JPM’s Chairman-CEO Drama; The Best Housing Solution?

JPM Chairman-CEO Drama: The debate over whether Jamie Dimon should be stripped of his dual role as JPMorgan Chase CEO and chairman took over Morning Scan and garnered some reaction from contributors. Former investment banker Harvard Winters argued the chairman/CEO split issue at JPM is a sideshow. "Dimon is unquestionably among the best CEOs in financial services, if not the best," he wrote. "But he hasn't been able to get JPMorgan's stock price above where it was in 2000. Is this a reason for why the firm was (or is) gambling?" Meanwhile, former FDIC chairman and current chairman of Fifth Third Bancorp William M. Isaac weighed in on the overarching issue by arguing that the right decision regarding dual roles varies from bank to bank. "Separating the roles can help to foster a better balance between the board and the CEO. … That said, there are other perfectly acceptable ways to accomplish the same result, such as creating a strong lead director," he wrote. Some commenters agreed the situation was complicated, but didn't think a strong lead director would solve all of the problems created by a dual role. "The Board is charged with the responsibility to … determine the CEO's compensation," one reader wrote. "There is a distinct conflict of interest when the Chair and CEO are one in the same. Appointing a lead director does not alter the issue or solve the perceived conflict."

The Best Housing Solution? BankThink's Risk Doctor, Cliff Rossi, argued the securities-based approach to housing reform recently presented by Federal Housing Finance Agency Acting Director Ed DeMarco stood the best chance at providing a stable source of mortgage financing, given a few modifications. "The government should establish a separate federal corporation to set pricing of fully guaranteed mortgages for low-income borrowers, and a catastrophic guarantee for all other securitized mortgages," he wrote. "This would promote an active market for credit risk-sharing arrangements that would further reduce systemic risk by distributing credit risk broadly across market participants." But one reader felt the government should get out of the housing market altogether. "True capital markets are what the financial society will demand at some point," this commenter wrote.

Assorted Feedback: Several contributors responded tovarious BankThink and American Banker articles this week. ICBA senior vice president Christopher Cole weighed in on the leverage-ratio-versus-risk-weights debate by arguing the capital standard set by the Brown-Vitter bill trumps a risk-based system. Risk management expert Richard J. Parsons argued the "fuzzy science" of ops risk – as described by American Banker's Jeff Horwitz – could be cleared up by a little common sense. And Alex J. Pollock of the American Enterprise Institutewryly argued that per the logic outlined in "A Simple TBTF Plan from Fed's Jim Bullard," it's time to break up the Federal Reserve. The central bank is "too big, with over $3.3 trillion in assets and growing; too leveraged, at 60 to 1, with a risible 1.7% capital ratio; extremely short-funded, with a massive interest rate risk from $2.9 trillion of very long, completely un-hedged assets and a frequent creator through its interest rate and money-printing actions of gigantic systemic risk," he wrote.