Breakout

Jamie Dimon Is Sorry. Is That Enough?

Breakout

JP Morgan (JPM) CEO Jamie Dimon wants to make one thing clear: he's sorry. In Dimon's prepared statement to the Senate Banking Committee, the former prince of Wall Street says JPM is its own toughest critic, adding that he finds the entire situation "embarrassing." Regardless of his shame Dimon closes by assuring the committee that the company will learn from this incident to emerge stronger, smarter, and better.

There's a shameless genius to Dimon's statement. The guy said he's sorry and vowed to do better; only an ass would keep berating him after he's humbled himself in such a manner.

Craftier still, Dimon ends by ticking off a list of all the things JPM does right. The bank still has a "fortress balance sheet" and will be profitable this quarter. What's more, JPM lends to small businesses, hires Americans, and will soon be offering a "consumer-friendly re-loadable card."

Between his semi-apology and the credit card pitch, Dimon lays out a very loose outline of what went wrong on the CIO trade. In essence, JPM "instructed CIO" (note the distancing language) to reduce risk assets in anticipation of Basel capital requirements. Instead of doing this by selling said assets, JPM tried to create synthetic offsets. In other words, JPM reduced risk by taking on a huge amount of different risk.

Which is OK because, as Dimon says in the note, "We have let a lot of people down, and we are sorry for it."

Sorry don't feed the bulldog. There are actual numbers and systemic risks to be addressed in the JPM mess. How large are the underlying trades? How leveraged is JPM's book? How big are the losses, and how much of the trade has been unwound? Are there actual counterparties with the size to be on the other side of JPM's trades, or is the government ultimately on the hook under any extreme stress, regardless of which direction?

None of that is going to be discussed today. But, in case you were wondering, Jamie Dimon is very sorry.

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