Cramer: Dimon a clear winner? Please
Jim Cramer | firstname.lastname@example.org
I do care about how well or badly he's doing running JP Morgan, and I'm still steamed about the trading loss that his firm racked up in London.
First, not all banking losses are created equal. A firm can make a loan to a client that blows up--that's the cost of doing business. A firm can make a wrong bet on the direction of a market, something I don't care for, but banks do it all of the time. I particularly don't like it if the directional bet is out of sync with what the firm is recommending to its own clients.
JP Morgan has been the most prescient firm 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 exact opposite of what the firm was telling clients to do? Did the firm's chief investment office believe that it was telling the wrong thing to clients? Maybe. Well, they were just stupid to do that, stupid enough that someone should lose her job over it anyway.
Shame on that internal investment management team for betting against the best advice the firm was giving to any clients. If Jamie Dimon paid attention to his own firm's advice, he should have shut down this trade ages ago. Why isn't anyone mentioning that?
But the big thing people don't seem to understand because they never worked at one of these institutions is that a rogue loss--a loss that's a mistake or against the firm's rules--is not a loss that can be condoned. When you made a mistake at Goldman Sachs, you made good for the losses. It was that simple. You cost the firm money, you made good on it.
I once had my pay docked $27,000 for a mistake I made while working at Goldman. 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 that Jamie Dimon won or lost today. 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 here, where money is returned to the bank from the pockets of those who made and checked off on the mistake.
But, the idea that Dimon came out a winner today? Oh please. Who are we kidding? You go in front of Congress because you did something wrong, and you don't leave having done something right. You were wrong when you walk into the hearing, and you're wrong when you leave. It really is that simple.
Disclosure: Cramer's charitable trust is long JPM.