPMorgan acquired in 2008. But Jamie Dimon is shouldering the blame anyway.
JPM inked another $4.5 billion deal with institutional investors to settle claims tied to JPM and Bear Stearns mortgage-backed securities, but Dimon has vowed to continue the fight to have the FDIC absorb the WaMu claims.
Jamie Dimon, who not long ago was talked up by President Barack Obama as the best and the brightest, is now widely reviled — particularly in the press — and his assertive leadership is now viewed as hubris. In July, the Comptroller of the Currency, which regulates national banks, asked Dimon to step down as chairman of JPM’s main operating subsidiary. And despite the fact that JPM’s stock has soared, Dimon still was skewered in JPM’s ill-advised Twitter blunder earlier this month.
As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.