May 15, 2012 in Business

Shareholders next for Dimon

Reservoir of good will likely to let JPMorgan Chase chief keep his job
Pallavi Gogoi Associated Press
 

Dimon
(Full-size photo)

Resignation

  The executive responsible for trading strategy at JPMorgan, one of the highest-ranking women on Wall Street, became the first casualty Monday.

 The bank said that Ina Drew, 55, the chief investment officer for the bank and a 30-year veteran of the company, would retire and be replaced by Matt Zames, an executive in JPMorgan’s investment bank.

 Dimon said Drew’s “vast contributions to our company should not be overshadowed by these events.” He stressed that the company remains “very strong.”

NEW YORK – JPMorgan Chase CEO Jamie Dimon owned up to stock analysts and went on TV to accept blame for a $2 billion trading mistake. Next he faces shareholders, who are considerably less wealthy since the blunder was disclosed.

While Dimon may be greeted by colorful protesters and tough questions at the JPMorgan annual meeting in Tampa, Fla., today, shareholders are unlikely to call for his head.

For them, facing the crisis without Dimon might be a bigger nightmare than the loss itself.

“When a bank is dealing with this sort of a challenge, you want someone of his caliber to shepherd it through,” said longtime JPMorgan shareholder Michael Holland, chairman and founder of money manager Holland & Co.

That has not been a universal opinion since Thursday, when Dimon disclosed to analysts that the bank had lost $2 billion by making a bad bet with so-called credit derivatives.

Investors lopped almost 10 percent off JPMorgan’s stock price the next day, and 3 percent more on Monday. Since Dimon made the announcement, almost $20 billion in market value has evaporated.

Over the weekend, Elizabeth Warren, architect of the Consumer Financial Protection Bureau and a Senate candidate from Massachusetts, called for Dimon to give up his board seat at the Federal Reserve Bank of New York.

And on Monday, White House press secretary Jay Carney, without singling out Dimon, said that Washington can’t prevent “bad decisions being made on Wall Street.”

Dimon will be talking to shareholders from a position of weakness for the first time. He has built a reputation as a cost-cutting zealot and an expert at keeping risk under control.

He led JPMorgan into a stronger position than almost any other bank after the 2008 financial crisis, earning him high praise.

Dimon’s reputation has been severely damaged now. But shareholders still appear to believe he should be given the chance to prove himself again.

“He’s earned enough market respect to have the opportunity to correct this,” said Benjamin Wallace of investment firm Grimes & Co., a longtime shareholder that sold its shares six months ago.

“I don’t think anyone else can do a better job than him, and we would not be calling for his ouster,” Wallace said.

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