Dimon in the Rough

When the “safe” bank loses $2B overnight, is it time for reform?

Jamie Dimon, CEO of JPMorgan Chase, crowned “America’s Least-Hated Banker” by The New York Times Magazine less than two years ago, took a major Sentiment hit following Thursday’s announcement that JPMorgan lost $2B in just six weeks due to a “mistake.”

That figure is still growing. The New York Times is reporting losses reaching $3B already, and the Wall Street Journal predicts the total could reach $5B before the full impact is felt.

Dimon claims these losses are due to a failed hedging strategy — not risky trading with taxpayer-insured dollars. However, calls for regulation have surged in the past few days.

In particular, the Volcker Rule – the part of the Dodd-Frank Act that seeks to prohibit banks from gambling on their own accounts with money that taxpayers insure — experienced a 17-percent increase in Volume between May 9 and May 11 (the days before and after Dimon’s announcement of the losses).

Interestingly, however, despite increased buzz about the Volcker Rule (which may or may not have prevented the suspect trades in which JPM engaged), conversation surrounding Jamie Dimon himself far outweighed that of either JPMorgan as an institution and that of the Volcker rule.

And while the success of JPMorgan (JPM was one of the only banks to remain profitable during the financial crisis of 2008.) previously sustained Dimon’s outspoken criticism of “excessive” bank regulation, JPM’s recent losses are hardly an indication of the banks’ ability to self-regulate.

Dimon may need to change his tune.

As both CEO and chairman of the board at JPMorgan Chase, Dimon has taken the majority of the blame for his institution’s banking blunder. Dimon’s Perception Media Value plummeted following the announcement of the losses, generating a total of -$14,184,808 between May 10 and May 17. JPMorgan Chase as an institution did not even come close with a total of -$1,351,379. And we still don’t know whether JPMorgan’s suspect trades violated any existing laws (Dimon is scheduled to speak before the Senate Banking Committee as early as June of this year.), Dimon’s rhetoric post-crisis has already registered a different tone with respect to Wall Street regulation.

In commenting on the Volcker Rule, Dimon scaled back earlier complaints, stating Monday, “I do not disagree with the intent of the Volcker Rule.” Amidst calls for his resignation, however, Dimon reclaiming public approval will require more than a moderate shift in his Volcker stance. This leaves banking’s diamond in the rough, for now, simply in the rough.