If Jamie Dimon, CEO of J.P. Morgan Chase & Co. (NYSE: JPM), is really going to be grilled hard in Congressional hearings on Wednesday, then why is it that shares of J.P. Morgan are actually trading higher along with the other “too big to fail” banking institutions? The answer is somewhat simple, even if the logic is not… NOTHING WHATSOEVER WILL LIKELY COME FROM THIS HEARING!
Jamie Dimon will have to explain how his hedging losses are growing and now that he has been clipping the wings of the trading area under question in London. Reports show that Dimon has known about some concerns out of the trading and risk management department for more than just a few months, even while he referred to allegations of such issues earlier this year as a tempest in a tea kettle.
What will be interesting is that Jamie Dimon will be able to claim that the hearings and the publicized media efforts covering these losses is also exacerbating those losses. After all, the money-center bank has shown that this is a very illiquid trade and many firms and hedge funds are on the other side of this ‘hedge’ and many new firms have weighed even heavier on the other side of the trade.
Perhaps the biggest loss here was not the $2 billion, or $4 billion or more… The loss of Jamie Dimon’s right to be vocal. The change that has taken place over the last few weeks is that Jamie Dimon has lost much of his street respect from Wall Street and from Main Street. If one man in banking was able to stand up to regulators and politicians seeking to demonize the banking sector, it was Jamie Dimon. Now the industry lacks such a strong CEO who can act as the champion of the financial sector.
JP Morgan shares are up 2.2% at $33.54; Bank of America Corporation (NYSE: BAC) is up 2.2% at $7.45; Citigroup, Inc. (NYSE: C) is up almost 4% at $27.52; and Wells Fargo & Company (NYSE: WFC) is up only 0.4% at $31.10. The non-bank banks are higher as well: The Goldman Sachs Group, Inc. (NYSE: GS) is up 1.1% at $93.81 and Morgan Stanley (NYSE: MS) is up almost 4% at $13.89.
Dimon is going to overcome the pressure to show how this “hedging” was not just “betting.” He is also just going to have to take some scathing comments. Perhaps Jamie Dimon should steal a quote from Bunker Hunt who testified in front of Congress over trying to corner the silver market over thirty years ago: “A billion dollars is not what it used to be.”
Our number one suggestion to Jamie Dimon may seem off the wall to some… Please do not fly the company’s private jet! Do you remember when the Big Three CEOs took their jets to ask for bailout funds? It is not a cost issue, but it is a public image issue.
“Dear Jamie, Just take the train to D.C.!”
JON C. OGG