What's dumber than JPMorgan Chase losing $6 billion in credit derivatives, along with its sterling reputation for crisis management? Giving JPMorgan an award for its crisis management, that's what.
Yes, JPMorgan has won an honest-to-goodness, great-job award for its handling of the London Whale trading debacle, and it is not a Golden Raspberry or a Dubious Achievement Award. At a black-tie awards ceremony on Thursday that was the Oscars of investor relations, IR Magazine gave JPMorgan the prize for "best crisis management," reports Anton Troianovski of the Wall Street Journal.
Just like the Oscars, there were terrible jokes:
Kathy Hu, an executive director in J.P. Morgan’s investor relations department, accepted the award and quipped: “Can I just say, ‘Crisis? What crisis?’”
Ha ha, yes, very funny, but maybe not for the reasons Hu thinks. What's super hilarious about this is the fact that, while the London Whale crisis was exploding in the newspapers a year ago, JPMorgan executives were seriously saying, "Crisis? What crisis?" to investors.
In an earnings conference call on April 13, as part of JPMorgan's award-winning investor relations, CEO Jamie Dimon dismissed the London Whale story as a "tempest in a teapot." That performance helped Dimon win his own award from IR Magazine last night, for "Best Investor Relations by a CEO or chairman -- large cap.” Hu accepted on behalf of Dimon, who couldn't make the dinner for some reason.
During that same award-winning April 13 call, chief financial officer Douglas Braunstein waved off the London Whale trades as totally fine, vetted by risk managers and made in full view of regulators. That, as he admitted to Sen. Carl Levin (D-Mich.) during a Senate Permanent Subcommittee on Investigations hearing last week, was not exactly true. But those are the breaks when you're managing crises in an award-winning way.
Of course, the very fact that, more than a year after the news broke, JPMorgan executives are testifying on Capitol Hill, with the bank and its executives facing potential legal trouble for years to come, raises its own questions about just why JPMorgan's crisis management is award-winning.
The Senate subcommittee's damning report on the London Whale debacle raises serious questions about JPMorgan's risk management and crisis management, painting a picture of executives who were clueless about the risks the London Whale was taking on, and then desperately tried to hide the true size of the problem from investors and regulators. The bank's overseers at the Office of the Comptroller of the Currency last year cut its rating for the bank's award-winning management to signal it "needs improvement."
JPMorgan denies it tried to hide anything from investors and revealed all just as soon as it could. It accepts its award for crisis management with the appropriate humility:
“It’s really an honor to be recognized," bank executive Doug Levin said, according to the WSJ. "It’s a lot of hard work on the part of the team.”
And apparently JPMorgan's investor relations were just good enough to satisfy investors: The award was based on voting by analysts and investors, one of whom said: “We needed handholding this year, and J.P. Morgan came up trumps.”