JPM Morgan's Humpty Dumpty Moment
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So by now even taxi drivers have heard. JPM Morgan (NYSE:JPM) lost $2 Billion in the last six weeks. There is lots of speculation about the issue. This one will not go away soon. The political ramifications are about to resonate. Jamie Dimon is a disgruntled democrat who does not appreciate President Obama's demonization of Wall Street. At one point there may have been thoughts of Dimon becoming a second administration Treasury Secretary. Even after some verbal pugilistics with central bank governors he may have been a consideration. But now that he has presided over an embarrassing trading loss, well lets just say Treasury Secretaries need to be winners not losers on Wall Street. At the same time he was starting to flirt with Republicans. Republicans will not want to embrace a Wall Streeter with controversial losses. Romney just lost Dimon's cell phone number.
Six weeks eh! Six weeks and nothing was said. Counter-parties knew. The trading fraternity had a pretty good inkling and that's how the rumours started. But for the average guy in the street investor and even for normally well-informed institutions there was no inkling. This is Reg FD challenged. When does $2 Billion become material enough to disclose. Speaking of which at what point in the last six weeks did you realize you had a problem? Could you not have curtailed it at some point less than $2 Billion. The Board of Directors will need to commence their own independent inquiries. There does not seem to be a lead independent director and maybe this will be a governance epiphany. Who knew what and when as they say?
Regulators are already planning informally as it were. In the UK the FSA has already had conversations. In the USA the Fed and Treasury will want some answers. Get ready for some major explaining. This being a presidential election year partisanship is not far away. Congressional investigation(s) will be held on this extremely important topic. Jamie Dimon may become a political football. Can he keep his job? Will he want to keep his job?
In any event the risks that Jamie Dimon craved and relished have come back as negative events. Jamie Dimon says they did not execute very well. Did someone forget to do something. Did the quarterback throw a bad ball? There are still more questions than answers, and now the speculation starts that the losses can be much higher.
So can all the kings horses and all the kings men put humpty dumpty together again. I think not.
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