NEW YORK, N.Y. - JPMorgan Chase CEO Jamie Dimon came clean to stock analysts and accepted blame in a TV interview for a $2 billion trading mistake. Next he faces the shareholders, who have taken a big hit from the bank's blunder.
Dimon travels to Tampa, Florida, on Tuesday for the JPMorgan annual meeting, where he will almost certainly address the colossal error.
Since the 2008 financial crisis, shareholder meetings have been colorful affairs, a mix of defensive CEOs and placard-wielding protesters. The timing of the JPMorgan meeting adds a layer of intrigue.
JPMorgan stock was down almost 2 per cent on Monday, a much bigger decline than the broader market. It had already lost almost 10 per cent of its value on Friday, the day after Dimon disclosed the trading mistake.
President Barack Obama said JPMorgan Chase's loss demonstrates the need for the Wall Street rules that Congress passed two years ago. Many of the rules are still being written and have not taken effect. He argued that while JPMorgan could withstand the loss, a smaller bank could have been so damaged that it would have required federal assistance.
Obama said the bank's loss also illustrates the sharp differences between his view of government and that of Republican challenger Mitt Romney, who has called for less stringent regulations than those contained in the new law.
Also Monday, the executive responsible for trading strategy at JPMorgan Chase, one of the highest-ranking women in Wall Street, became the first casualty of the bank's stunning loss.
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."
"We maintain our fortress balance sheet and capital strength to withstand setbacks like this, and we will learn from our mistakes and remain diligently focused on our clients, who count on us every day," Dimon said.
JPMorgan, the largest bank in the United States, is seeking to minimize the damage from the trading mistake, which Dimon has conceded will complicate the efforts of banks to fight certain regulatory changes.
Drew, one of the highest-paid officials at JPMorgan Chase, had offered to resign several times since Dimon disclosed the trading loss on Thursday, a person familiar with the matter told The Associated Press on Sunday.
At least two other executives at the bank will be held accountable for the mistake, the person said.
Drew oversaw the division of the bank responsible for the loss. She was paid $15.5 million last year and almost $16 million in 2010, making her one of the highest-paid officials at JPMorgan, according to a regulatory filing.
Drew declined comment through a bank spokeswoman on Sunday. The Wall Street Journal reported Sunday that she and two other executives were expected to resign soon.
The Journal also reported that Bruno Iksil, the JPMorgan trader identified as the "London whale" because of the giant bets he placed, was also likely to leave, but the paper reported that it was not clear when that would happen.
The surprise loss has been a black eye for the bank and for Dimon, who is known in the industry both as a master of risk management and as an outspoken opponent of some proposed regulation since the crisis.
Dimon said in a TV interview aired Sunday that he was "dead wrong" when he dismissed concerns about the bank's trading last month. "We made a terrible, egregious mistake," Dimon said in an interview that was taped Friday and aired on NBC's "Meet the Press."
"There's almost no excuse for it." Dimon said he did not know the extent of the problem when he said in April that the concerns were a "tempest in a teapot." The loss came in the past six weeks.
Dimon has said it came from trading in so-called credit derivatives and was designed to hedge against financial risk, not to make a profit for the bank.
A piece of financial regulation known as the Volcker rule would prevent banks from certain kinds of trading for their own profit. Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.
Rep. Barney Frank, a Democrat, told ABC's "This Week" that he hopes the final version of the Volcker rule will prevent the type of trading that led to the massive loss at JPMorgan.
Dimon conceded to NBC that the bank "hurt ourselves and our credibility" and expects to "pay the price for that."
Asked what the price should be, Democratic Sen. Carl Levin said that banks will lose their fight to weaken the rule. "This was not a risk-reducing activity that they engaged in. This increased their risk," Levin told NBC. "So we've got to be very, very careful that the regulators here are not undermined by this huge effort to weaken the rule by putting in a huge loophole" that includes the trading involved in the JPMorgan loss, he said.
Dimon said the bank is open to inquiries from regulators. He has also promised, in an email to the bank's employees and in a conference call with stock analysts, to get to the bottom of what happened and learn from the mistake.
Dimon told NBC that he supported giving the government the authority to dismantle a failing big bank and wipe out shareholder equity. But he stressed that JPMorgan, the largest bank in the United States, is "very strong."
Addressing public anger toward Wall Street, Dimon said he wants a more equitable society and does not mind paying higher taxes. But he said attacking all of business is "very counterproductive.