Today, one of the most convoluted, opaque editorials ("The Dimon Principle") that the Wall Street Journal has been able to muster, alluding to JPMorgan Chase's $2 billion trading loss, opened with the following hosanna to Jamie Dimon, and slap on the wrist to those in government and elsewhere who now feel that Dimon's aggressive prop trading policies have finally come home to roost:
Employees at J.P. Morgan may think that CEO Jamie Dimon's primary rule is to minimize risk. But Washington politicians now have their own Dimon Principle: Use mistakes at a bank run by an admired CEO to expand government control over financial markets.
The editorial goes on breathlessly in technical hodgepodge jargon, with nary a mention of the obdurate and relentless policies initiated by Dimon to turn JPMorgan Chase into a casino on a scale barely known nor countenanced before. There was the eye-opening broad exposé in the very same Wall Street Journal's October 2010 article "JPMorgan's Commodities Chief Takes the Heat". (please also see "Bravo JPMorgan! Just What We Need Another Wall Street Casino"). The article details JP Morgan's full court press ambitions "to build the No.1 commodities trading franchise on the planet." Barely deterred by the events of 2008, JP Morgan was busy spending then $2 billion acquiring the trading assets of:
- Bear Stearns and UBS Commodities in 2008
- Sempra Commodities in 2010
- Poaching traders and executives from rivals
- Boosting its trading work force from some 125 in 2006 to 1,800 by October 2010
But building the casino wasn't enough for Dimon. A little over a year later JPMorgan Chase took steps to buy the casino itself, acquiring a stake from that heralded provenance, MF Global, in the London Metals Exchange, to make it the largest single shareholder (please see "JP Morgan Chase Banks on Buying Into The Casino"). At the time the Telegraph revealed that JP Morgan Chase was the "mystery trader" that bought Pounds1 billion worth of copper on the LME. That purchase, according to the Telegraph pushed up the price of copper to the highest level since the banking crisis in October, 2008. Now that's banking as it should be!
And the beat went on. As a prelude, to as Mr. Dimon would put it on NBC's Meet the Press this Sunday, "There's almost no excuse for it," Bloomberg reported in April of this year that J.P Morgan's treasury and chief investment office held a combined $355.6 billion of investment securities as of December 2011. At the time, the now departing Chief Investment Officer, Ina Drew was among JP Morgan's highest paid executives in 2011, earning $14 million and whose imminent departure from JP Morgan was due, one can assume, in measure to the $2 billion and counting, debacle.
Yet it would appear Ms. Drew was simply or complexly following guidelines laid down over the years by the corner office where banking had become second fiddle to siren call of the roulette wheel.
Clearly, at JPMorgan the buck stops elsewhere.