The $6.2 billion “London Whale” trading fiasco was “the stupidest and most embarrassing situation” of Jamie Dimon’s career, J.P. Morgan’s chief executive told shareholders in his surprisingly frank annual letter. It’s not all bad though; the flub is likely to create new jobs at the bank.
Dimon apologized – to shareholders, employees, regulators and basically anyone else he could think of – for failing to prevent the loss, but then delivered a warning: the fallout is far from over. Regulators have issued strict orders to improve several units. To fall in line, J. P. Morgan is poised to expand its staff to help its 260,000 current employees climb through a mountain of red tape when trading, selling to clients or pouring themselves a cup of coffee.
“These new rules will touch almost every system, every legal entity, every product and every service that we have across the company,” Dimon said. “We are committed to making the necessary investments in our risk, credit, finance, legal, compliance, audit, technology and operations staff.”
Staffers should expect to have their manager breathing down their neck, as the bank will dedicate “critical managerial time and focus to this [regulatory] effort,” he said.
The letter is an abrupt about-face from last year’s shareholder note, in which Dimon bashed regulators for designing “uncoordinated and inconsistent” rules that undermine economic growth. That letter was sent one day before the bank’s massive derivatives bets were first reported.