JP Morgan Chase CEO Jamie Dimon held a conference call today to announce the bank’s latest earnings and address the mounting losses from the so-called “London Whale” trade. So far, the bank’s losses from that trade total nearly $6 billion, and could be headed north to $9 billion.
During the call, one analyst asked Dimon whether the failed trade — which was originated from a trading desk that was supposed to help the company reduce risk — shows that JP Morgan is simply too big to manage. Dimon, of course, said, “no”:
During the Q&A; portion Mike Mayo, an analyst with CLSA, asked Dimon about Too Big To Fail “I’m wondering if the firm as a whole has reached some sort of tipping point in terms of size or complexity that makes it more difficult to manage,” Mayo asked.Dimon replied, “No”
Mayo probed Dimon with “Have you lost a step?” The crowd on the conference call laughs and someone shouts out “Are you too old?”
Dimon will have none of it, saying “Mike, this company is the same company went from ’06, ’07, 2010, 2011, Bear Stearns, while Mike, we had a record last year.”
Many financial experts, however, disagree. “I think it does underscore that even with very good management these institutions are just too big to manage,” said former Federal Deposit Insurance Corp. Chair Sheila Bair. “Such banks have become too large and complex for management to control what is going on,” added economist and big bank critic Simon Johnson. “The regulators also have no idea about what is going on. Attempts to oversee these banks in a sophisticated and nuanced way are not working.”
As Sen. Sherrod Brown (D-OH) said during an interview with ThinkProgress, “these banks are not just too big to fail, they’re too big to manage…I think these banks will be stronger and healthier and probably more profitable if they’re smaller.” However, Dimon clearly doesn’t see it that way, and has done everything he can to ensure that regulations restricting risky trading by the biggest banks get watered down.