Jamie Dimon
At the Senate Banking Committee on Capitol Hill, Jamie Dimon, 56, the CEO of JPMorgan Chase explained how some of the traders responsible for the losses would get hit in their wallets.
“When the board finishes its review, which is the appropriate time to make those decisions, you can expect that we will take proper corrective action and it is likely there will be ‘clawbacks,’ ” Dimon told senators.
Sen. Chuck Schumer asked Dimon how the ‘clawbacks’ -financial jargon for having to kick back cash -would work.
“The board will review every single person involved in this case and figure out what’s appropriate,” Dimon said.
“The buck stops with me,” Dimon told lawmakers.
Un-vetted strategies designed to limit the bank’s risk backfired because traders and managers didn’t understand the complex new strategies, Dimon explained.
Officially the trading errors cost his bank at least $2 billion, though some estimates put the figure closer to $3 billion.
It is still not known if Dimon himself would face a clawback. JP Morgan’s board paid Dimon $23 million in salary and bonuses for his performance in 2011.
Ina Drew, who oversaw the problematic division, got $14 million for 2011.
The bank announced last month that she would retire.
Dimon, who was once a major supporter of President Obama, has broken with the administration over Wall Street reform.
Sen. Robert Menendez (D-N.J.) went after Dimon for lobbying against many of the banking reforms put in place in the wake of the housing crash.
“The American people, after making major investments in your bank and other institutions, are entitled to ensure that they don’t have to reach into their pocket again,” Menendez said.
Dimon countered that he supported the big-ticket reforms. He noted that poor management – which he blamed for his bank’s $2 billion loss – would not be caught by regulations.
Dimon eventually had to apologise for the trading loss.
However all this should be kept in perspective in spite of the loss, JPMorgan Chase recently posted a $19 billion profit.
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