Monday, May 14, 2012
Falling On Swords
The fallout at JP Morgan continues with three executives falling on their swords and resigning over a loss that can now reach $3 billion. Jamie Dimon, the CEO, is busily acknowledging that the trade was stupid, ill-managed, etc. It probably won't help him offset the call to impose the Volcker Rule and stop such proprietary trading, even though it supposed to be a hedge against risk. Dimon's crisis management may be a valiant attempt, but time and tide are against him. It might be better now for Dimon to prepare the bank for a new era. The larger question is whether risk management is adequate in major banks, and this incident would seem to indicate that it isn't. Many more executives may resign before it is. It is a major PR challenge for banking.
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