Billionaire investor Warren Buffett said JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon will withstand litigation and legal probes that led his bank to take a $7.2 billion charge in the third quarter.
"If a cop follows you for 500 miles (800 kilometers), you're going to get a ticket," Buffett, the chairman and CEO of Berkshire Hathaway Inc., said today in an interview on CNBC. "And believe me, you've had a lot of cops that have been following a long time, and they're going to write some tickets."
Dimon, 57, is grappling with regulatory investigations ranging from mortgage-bond sales practices to hiring methods in Asia. The New York-based bank is also tightening controls amid probes into botched credit-derivative trades last year.
Banks rely on so many licenses that the threat of criminal charges can undermine their business, Buffett said. The billionaire served as interim chairman and CEO of Salomon Inc. in 1991 and 1992 as the company sought to recover from involvement in a Treasury debt auction scandal.
"A large financial institution just can't take that," he said. "You are in a terrible negotiating position, and I've been in that position. If they want to take a pound of flesh, they can take a pound of flesh. But if they want to take a ton of flesh, they can take that, too."
Dimon concurred with Buffett's assessment of banks' inability to sway regulators last week during a conference call with analysts. Still, he vowed to push for outcomes that would be fair to investors.
"It is very hard to fight with your regulators or the federal government, but we want them to be fair and reasonable," Dimon said. "We have shareholders."
Buffett, 83, has said he personally owns shares of JPMorgan. Omaha, Nebraska-based Berkshire also holds stakes in some of the nation's largest banks, including Goldman Sachs Group Inc., Bank of America Corp. and Wells Fargo & Co.
JPMorgan's third-quarter loss was $380 million, marking the bank's first unprofitable period under Dimon. The company's stock advanced 19 percent this year through yesterday, matching the gain in the Standard & Poor's 500 Index.
"Jamie will survive it fine," Buffett said of the regulatory scrutiny. "He knows how to run a bank."