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JPMorgan CEO says execs may have pay taken back
WASHINGTON — JPMorgan Chase CEO Jamie Dimon told Congress on Wednesday that senior bank executives responsible for a $2 billion trading loss will probably have some of their pay taken back by the company.
Under bank policy, stock grants and bonuses can be recovered from executives, even for exercising bad judgment, Mr. Dimon told the Senate Banking Commitee. The policy has never been invoked, he said, but he strongly suggested that it will be.
“It’s likely that there will be clawbacks,” he said.
Among the most likely candidates would be Ina Drew, JPMorgan’s chief investment officer, who left the bank days after Mr. Dimon disclosed the loss on May 10. Ms. Drew oversaw the trading group responsible for the $2 billion loss.
Mr. Dimon, under close questioning from lawmakers about his own role in setting up the investment division responsible for the mess, declared: “We made a mistake. I’m absolutely responsible. The buck stops with me.”
The trading loss has raised concerns that the biggest banks still pose risks to the U.S. financial system, less than four years after the financial crisis erupted in the fall of 2008.
Mr. Dimon’s reputation for cost cutting and his perceived mastery of risk, particularly during the crisis, earned him respect in Washington. JPMorgan Chase & Co. weathered the crisis with relatively little damage.
At every turn before the committee, Mr. Dimon responded easily and in rapid-fire style to questions. He sounded notes of contrition — “We should have gotten it earlier” — but also defended the bank and his own criticism of some financial regulation.
Other than a few critical jabs from a couple of Democratic senators, the panel’s treatment of Mr. Dimon was gentle compared to that received by other Wall Street executives in recent years on Capitol Hill.
Lloyd Blankfein, the CEO of Goldman Sachs, was roughed up at a hearing by a Senate investigative panel looking into allegations that the firm steered investors toward mortgage securities it knew would likely fail.
In December, former New Jersey Gov. Jon Corzine endured grueling questioning by three different committees over the collapse of the brokerage firm MF Global, which he had led as CEO.
Those grillings came after a parade of financial titans were derided and questioned by congressional committees conducting autopsies of the financial crisis for the TV cameras.
On Wednesday, Sen. Jim DeMint, South Carolina Republican, told Mr. Dimon sympathetically that Congress manages to lose at least $2 billion every day. Referring to the bank, he said: “You appear to be in much better fiscal shape than we are as a country.”
“The intent here is really not to sit in judgment,” the senator said.
Far from crouching, Mr. Dimon appeared to strike a posture of a public advocate as the hearing ended. He urged Congress to act quickly to avoid the so-called fiscal cliff at the end of this year, when billions of dollars in tax cuts will expire and billions more in automatic government spending cuts will take effect.
By Brahma Chellaney
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