Dimon Deserves The Blame

[Parsad]

I know, I know, many of you are going to disagree with this, especially after Warren has said such great things about him, but like Sokol, Dimon deserves all of the blame for what happened at JPM.  I thought he deserved some of the blame, but after reading this article, he deserves all of the blame.

 

http://www.bloomberg.com/news/2012-05-25/jpmorgan-gave-risk-oversight-to-museum-head-who-sat-on-aig-board.html

 

This is a corporate America problem with board selection and you would think Dimon would know better...but boards like to be very collegial...so you don't actually get the oversight you need.  Happens from small companies like ITEX to large companies like JPM.  How these three were the ones selected to sit on the risk committee, I don't know.  And the fact that Dimon was ok with it, just makes it worse.  Cheers!

[returnonmycapital]

I believe people think JPM is special because Dimon tells them so. Most people would rather die than think...

[prevalou]

and other follow newspapers opinion...Look at JP MORGAN profitability during the 2008 financial crisis and after.

[lessthaniv]

any opinion of Dimon's board position at the New York Fed?

[Vish_ram]

I'm just amazed that Dimon calls this an isolated incident. How come a bank CEO  doesn't know the size & nature of derivative bets? I think that the temptation is just too great to screw around.

 

It is like hiring a bunch of pyromaniacs to act as chef's and it is no surprise that the kitchen goes down in flames periodically. There is no hope on big banks. Dimon's tarnished reputation is the only good thing to come out of it.

[moore_capital54]

I believe people think JPM is special because Dimon tells them so. Most people would rather die than think...

 

This is a very very important observation. I believe that the bank which embodies the principles of JPM or the image of Dimon that everyone subscribed to is actually BAC and Moynihan. What Moynihan is doing is going to be looked at every quarter with more and more appreciation.

 

I dont believe JPM and WFC will retain their premium over BAC for more than 2 additional quarters.

[Parsad]

I believe people think JPM is special because Dimon tells them so. Most people would rather die than think...

 

This is a very very important observation. I believe that the bank which embodies the principles of JPM or the image of Dimon that everyone subscribed to is actually BAC and Moynihan. What Moynihan is doing is going to be looked at every quarter with more and more appreciation.

 

I dont believe JPM and WFC will retain their premium over BAC for more than 2 additional quarters.

 

I agree with that, other than the 2 additional quarters.  I think it will take a little longer because of all of the legal overhang. 

 

But yes, I think Moynihan is actually showing all the traits that any rational person would want in a CEO...humble, learns from his mistakes, making things more efficient, getting rid of non-essential businesses, restoring morale and reputation and creating a much stronger institution. 

 

The problem is that he's not as charismatic as Dimon, and has all of the crap to deal with from his predecessor.  But this guy is the real deal and what he's doing is going to be recognized by his employees and the banking industry 10 years from now.  He saved this bank and the hundreds of thousands of jobs still there!  Cheers! 

[bathtime]

I haven't followed the banks closely as investments. So the first time I listened to Dimon and Moynihan present was in recordings of that bank conference the other day. I found Dimon surprisingly arrogant and off the cuff (especially considering the recent losses), whereas Moynihan was boring nuts-and-bolts - what you'd want in a banker.

[A_Hamilton]

I think they both have the opportunity to be grand slam homeruns.

 

Forget the investment bank and CIO at JPM for a moment, look at massive increase in employees at Commercial/Asset Management/RFS/TSS. JPM is easily the best positioned U.S. bank to capture custody/management of the massive amounts of wealth that will be generated over the next 25 years.

[ubuy2wron]

My goodness gracious we are quick to point the finger and to allocate responsibility. The House of Morgan has well in excess of 100k employees in so many countries that its likely no one here know how many countries they in fact have an office. IMO Jamie is guilty of nothing more than hubris and a little arrogance (Ok maybe a lot of arrogance). If you run a bank and it has a huge balance sheet and hundreds of thousands of employees, crap is going to happen from time to time even if you are as good as we used to think Jamie was. The bank has pretty much dealt with  what will become a tiny footnote in its history in a pretty darn responsible manner.

[Rabbitisrich]

 

I dont believe JPM and WFC will retain their premium over BAC for more than 2 additional quarters.

 

I agree with that, other than the 2 additional quarters.  I think it will take a little longer because of all of the legal overhang. 

 

 

Why wouldn't WFC maintain a premium vs. BAC, given that USB maintains a premium vs. WFC? Do you see a pathway for BAC to depart from historically inferior unlevered profit margins, and to compensate for the leverage handcuffs of Basel III?

[Parsad]

 

I dont believe JPM and WFC will retain their premium over BAC for more than 2 additional quarters.

 

I agree with that, other than the 2 additional quarters.  I think it will take a little longer because of all of the legal overhang. 

 

 

Why wouldn't WFC maintain a premium vs. BAC, given that USB maintains a premium vs. WFC? Do you see a pathway for BAC to depart from historically inferior unlevered profit margins, and to compensate for the leverage handcuffs of Basel III?

 

The only time I've seen premiums retained on a business over long periods of time, is where their is a lack of competition or a duopoly.  In cases where a premium is retained in competitive industries, it is often a superb manager that retains that premium because of his/her abilities.  In a highly competitive industry like the financial industry, I doubt that any business can retain a significant premium over a decade or longer unless that CEO remains in place for a long period of time. 

 

So while I expect WFC to maintain some premium over it's peers because of its cross selling, loyal customer base, and higher credit quality loans, I think that will narrow slightly over time.  I don't think JPM will have a significant premium over BAC in 5 years.  Especially if Dimon moves on as is expected.  I've never owned JPM and own only WFC and BAC...I expect to hold both for many, many years.  Cheers!