“At first I thought it was a friend of mine pulling a prank. I thought it was Lloyd Blankfein,” Jamie Dimon said yesterday in Germany, re: the time Tom Brady called to cheer him up about JPMorgan’s $6.2 billion trading loss. He didn’t elaborate but it’s pretty obvious that the day Goldman was sued over Abacus, Dimon called over to GS pretending to be Aretha Franklin, telling Lloyd “no one’s got any R-E-S-P-E-C-T for clever investment products,” while months after JPMorgan bought Bear Stears, JD received a call from someone claiming to be “Jimmy Cayne” calling from the lobby with a sample of 90210 kush that he insisted Dimon had to come down and try but “A-SAP, ’cause Big J had to double park his truck.” [Bloomberg]
Back in October, the most wonderful aspect of the JPMorgan Whale Tale emerged in the pages of Vanity Fair: the day Vice-Chairman Jimmy Lee barricaded himself in his office determined to come up with a way to help Jamie Dimon, and after hours of thinking real hard, summoned his six secretaries and told them they had a job to do, which was getting Tom Brady on the horn so he could deliver a pep talk sure to cheer up the boss. Was the call kind of awkward, considering the two had never spoken and Brady’s lack of useful investment ideas likely meant his big speech involved not much more than ”Even Super Bowl champion quarterbacks have bad days” and “Keep your chin up out there?” Probably. And yet some sort of bond was clearly forged, which would explain why Dimon felt compelled to throw Brady this bone: Read more »
How should one read JPMorgan’s Whale Report? I suppose “not” is an acceptable answer; the Whale’s credit derivatives losses at JPMorgan’s Chief Investment Office are old news by now, though perhaps his bones point us to the future. One way to read it is as a depressing story about measurement. There were some people and whales, and there was a pot of stuff, and the people and whales sat around looking at the stuff and asking themselves, and each other, “what is up with that stuff?” The stuff was in some important ways unknowable: you could list what the stuff was, if you had a big enough piece of paper, but it was hard to get a handle on what it would do. But that was their job. And the way you normally get such a handle, at a bank, is with a number, or numbers, and so everyone grasped at a number.
The problems were (1) the numbers sort of sucked and (2) everyone used a different number. Here I drew you a picture:1
Everyone tried to understand the pool of stuff through one or two or three numbers, and everyone failed dismally through some combination of myopia and the fact that each of those numbers was sort of horrible or tampered or both, each in its own special way. Starting with:
VaR: Value-at-risk is the #1 thing that people talk about when they want to talk about measuring risk. To the point that, if you want to be all “don’t look at one number to measure risk, you jerks,” VaR is the one number you tell the jerks not to look at. Read more »
Jamie Dimon, the CEO of the country’s largest bank by assets, says that regulating Wall Street pay could put us on the road to communism. “We all want an equitable society. We need to have a conversation about what makes it equitable,” the JPMorgan Chase CEO said at The New York Times DealBook conference on Wednesday. “You can go do it the way that Cuba tried. Okay, well, then it will be equitable, but everyone won’t have much.” “If you don’t want a free society, then start dictating what compensation can be,” he added. [HuffPo via Counterparties]
Jamie Dimon Suggests The Government Stop Twiddling Its Thumbs On This Fiscal Cliff Business And Start Moving Its AssesBy Bess Levin
“We are one decision away from restoring our fiscal and moral authority from around the world,” Dimon said today. “Let’s just do it.” [Dealbook]
J.P. Morgan named finance executive Marianne Lake to succeed Douglas Braunstein as chief financial officer of the largest U.S. bank. The appointment makes Ms. Lake one of the most powerful women on Wall Street as the New York company shuffles its leadership and recovers from a massive trading loss. The 43-year-old Ms. Lake currently is chief financial officer for the bank’s consumer unit. J.P. Morgan said that Mr. Braunstein will become a vice chairman of the company following Ms. Lake’s transition to the CFO position in first quarter 2013…Ms. Lake is known within the company as smart and assertive in the style of Mr. Dimon. “She talks so fast because she knows her numbers so well,” said a person close to the bank. [WSJ]
JPMorgan did its third-quarter earnings call this morning, and even though the London Whale was a pretty minor presence on the call I was still going to throw up a picture of a whale here because (1) why stoke Jamie’s ego further and (2) who doesn’t like whales, but then the operator asked for closing remarks, and Jamie Dimon closed the call by saying “I’m just surprised no one mentioned how handsome Doug Braunstein looked in that article in the Wall Street Journal,”1 and, well, that happened, and we’re each going to have to deal with it in our own way, but in any case, Doug Braunstein, ladies and gentlemen.
I HAVE NOT FORSAKEN YOU WHALEDEMORT and we’ll talk about him in a bit when I can get my emotions in check but for now I guess we owe it to that handsome cherub to your left to talk about JPMorgan’s business a bit so let’s do that.
JPMorgan’s business: It is good! Records were set, expectations exceeded, the stock … um, opened down, but got better. (Then got worse again! I don’t know.) The other day I suggested that underwriting 30-year investment-grade bonds is sort of a bad business because you make 87.5bps now, but then your client is all set for 30 years, so it’s really only 3bps a year, which is not much compared to basically any other method of providing money to companies, except ironically actually lending them money (if they are high investment grade), which is just a pure loser. I more or less stand by that in a big-picture sense, but of course 30 years is well into IBGYBG territory and it feels great to make 87.5bps now, so now you’re happy. JPMorgan is I guess underwriting a lot of 30-year bonds; more to the point it’s underwriting a lot of 30-year mortgages.
A toy model you could have of the mortgage market is: Read more »
JPMorgan Chase Chief Executive Jamie Dimon said his company has lost up to $10 billion as a result of the government asking him to buy teetering Wall Street firm Bear Stearns during the financial crisis. “Someone said the Fed did us a favor to finance some of this or something like that. No no no. We did them a favor,” Dimon said, speaking at a Council on Foreign Relations event. “I’m going to say we’ve lost $5 billion to $10 billion on various things related to Bear Stearns now. And yes, I put it in the unfair category,” the CEO added. [CNBC]
Dimon recalls that when he e-mailed his senior executives, back in 2010, first proposing the JPMorgan Chase bus tour, which is designed to demonstrate to clients, employees, and important people around the country that the bank is a force for good in the world. But, as in almost everything related to JPMorgan, Dimon prevailed. “That’s bullshit. We have to live our lives and do the right thing,” he told them…At stop after stop, the executives emerged from their bus cocoon into what they called “the Tunnel of Love,” where employees surrounded them for hugs, fist pumps, and high fives. [VF]
On One of The Worst Days Of WhaleGate For Jamie Dimon, JPMorgan’s Vice-Chairman Thought It Would Make Him Feel Better To Hear From Another Guy Who’s Sort Of But Not Really Been ThereBy Bess Levin
As you may have heard, Summer 2012 was not the best of times for JPMorgan CEO Jamie Dimon. On May 10, after having said that a Bloomberg story about one of its London traders making very large, very worrisome bets was but “a tempest in a teapot,” the bank announced that said trader had lost approximately $2 billion. On May 11, it was suggested that Dimon’s title of most-loved banker on Wall Street was up for grabs. On June 19, Dimon was forced to testify on Capitol Hill. On July 13, JPMorgan revised the $2 billion loss to $6 billion. Associates who surrounded Dimon during these days said that the stress was visibly wearing on him, and that it was arguably one of the worst periods of his career. And while senior executives logged long hours and gave up weekends and holidays to help deal with the fallout, gathering documents and unwinding trades and trying to manage the crisis, only one busted his ass to actually give Jamie Dimon what he needed: Jimmy Lee. Read more »
Jamie Dimon Shook Up JPMorgan Management Post-CIO Loss Because He God Damn Well Felt Like It, Will Support The Asinine Reforms Threatening To Destroy America On A Dark Day In HellBy Bess Levin
Jamie Dimon, the outspoken chief executive of JPMorgan Chase, sat down on Tuesday for what banking analysts called a “fireside chat” during the Barclays 2012 Global Financial Services Conference. Known for his hands-on management style and confident swagger, Mr. Dimon has been navigating the fallout from a rare misstep in his career after JPMorgan announced a multibillion-dollar loss on a complex credit bet at its chief investment office unit. During a question-and-answer session with Jason Goldberg, a Barclays analyst, Mr. Dimon responded to questions about things like his stance on the mounting turmoil in Europe and regulatory changes, in particular the Volcker Rule, which restricts banks from trading with their own money. Mr. Goldberg started by asking Mr. Dimon about the rationale behind shaking up the upper echelons of JPMorgan’s executive suite in July. “It had nothing to do with the chief investment office,” Mr. Dimon said. He added that “there is nothing mystical, folks,” because the moves enabled greater cross-selling. “Cross-selling is a big deal, and we do an exceptionally good job,” he said…Tackling the issue of whether the big banks should be broken up, Mr. Goldberg asked Mr. Dimon about recent calls to break up the major banks. “There are huge benefits to size,” Mr. Dimon said. He noted that JPMorgan’s size allowed it to be “a port in the storm” during the market turmoil of 2008. “Big banks have a function in society.” The United States, he added, has the “best, widest, deepest and most transparent capital markets in the world.” Cautioning against needless reform, Mr. Dimon said, “Let’s make sure we keep that before we do a bunch of stupid stuff that destroys that.“ [Dealbook]