The reputation woes do not end for the bankers on Wall St. On May 10th Jamie Dimon, the CEO of JPMorgan, announced that his firm had potentially lost $2 billion in an ill-advised trade out of the bank’s London branch. The real monetary loss has actually increased from that initial estimate, and JPMorgan has been (rightly) taking tons of flak. On June 7th, Dimon will appear in front of Congress and answer questions about this large (and still growing!) trading loss.
There is no doubt that the current political climate in America is one that is pretty suspicious of investment banking. People wonder just how investment bankers make their money. There seems to be a failure from the big banks (Morgan Stanley, Goldman Sachs, etc) to clarify what they do. Because there is ignorance on how the banks play a role in America’s economy, these firms find themselves susceptible to attacks from both sides of the political divide.
Dimon is, what one Fox News Analyst calls “famously hot-tempered”, but he will have to keep cool in the upcoming weeks. JP Morgan has been striving for months to try and sway bank regulation legislation in Washington D.C. The CEO in his testimony before Congress must be very careful in how he handles the situation. Our advice? Get a message and hammer it home. Dimon should, in no way, try and improvise his way through the testimony. Instead he should have a coordinated plan for displaying why this fiasco happened. For JPMorgan’s sake, Dimon should also show, in a thoughtful manner, why current planned regulation would have not stopped the trading loss. There is no doubt this is a bad situation for Dimon and JPMorgan, but if handled adeptly the political fallout could be minimal.