In my book ‘What I Really Think - The Business Chapters’, in the chapter On Investing, I make the point: “It’s hard enough to make money in the stock market without the inescapable backdrop of the cyclical market and sector crashes due to the greed and incompetence of Wall Street bankers.”
These past couple of days we’ve seen similar ineptitude play out in the banking industry by none other than Jamie Dimon, the CEO of JPMorgan Chase, who was arguably the one top guy who escaped The Stink forever now attached to those cast of characters who back in 2008-2009 almost took our country to it’s knees. To his credit, Dimon’s bank had a nearly unblemished record during the financial crisis.
So much for staying 'clean’; Dimon just screwed up royally, and is now destined to have The Stink for the rest of his career. He will forever now have a black mark on his legacy.
Jamie Dimon is one of those incredibly smart guys who possesses a certain swagger. It works well for him when things go reasonably well. But after announcing Thursday that under his watch, JP Morgan took a $2 billion loss as a result of portfolio hedging that got completely out of control, Dimon now fits the mold of the stereotypical banker who has pleaded over the years for less regulation, only to become another poster boy for just why we need oversight. What is it about their inner workings that they have to push the envelope until they screw up? They can’t seem to help it; it’s almost like it’s part of their DNA.
The Volker Rule is a regulatory law meant to prevent overly risky trading. Dimon himself, along with his hired lobbyists, went regularly to Washington and argued strenuously, successfully, for loopholes that would allow for trades like the ones that led to what will turn out to be a ONE BILLION DOLLAR swing in net income performance for the quarter at JP Morgan.
It’s egg! Jamie Dimon has admitted as much. It will be interesting to see how he spins it in the months ahead and when he will no doubt be called to testify again to Congress.