Politicians will draw the wrong lesson from JP Morgan’s losses
JAMIE Dimon’s straight talking came back to bite him last week when he was forced to admit that rumours of huge bets JP Morgan had made using its treasury were a little more than “a tempest in a teapot”, as he had called them.
Dimon’s critics have been quick to use the incident to call for a tough interpretation of the US’s new laws. But far from showing the need for a beefed up Volcker Rule, it shows the need to make sure that banks that do “screw up”, as Dimon put it, can be wound up without a bailout.
Of course, this $2bn loss – $800m post-tax – is nowhere near sinking the bank. One analyst even asked Dimon why he had bothered to disclose it. The market’s reaction had more to do with the bank’s injured credibility than its profits, which totalled $19bn last year.
But a sense of scale won’t stop the political manoeuvring and, in that sense, this could prove to be one hell of an expensive teapot.