Nikhil Kumar: Getting on the scent of a bank mystery
Splitting Jamie Dimon’s role might make his reign longer, with an extra set of eyes at the top to cut mistakes
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Saturday 06 April 2013
US Outlook Does anyone know what cologne Jamie Dimon wears? Answers on a postcard please, because it must possess some magical properties, including one that makes everyone blind to your shortcomings, while at the very same time accentuating your strengths. Or maybe it just has this effect on the people who sit alongside Mr Dimon in the boardroom at JPMorgan, the bank he leads as chief executive. How else does one explain the proxy filing by the company last month, in which its board strongly endorsed Mr Dimon's dual role as chairman and chief executive of the giant bank?
Earlier in the year, the board cut Mr Dimon's annual pay because of the more than $6bn (£4bn) the business lost as a result of the London Whale trading debacle in early 2012. And before the filing, there was the damaging 300-page US Senate report which, while also blaming regulators, took aim at the bank. In his opening statement at a March hearing on the trades, Senator Carl Levin said the report "demonstrated in detail" that "JPMorgan executives ignored a series of alarms that went off" as the chief investment office, the unit at the centre of the issues, "breached one risk limit after another".
Now, no matter how you play it, one thing is clear. Mr Dimon, as the boss, was responsible as the buck ultimately stopped with him.
And so docking part of his pay was a good move. But it's not enough. And if the board doesn't want to get rid of him, they should at least consider splitting his role, if for nothing else than increasing oversight. How can than hurt? Yes, it will constrain Mr Dimon's power. But it might make his reign longer-lasting, for it would introduce an additional set of eyes at the top, thus reducing the risk of mistakes going unnoticed. JPMorgan was a very big bank that, under Mr Dimon's guidance, has become bigger still. It's time that it also expanded its top team.
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