Tags: jpmorgan | dimon | ceo | loss

JPMorgan CEO Dimon on Big Loss: ‘We Were Sloppy and Stupid’

Sunday, 13 May 2012 10:39 AM

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JPMorgan's $2 billion trading loss was definitely the result of poor business practices but the bank isn't sure yet if any laws were broken, says the bank's CEO Jamie Dimon.

The company also isn't surprised by probes from regulators and will continue to find out how a hedging snafu lost $2 billion for JPMorgan, which came through the 2008 global financial collapse largely unscathed compared to other U.S. banks.

"We've had audit, legal, risk and compliance — we've had our best people looking over all that," Dimon tells NBC News when asked if laws were broken.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

"We know we were sloppy, we know we were stupid, we know there was bad judgment. We don't know if any of that is true, yet."

The Securities and Exchange Commission has said it has launched a preliminary probe into the trade.

"Regulators should look at something like this. That's their job," Dimon says.

"They will come to their own conclusions, but we intend to fix it, learn from it and be a better company when this is done."

In early April, Bloomberg News and the Wall Street Journal reported the bank was making large and risky trades at the bank's corporate investment office, activities that Dimon described at the time as "a tempest in a teapot."

"I was dead wrong when I said that. I obviously didn't know or I never would have said that," Dimon says.

Still, the bank is overall a healthy financial institution.

"We took a $2 billion loss, and we made it clear it could get worse before it gets better. I do want to put in perspective the company is going to earn a lot of money this quarter. It's a very strong company. We made a terrible, egregious mistake, and there's almost no excuse for it."

Dimon, who supports most but not all of the measures outlined in the government's Dodd-Frank financial reform law, says he agrees that troubled banks should be allowed to fail.

"We want the government to be able to take down a big bank like JPMorgan, and it can be done. We think Dodd-Frank, which we support parts of, gave the authority to take down a big bank," Dimon says.

"The board should be fired, equity should be wiped out, and the bank should be dismantled, and the name should be buried in disgrace. That's what I believe."

JPMorgan, however, can stand on its own two feet.

"This is not a risk which is life-threatening to JPMorgan. This is a stupid thing we should never have done, but we're still going to earn a lot of money this quarter. It's not like this company is jeopardized. We hurt ourselves and our credibility, yes, and we've got to fully expect that and pay for the price for that."

Despite damage control and proactive public relations campaign taken by the bank, Wall Street is getting defensive.

The trading losses were hedging trades, meaning they were designed to protect the bank against losses but instead, wound up generating losses themselves.

Fitch Ratings cut JPMorgan's debt ratings to A+ from AA- and slapped a negative ratings watch on the bank, meaning more downgrades are possible.

"The magnitude of the loss and ongoing nature of these positions implies a lack of liquidity," the ratings agency said, Reuters reports.

"Fitch believes the potential reputational risk and risk governance issues raised at JPM are no longer consistent with an 'AA-' rating."

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video



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