Jamie Dimon Vs. JPMorgan: One Must Go
Jamie Dimon is one of the most admired CEOs on Wall Street. Under his watch, JPMorgan Chase has been penalized for multiple legal violations, capped by the largest legal fines in banking history. Should Jamie Dimon be fired? Well, if not, his bank should be destroyed.
Wall Street types will tell you that Jamie Dimon's job performance is far too complicated to be properly understood by a normal person. That's not quite right. JPMorgan Chase, a hub of global finance with its finger in every financial pie on earth, is far too complicated to be properly understood by a normal person. But Jamie Dimon's job performance operates on a principle that just about everyone with a job can grasp. The case against Dimon was summarized most succinctly by Alex Pareene, who said "I think that any time you’re looking at the greatest fine in the history of Wall Street regulation, it’s really worth asking should this guy stay in his job. In any other industry — I can’t think of another industry. If you managed a restaurant, and it got the biggest health department fine in the history of restaurants, no one would say 'Yeah, but the restaurant’s making a lot of money. There’s only a little bit of poison in the food.'”
The principle is simple: perform your job properly. If you are the boss, and things go horribly wrong on your watch, you get canned. This applies everywhere from fast food restaurants to elementary schools to corporations to the White House. There is no reason for JPMorgan to be treated any differently. The fact that Jamie Dimon is a smart man who is likable just means that he is a smart man who is likable. It does not mean he should be immune to the normal rules that govern every manager in every organization everywhere. Bosses get paid more than everyone else because they accept more responsibility than everyone else. When things go to hell, the responsibility is theirs. The fact that someone pointing out this basic principle sends CNBC anchors into sputtering fits of disbelief just goes to show how far down the rabbit hole some segments of the media have gone.
Jamie Dimon has plenty of defenders. Some of them are defending him out of self interest—it's easy to see why fellow Wall Street executive types would want to discourage anything that might imply that Wall Street executives be held responsible for the fuckups of Wall Street firms. (Wall Street executives exist to make money, not to take responsibility. Why do you think they got into this field? Yeesh.) Dimon is also, however, genuinely admired by many businesspeople, investors, and journalists alike. Professional Wall Street bootlicker Andrew Ross Sorkin today takes up Dimon's cause, giving ample space for his defenders to mock the irrational "bloodlust" of those who would seek to have Dimon fired, and to tout his brilliance. “Jamie Dimon is one of the best C.E.O.’s of any company in the world. It doesn’t mean you can’t have an accident. It’s totally unfair to say he inflicted this upon himself,” says one. And, according to activist investor Daniel Loeb, who feels Dimon is being scapegoated: “It’s a very large and complex company, and things will happen.”
Simply put, defenders of Jamie Dimon cannot have it both ways. It is a fact that JPMorgan, under Dimon's leadership, has had to set aside $28 billion in legal costs in the past three years, the largest amount in Wall Street history. The infractions are myriad and serious and damaging to the public and to the principles of a free and fair market. It is also a fact that Jamie Dimon is supervising a global bank with more than 250,000 employees and $2.4 trillion on its books, and that it would be absurd to expect one man to keep tabs on every single thing happening in company of that monstrous size.
Therefore, one of two things should happen: either Jamie Dimon should be fired for the many serious legal violations on his watch; or—if we accept that Dimon cannot be expected to know what's going on in his own company—JPMorgan should be broken up, because it has grown to a size far too large to be controlled. If a bank is so enormous that not even its CEO can be held responsible for its actions—so enormous that the largest fines in Wall Street history can be dismissed as "an accident"—then it is more than clear that the company is not only too big to fail, but too big to be safely managed. You cannot absolve Jamie Dimon of responsibility for the bank's failures without acknowledging that the bank is out of control. It must be broken up and remade into an institution of sane, manageable size.
Fire Jamie Dimon, or break up JPMorgan. To save one, the other must go. This is simple enough for anyone except a CNBC anchor to understand.
[Photo: AP]