At the annual JPMorgan Chase shareholders meeting on Tuesday morning in Tampa, Fla., CEO Jamie Dimon offered what amounted to a spirited defense of the bank’s efforts to lobby against stiffer financial regulation.
“Our interest is the same as yours, make [the financial system] strong and sound,” Dimon said during a question and answer session. “Financial services has the right, like anybody else, to be engaged in the process. I personally think that collaboration would lead to better outcomes, not worse outcomes.”
The comments followed opening remarks in which Dimon once again apologized for the bank's $2 billion loss on risky bets on credit derivatives. It also comes just days after reports surfaced that JPMorgan has engaged in fierce lobbying efforts aimed at watering down the Volcker rule, a key piece of financial regulation not yet in effect that is designed to safeguard against the type of trading that led to the bank's loss.
“We ended up with a strategy that was flawed, complex, poorly conceived, poorly vetted and poorly executed,” Dimon said about the bets that led to the loss. “This should never have happened, I can't justify it and unfortunately these mistakes were self-inflicted.”
The high-profile misstep has fueled calls for increased regulation of banks and the derivatives market, with a particular focus on implementation of the Volcker rule, a provision of the Dodd-Frank financial reform law that would ban federally-insured banks from making speculative bets with their own money.
On Tuesday the FBI opened a probe into the losses, following announcements from the Securities and Exchange Commission and the Federal Reserve, which are both looking into the losing bets made out of the bank's London office.
The $2 billion in losses was a topic that shareholders returned to throughout the meeting, fueling criticism of JPMorgan and its leaders. Shareholders floated a variety of far-reaching proposals aimed at changing the way the bank operates.
One proposal, put forth by the labor union American Federation of State, County and Municipal Employees (AFSCME), called for Dimon to be stripped of his title as chairman of the Board of Directors, which he currently holds in addition to his title as CEO. An independent director would be appointed in his place.
“This boils down to preventing an inherent conflict of interest. The chairman runs the board and the board monitors the executive. If CEO is also the chairman, it means Mr. Dimon is effectively in charge of monitoring his own performance,” Lisa Lindsley, director of Capital Strategies at ASFCME, said at the meeting. “Even before the losses disclosed last Thursday, our company faced significant reputational harm” from a variety of recent scandals, including the robo-signing settlement and wrongful foreclosure on families of soldiers serving overseas. “Businesses like JPM need proper structures with checks and balances.”
The previous day, Lindsley went further, telling The Huffington Post that “we think Wall Street has already driven our economy into the ditch once and we don’t want it to happen again.”
JPMorgan opposed the idea. “We have 11 board members, they’re all deeply engaged in the company. And we look periodically at how we should maximize and build the best company and so far we’ve determined that there will be one chairman and CEO,” Dimon said.
In a preliminary vote tallied at the end of the meeting, the proposal received 41 percent support. Shareholder proposals like these only serve as recommendations and are non-binding. A similar proposal was floated at the JPMorgan shareholders meeting in 2010 and it received 34 percent support, according to the Wall Street Journal.
Dimon also addressed a growing chorus of calls, initiated by Massachusetts Senate candidate Elizabeth Warren Sunday evening, for him to step down from his position on the board of the Federal Reserve Bank of New York.
“The New York Fed Board is an advisory board,” Dimon said. “I am not involved at all in the supervisory side of that. I can't even vote for the president of the New York Fed Board. It’s not like a board, it’s more of an advisory group in my opinion."
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Posted: 05/15/2012 2:23 pm