So just how much trouble is Jamie Dimon really in? And what would it take for him to actually lose his job?
You'd need an industrial-grade spatula to scrape all the egg off of the JPMorgan Chase CEO's rosy face in the wake of his firm's $2 billion (and counting) trading loss. And yet Dimon still does not seem to be in any real danger of joining the ranks of the unemployed.
In fact, JPMorgan shareholders on Tuesday let Dimon keep not one but two of his jobs, voting down a proposal to split the roles of CEO and chairman of the board. And ears in Tampa Bay are still ringing from the vigorous thwack of the shareholders' rubber stamp on Dimon's $23 million pay package.
Dimon may in fact be starting to get some of his old anti-regulatory swagger back, taking time at the shareholders meeting to defend his bank's efforts to lobby against financial reforms.
But maybe Dimon shouldn't get too cozy just yet, particularly with FBI agents nosing around JPMorgan offices.
The investigation is just beginning, and will likely include a probe into whether JPMorgan properly disclosed the trades that led to the $2 billion loss and an examination of the bank's accounting practices,, according to an official familiar with the probe.
The investigation won't turn on the trade itself, said Thomas Gorman, who writes the SEC Actions blog and is a Washington partner at the law firm Dorsey & Whitney. The betting that triggered JPMorgan's huge loss is legal, for now at least.
But the Justice Department and others are probably looking at whether bank executives made any false statements, Gorman said.
And that's where the greatest peril for Dimon's future employment seems to lie -- in the answer to the questions as to what he knew about the trades and when he knew it.
"The main question for the CEO respected for getting his hands dirty is, how dirty are his hands related to the $2 billion loss," said Mike Mayo, author of the book "Exile on Wall Street" and a banking analyst with CLSA, a unit of Credit Agricole Securities.
The worst-case scenario for Dimon -- and probably for JPMorgan and the banking industry as a whole -- is if it turns out that Dimon directly misled the public and investors about the risks being taken by his chief investment office.
James Cox, a corporate and securities law professor at Duke University, said the most obvious issues are the "carte blanche denials" Dimon issued in April in response to questions from the press. Those questions were prompted by the Wall Street Journal story on the trader behind the bets who became known as "the London whale."
"What did he then know and when did he learn of the problems that caused the firm to become sufficiently concerned to begin unwinding its positions?" Cox asked about Dimon. "Was Dimon then just managing the press or managing the markets to aid in unwinding those transactions?"
Though Dimon is starting to get a reputation for shooting his mouth off and having to apologize later, it seems highly unlikely that he would have been so reckless as to directly mislead investors.
But that still leaves a couple of unpleasant alternative explanations, notes Mayo of CLSA: Either he hadn't done his homework on the bank's risk-taking back in April, or he did his homework and "got the wrong answer." Neither speaks all that well of Dimon's risk management, at the very least.
Separate reports by Bloomberg and The New York Times, citing anonymous former JPMorgan employees, have suggested that Dimon pushed his chief investment office, which is designed to keep the bank's risks under control, to take even bigger risks.
It's not clear that those stories contradict statements Dimon has made to the public, but it doesn't look good for risk management. And Tuesday's shareholders meeting may have seen the first rumblings of some discontent, according to Marc Pado, U.S. market strategist at Dowbull, an investment advisory service in Truckee, Calif.
"I think shareholders wanted assurances that this would never happen again," Pado wrote in an email to The Huffington Post. "It did not come off that way."
Still, for now at least, investors seem to be mostly cutting Dimon some slack for his risk management. After losing about 11 percent in the two trading days after the news of the loss broke, the stock rebounded more than 1 percent on Tuesday.
In fact, JPMorgan's stock price, even after its recent big losses, is still outperforming its banking peers and the broader market, Mayo notes. That may explain why Dimon is still getting plenty of leeway from shareholders. Until the stock price starts to suffer, Dimon's job may be safe.
Neither the FBI nor JPMorgan returned calls seeking comment.
D.M. Levine contributed reporting to this story.
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Posted: 05/15/2012 5:28 pm Updated: 05/16/2012 12:48 am