JPMorgan sorts out 'London Whale' consequences
JPMorgan Chase Chairman and CEO Jamie Dimon testifies during a US House Financial Services Committee hearing on Capitol Hill in Washington, DC, June 19, 2012, about JPMorgan Chase's trading loss.
Jeff Horwich: JPMorgan Chase CEO Jamie Dimon has spent the morning in a long conference call with analysts. The occasion is the company's quarterly earnings -- which weren't bad, frankly. But all the attention is on the massive trading loss -- bad derivatives bets by a trader they called the 'London Whale.' The current tally is $4.4 billion lost, twice what they first thought, but the bank is still sorting out the full implications.
Karen Petrou with Federal Financil Analytics is here with some insights, hello.
Karen Petrou: Thank you, Jeff, good to talk with you.
Horwich: So what's new, and what's maybe worrying to you about today's revelations from JPMorgan?
Petrou: What bothers me, and I know bother Jamie Dimon, and it bothers everyone, is this issue of internal control. We give banks our money and all the various benefits they get because they need to not just be regulated, but govern themselves.
Horwich: It sounds like there might be some bloodletting over at the company -- more folks fired, clawbacks of funds that were perhaps ill-gotten in some sense. Do you think that will help resolve things?
Petrou: Once all the facts are out, which they aren't, there do need to be reactions to people as well as policies. These actions have to have consequences. Who takes the fall, I think, needs to be determined once we know better who's to blame.
Horwich: We've seen lot's of scandals come and go, so pardon a simple question, but why? Why do there have to be consequences?
Petrou: Because there won't be truth. If there aren't consequences there won't be truth. Bad actions need to have immediate consequences and in an employment situation, which is what a bank is, bad consequences have to from a salary and personnel perspective -- as well as whatever the regulators might eventually come to do in the broader legal context.
Horwich: Karen Petrou with Federal Financil Analytics, thank you very much.
Petrou: Thank you, Jeff.