The boss at the centre of the City's latest trading scandal admitted yesterday he was "dead wrong" to dismiss concerns about the bank only a month earlier.
Jamie Dimon, the chief executive of JPMorgan Chase who last week uncovered a shock $2bn (£1.2bn) trading loss, said his bank reacted badly to warning flags that it had large losses in financial derivatives trading.
"We got very defensive. And people started justifying everything we did," Dimon said in an interview on American television network NBC. "We told you something that was completely wrong a mere four weeks ago."
Dimon, who had been lauded for steering JPMorgan out of the financial crisis relatively unscathed, said in April that the concerns were a "tempest in a teapot".
Last week he was forced to admit that one of London's highest-paid traders had racked up huge losses, an admission that sent his firms' share price tumbling by 10%.
The source of the losses was French-born Bruno Michel Iksil, nicknamed The London Whale because of the size of the giant bets he took. Rumours that the bank had overstretched itself were played down when analysts quizzed Dimon on the subject.
Dimon did not explain in the NBC interview why the trades went wrong. "The strategy we had was badly vetted," he said. "It was badly monitored. It should never have happened."
The incident has handed fresh ammunition to politicians who are keen to limit investment banks' riskier activities. A new piece of regulation known as the Volcker rule aims to prevent US banks from certain kinds of trading for their own profit.
It is similar to the Banking Reform Bill that was contained in last week's Queen's Speech, and which will ring-fence a British bank's retail operations, including customer deposits, from so-called "casino" banking activities. However, Dimon, who has been an outspoken critic of the changes, said that Iksil's trades would not have fallen under the rule.
"This is a very unfortunate and inopportune time to have had this kind of mistake," he said. "We hurt ourselves and our credibility. We [have] got to fully expect and pay the price for that."
Bankers at JPMorgan fear that as much as 50% could be wiped off their bonuses this year as a result of the scandal.
The Wall Street bank split a £5.8 billion pay and bonus pot last year between 26,000 staff – worth an average £223,000 each.
Dimon is scheduled to speak again tomorrow when JPMorgan holds its annual shareholders' meeting in Florida.Reuse content