The US justice department opened an investigation into how JP Morgan lost more than $2bn in poorly managed trading at its London office as the bank’s embattled boss, Jamie Dimon, saw off attempts by shareholders to strip him of his role as chairman.
The justice department inquiry is at a preliminary stage and as yet there appears to be no evidence of criminal wrongdoing at the bank. The Securities and Exchange Commission has already launched a separate investigation and as political pressure for greater regulation of Wall Street banks begins to mount.
President Barack Obama appeared on the daytime talk show The View on Tuesday to call for Wall Street reform. “JP Morgan is the best, or one of the best managed, banks. You could have a bank that isn’t as strong, isn’t as profitable making those same bets and we might have had to step in. That’s exactly why Wall Street reform’s so important,” he said.
He said Dimon, the chairman and chief executive officer of JP Morgan, was “one of the smartest bankers we’ve got – and they still lost $2bn and counting.”
At the bank’s annual meeting, held at a tightly secured facility seven miles outside Tampa, Florida, shareholders quizzed Dimon on what went wrong. He said the losses “never should have happened” and that “all corrective actions” were being taken.
Forty-one percent of shareholders voted for a proposal by the American Federation of State, County and Municipal Employees (AFSCME) to appoint an independent chairman. Dimon also received 94.8% approval from shareholders on his $23m pay package from last year.
Lisa Lindsley, a AFSCME director, said the vote on splitting chairman and CEO was “pretty high” in favour considering most of the votes were in before the losses were announced last week. A similar proposal last year for an independent lead director got only 11.9% of the vote.
“We’re not saying he should be fired as CEO,” said Lindsley. But the “stakes were too high to continue business as usual,” she told shareholders. “An all-powerful CEO is his own boss,” she said. “Looking for an infallible CEO is a fool’s errand.”
Read more at the Guardian…
Ben Cohen is the editor and founder of The Daily Banter. He lives in Washington DC where he does podcasts, teaches Martial Arts, and tries to be a good father. He would be extremely disturbed if you took him too seriously.