Dimon a Winner? Please

He was wrong when he walked into the hearing, and he was wrong when he left.

By Jim Cramer Jun 14, 2012 9:54AM

Did Jamie Dimon do well, or did he do badly in front of Congress?

 

Frankly, I don't care. I care about how well or badly he's doing running JPMorgan (JPM), and I'm still steamed about the trading loss that his company racked up in London.

 

First, not all banking losses are created equal. A company can make a loan to a client that blows up. That's the cost of doing banking business. A company can make a wrong bet on the direction of a market, something I don't care for, but the bank has a right to do it and do it all the time. I particularly don't like it if the company's directional bet is out of sync with what the company is recommending to its own clients. JPMorgan has been the most prescient in the world when it comes to Europe, with the most consistent view possible during this whole crisis, which is to stay away from everything -- stocks, bonds, you name it.

 

So why the heck was the chief investment office for the bank doing the opposite of what the company was telling clients to do? Did the chief investment office believe it was saying the wrong thing to clients? Maybe. Well, they were just stupid to do that, stupid enough that someone should lose his or her job over it anyway. Shame on that internal investment management team to bet against the best advice any firm was giving to any clients. If Jamie Dimon paid attention to his own company's advice, he should have shut down this trade ages ago. Why isn't anyone mentioning that?

 

But the big thing people seem not to understand, because they never worked at one of these institutions, is that a loss that's a rogue loss, meaning a loss that's a mistake or against the company's rules, is not a loss that can be condoned. When you made a mistake at Goldman Sachs (GS), you made good for the losses. It was that simple. You cost the company money, you made good on it. I had my paid docked $27,000 for a mistake I made. Who should pay for it? The shareholders? Did they do anything wrong? Did they make the mistake? No, I did. It was an honest mistake, unlike what this might have been, but it was a mistake nonetheless, a buy of 50,000 shares instead of 5,000 that immediately went against me. The fault wasn't with the shareholders or the partners, it was with me.

 

Which brings me to the biggest outrage, why I don't care whether you think Jamie Dimon won or lost Wednesday. Somebody or somebodies cost the shareholders billions upon billions of dollars with this rogue order. They may not have enough money to make good on the error, and they certainly don't have enough money to make good on the shareholder losses.

 

But everyone involved has made immense amounts of money working at this bank, taking huge bonuses, including the CEO. I was thrilled to hear that Dimon said there might be clawbacks, whereby money is returned to the bank out of the pockets of the people who made and checked off on the mistake.

 

But the idea that Dimon came out a winner Wednesday? Oh, please. Whom are we kidding? You go in front of Congress because you did something wrong, you don't leave having done something right. You were wrong when you walked into the hearing, and you're still wrong when you leave. It really is that simple.

 

 

 

Jim Cramer is a co-founder of TheStreet and contributes daily

market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and is long JPM.

 

 

 

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23Comments
Jun 14, 2012 10:47AM
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Whatever Cramer,   JPM gave all those Senators big fat checks for their campaigns.   The whole thing was just a ruse for the media.
Jun 14, 2012 10:20AM
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Dimon came out clean and nobody at JPM will pay a nickel. He laughed all the way home.
Jun 14, 2012 10:31AM
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Big money rules! Always has, always will....
Jun 14, 2012 2:18PM
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All our leaders suck.

 

I mean, this is all pathetic. No one has concern for actually doing the right thing. Plain and simple.

 

CEOs are too worried about lining pockets with shareholders money (let alone everyone else who works for them), Politicians are too concerned about getting re-elected, and people are too concerned with just getting theirs when and where no matter who or how.

 

To build anything, you build from the foundation up. You want to be on the top, you have to have strong support under you. Which means making sure families are successful. Not just that you're successful. What I see is a system unconcerned with trying to provide the most opportunities possible to its citizens for success so that they can have strong families, that produce strong futures.

Jun 14, 2012 1:53PM
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Jamie Dimon, the guy that is in charge that "takes responsibility" wants to claw back the compenstion from the people who made the trades and Ina Drew the late CIO....funny the government was not to claw back any compensation from any of the banks CEOs or others due to employment contracts even though the government bailed them out and kept them from goin bankrupt or the stock and bond holders from taking a major hit.....yeah funny how it works that way!

Jun 14, 2012 9:32PM
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We should all be steamed that he refers to it as synthetic investing. Synthetic means- fake. So his people used fake money to hedge against economic failure. In the event of a c rash, JPM would stand to make profit on it. Is there anything right about any of it? No. Why Dimon isn't in GITMO and troops aren't shutting down that ivory tower is a crime in itself.
Jun 14, 2012 11:22AM
Jun 14, 2012 3:58PM
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CEO's today are figureheads and PR Meisters, more adept at back slapping and glad handing than they are actually running their companies. One CEO I know spends maybe 10 weeks a year at this company HQ...the rest he travels the world. He is that company's designated politician and reputation builder/protector, but certainly not its operations head.. No wonder more and more of them are out of touch with what is going on in their company's businesses.
Jun 14, 2012 11:39AM
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Way to get off your FACEBOOK fiasco by trying to get the people to forget by slamming some one else. You don't have clue and as your readers are seeing you jump from one side of the fence to the other with out even a check to see what you had said earlier.
Jun 14, 2012 11:09AM
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you make picks that your hero CEOS trade against all the time and you aren't "steamed"

one bit......your con game takes no skill......preying on the gullible is disgusting 

Jun 14, 2012 5:37PM
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Amen to that. Dimon was always shady in my book.
Jun 14, 2012 6:10PM
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He's just another greedy pig who got caught.   And most likely he'll laugh all the way to the bank.  But doesn't he work for a bank?   Let the buyer beware, you smart people!

Say what u want about Cramer, I love it when anybody posts about Wall street pigs taking heat.  I hope they burn in hell....

Jun 14, 2012 11:12AM
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The Volker rule notwithstanding, this underlines the problem of excessive government regulation and the inability of economically illiterate congressmen to separate proprietary trading from normal hedging transactions.

 

This was ill advised for sure and a big hit on JPM's $17.5B annual profit. I bet they don't try this again. But JPM is a corporation. No US taxpayer dollars were lost. With a $130B market cap a $2B loss isn't going to sink JPM or plunge the US into a massive recession. The main purpose of this show was politicians grandstanding to cover up their pathetic inability to revive our economy.

Jun 14, 2012 9:56PM
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Jamie Dimon and Ken Lewis are the poster boys for the arrogance and hubris that got us here.
Jun 14, 2012 4:19PM
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Dimon made a mistake and admits it......more than you do sometimes Cramer!!  He's a good manager and his Bank is the most profitable in the World notwithstanding this glitch.  I soooooo appreciate his candor and honesty.   The only sad part of all this is that none of the senators have a clue what he is talking about.  No one on that Banking committee has the sophisticated knowledge necessary to pass laws regulating hi tech transactions.  Most of our legislators can't talk and chew gum and the same time..... The Chair of the committee sounded like he just learned English and how to read yesterday - 
Jun 14, 2012 11:30AM
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Cramer,

 

I think you are very wrong if you assume that because you are before Congress you have done somthing wrong.  Congressional hearings are not about the guilty vs. the innocent.  Congressional hearings are about pompous Congressmen who do not hear a word said other than what comes from their own lips.  The very purpose of these hearings is to create a forum for Congressmen to point fingers. 

 

I'm on the side of Dimon on this one.       

 

 

Jun 14, 2012 1:26PM
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it is sad that there are people who believe this con man .......but sadder yet that he isn't in jail.....

and sadder still that MSN and CNBC allow him to do his dirty work

 

WHAT'S THAT SMELL ?

 

Jun 14, 2012 12:39PM
Jun 14, 2012 4:07PM
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C'MON YOU JERK SHUT YOUR BLOW HOLE, THEY SHOULD BE INVESTIGATING YOU, YOU HALF WIT.

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