When this $2 billion brouhaha blows over, Jamie Dimon will still be known as the banker who built a fortress balance sheet when it mattered while many of his peers were off playing musical chairs. But will he still be known as a CEO who does his best to do right by his shareholders?
In the fall of 2008, on a hastily arranged teleconference with reporters to discuss JPMorgan Chase’s just-announced takeover of Washington Mutual, I asked Dimon how it felt to be the white knight again, riding to the rescue just as he had done for Bear Stearns several months earlier. I thought it was almost a softball question, but he bristled at the premise, arguing he hadn’t done anything that wasn’t first and foremost in his shareholders’ best interest. I get it. One only needs to look at Dimon’s annual letter to shareholders to see just how seriously he takes the idea of a CEO’s responsibility to investors. Year after year, these letters have had the type of thoroughness and thought leadership that are in short supply in this sound bite-driven world.
But even before his firm’s $2 billion trading loss was disclosed, it was clear that Dimon’s sense of how to best take care of shareholders had some catching up to do with the new realities of banking. When Dimon decries “discrimination” against bankers, he invites backlash from critics. When he uses the middle class and low-income neighborhoods as political pawns, practically daring to pull needed banking services away from customers who will be unprofitable under new regulations, he does no favors for an industry that needs all the goodwill it can get from the general public.
Dimon is eating humble pie now over the activities of his chief investment office. But is he ready to quit whining about how business in this country is wrongfully under attack? (See this month’s People section for one of his recent comments on that.) Whether he is right or wrong in his conclusion, when he voices it, he only adds to the frustration of a citizenry that’s already had it up to here with corporate entitlement.
Even just three years ago, Dimon could have argued that public opinion matters less than investor opinion. But as I’ve argued here before, technology is changing the way the public can organize, and that’s forcing corporate America to be much more responsive to constituencies beyond traditional stakeholders.
I remember being shocked in 2009 that Citigroup’s annual meeting that spring was as tame as it was, given that for most shareholders it was their first face-to-face encounter with the board and management since the extent of the company’s screw-ups had been revealed. Sure, there was some rabble-rousing, but no revolt. I left feeling that if shareholders couldn’t harness any real power here, at a time like this, then it was doubtful they ever could. So for Citi’s shareholders to start venting in a meaningful way now? Three years on? With Citi having made more progress than most people would have thought possible? Something new has to be afoot here. And I’d argue it’s the beginning of a major shift in the dynamic between average citizens and corporate America.
Does Dimon’s mea culpa in May suggest he sees this too? Well, only a few weeks prior, he was obfuscating the issue, downplaying the significance of his firm’s trading activities when the press first reported on them. But even giving Dimon the benefit of the doubt, I say his thinking needs to evolve a lot further.
I mean the shareholders not the proxies who have their own game with OPM. The experts say its too wild for retailers to be in the market, who have largely left the market- Leave it to the big boys they say- well the big boys have the market cornered and are set on fleecing us more. With Fed action to reduce interest rates close to zero we folks have not option but to be in stocks, at least make it fair. The only positive is that he accepted responsibility but why the $23 million.