Wall Street is not the most
popular street in America but with JP Morgan cutting the bonus of its Chairman
and CEO Jamie Dimon, It shows that some wall street institutions are responding
to public outrage. In light of making a massive loss in the derivatives market
(which played a key role in nearly bringing the US financial system to its
knees), Jamie Dimon saw his bonus halved as his company effectively said the
buck stopped with him when they cited that Dimon “bears ultimate responsibility
for the failures that led to the losses in the CIO and has accepted
responsibility for such failures"[1].
However, it is not enough as
Jamie Dimon will still have a significant bonus ($11.5 m) despite displaying terrifying incompetence[2].
According to an article in Forbes, Dimon displayed his shocking ignorance about
the company he heads when presented with news of JP Morgan Chase’s loss in the
market, responded angrily demanding that he saw “the positions” of the company, or in in
other words, the actual trades upon which JP Morgan Chase made losses[3].
Could you imagine incompetence of
this kind at your job resulting in a cut of your performance and effectively
merit free bonus if you didn’t know what investments your company specifically lost money? A
Checkout Operator in Tesco will face the sack for shorting the till by a meagre
£40 but a high powered CEO can so ignorant not to know his company’s loss
making positions in stock market is just short of being criminally negligent.
This is made worse by the fact
that politicians, despite reams of evidence suggesting that strong scepticism
being the reasonable approach towards banks, still have faith in financial institution
and its leaders as incredibly:
Congress being made up of
Congressmen and Congresswomen, no one thought to ask why the CEO of a financial
industry leader handling billions a day didn’t know where the money was.[4]
This is
because in light of technologies in the marketplace to make JP Morgan’s loss
making or profitable trades easier to access, JP Morgan use systems “that were
developed in the 1980s, or earlier” making accounting for losses and even
profits a taxing proposition[5].
Jamie
Dimon is a case that posits the problem of punishing bankers for unwise
financial deals besides imprisonment as Kevin Roose of New York Magazine smartly
pointed out:
You
think the guy who pulled down $40 million in the last two years — and
who already gets his black cars, private jet travel, and other perks paid for
by his employer is going to go hungry?[6].
Telling
from his reaction to his punishment in the press, he is fully aware of this
dreary fact as he confidently demanded to release the report which served as a
basis for cutting his bonus as he confidently asserted that losses in the
billions “are close to being a “non-issue” for the company”[7].
[1]
The Telegraph, 2013, JP Morgan halves Jamie Dimon’s pay over $6bn London loss, http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9806421/JP-Morgan-halves-Jamie-Dimons-pay-over-6bn-London-loss.html
[2]
Ibid
[3] T.
Groenfeldt, 2013, Why Jamie and Jon Corzine couldn’t find their money, http://www.forbes.com/sites/tomgroenfeldt/2013/01/15/why-jamie-dimon-and-jon-corzine-couldnt-find-their-money/
[4]
Ibid
[5]
Ibid
[6] K.
Roose, 2013, A Better Way To Punish Jamie Dimon, http://nymag.com/daily/intelligencer/2013/01/better-way-to-punish-jamie-dimon.html
[7] D.Kopecki,
2013, Dimon Says Whale Loss Is Very Close to Being a ‘Non-Issue’, http://www.bloomberg.com/news/2013-01-16/dimon-says-whale-loss-is-very-close-to-being-a-non-issue-.html
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