One day after a regulator fined JPMorgan Chase -– the biggest bank in America -- $20 million for letting Lehman Brothers take on too much debt, the bank’s CEO, Jamie Dimon, wants shareholders to know that they own stock in “an exceptional company.”
In a massive, 38-page letter to investors released yesterday, Dimon laid out a sunny vision of the bank's accomplishments over the past year.
“During 2011, the firm raised capital and provided credit of over $1.8 trillion for our commercial and consumer clients, up 18% from the prior year,” Dimon wrote. “We provided more than $17 billion of credit to U.S. small businesses, up 52% over last year. We raised capital or provided credit of $68 billion for more than 1,200 not-for-profit and government entities, including states.”
The sprawling letter, which touched nearly every slice of the firm’s commercial and investment banking businesses, admitted some fault -- particularly vis a vis its role in the mortgage (and resulting financial) crisis.
“We were one of the better actors in this [subprime mortgage] situation -- but not good enough,” Dimon wrote. “We made too many mistakes,” but, Dimon added, “we generally were a better underwriter…. Even our subprime mortgages outperformed most other subprime mortgages."
Still, Dimon did use the opportunity to take a mild swipe at new financial regulations, which at various points he described as "contrived" and "confusing." “The extensive requirements of regulatory reform – which we must meet – demand enormous resources,” Dimon wrote. “We are totally focused on what is in front of us. It is a new world, and we are going to adjust to it very quickly -- whether or not we like it or think it is all needed.”
Dimon’s upbeat letter comes only one day after the Commodity Futures Trading Commission ordered JPMorgan Chase to pay out $20 million to settle charges that it improperly loaned money to Lehman Brothers in September 2008, just before Lehman's collapse.
In a statement about that settlement, JPMorgan said it had "mistakenly factored [money held in customer accounts] into a daily calculation of (Lehman) assets to determine the amount of credit the firm was willing to extend to (Lehman)," according to Reuters. But, Reuters reports, the bank said that "no customer funds were ever used to satisfy any (Lehman) debt to JPMorgan, nor were any funds in these accounts lost."
JPMorgan also came under scrutiny for its handling of customer money during a congressional hearing last week probing the collapse of MF Global. During the hearing, legislators questioned JPMorgan executives on whether a transfer of $175 million MF Global had made to JP Morgan in the final days before its collapse came from a segregated customer account.
In spite of the intense legislative and regulatory scrutiny, Dimon had a good year in 2011, taking home a whopping $23 million, according to various reports. That is, it should be noted, three million dollars more than the bank was forced to pay the CFTC to settle the allegations of financial wrongdoing.
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Dimon Letter Derides Contrived, Confusing Financial Rules ...
Jamie Dimon's Letter: The Highlights - Deal Journal Australia - WSJ
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The Huffington Post | By D.M. Levine Posted: 04/ 5/2012 2:03 pm Updated: 04/ 5/2012 2:06 pm