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JPMorgan CEO says execs may have pay taken back
Question of the Day
JPMorgan Chase’s stock price was flat at the start of trading, at 9:30 a.m., but began climbing steadily when the hearing began at 10 a.m. It finished the day up 1.6 percent, the second-best performer among the 30 stocks in the Dow Jones industrial average, after Johnson & Johnson.
The so-called Volcker rule, which goes into effect in July, will prevent banks from making certain trades for their own profit. Banks won an exemption to trade to protect their broad portfolios, as Mr. Dimon has said JPMorgan was doing in this case.
Mr. Dimon told the committee, however, that “I have a hard time distinguishing it.” He allowed that “it’s possible” that the Volcker rule would have prevented the debacle at JPMorgan but said he didn’t know.
The CEO said that JPMorgan adopted a strategy late last year to reduce risk, but it backfired in its investment operation by heightening risk instead. The bank has named a new leader for the investment operation that was responsible for the loss.
A key regulator of JPMorgan, Thomas Curry, the U.S. comptroller of the currency, suggested last week that the bank lacked strong controls to contain risk in its investment operations.
And The Wall Street Journal reported Tuesday that some senior JPMorgan executives, including the chief financial officer and chief risk officer, were told about risky trading in London two years before the losses came to light.
Mr. Dimon himself knew of some of the trades and sometimes spoke with the traders involved, the Journal reported, citing unnamed people familiar with the matter.
The Securities and Exchange Commission is reviewing what JPMorgan told investors about its finances and the risks it took before the loss.
In April, in a conference call with analysts, Mr. Dimon dismissed concerns about the bank’s trading as a “tempest in a teapot.” Later, adopting a more conciliatory stance, he conceded that he’d been “dead wrong” to minimize those concerns.
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