Banks Are Down but Not Out
Rather, I put the highest odds that Dimon ignored the risks of the 2011-2012 trades because "things were going well." In all likelihood, he simply took his eye off the ball and improperly monitored balance sheet risk until things deteriorated. At which time, it was too late. (Not surprisingly, on Sunday, The Wall Street Journal reported that several members of management will be fired from the bank.)
Frankly, I don't know which is worse -- being disingenuous (which I don't think he really was) or the poor management (which was reflected in the flawed strategy, shoddy execution and improper monitoring of such a sizeable investment).
Importantly, it is hard for me to understand how such a hands-on guy such as Dimon was inattentive to such a large bank investment.
I thought Dimon was smarter than those other banking and Wall Street goofballs and had learned from AIG's near-fatal mistakes (and those of the other Wall Street banks).
I admire that Jamie Dimon is an honest guy. His appearance on "Meet the Press" was refreshing in his candidness and willingness to accept responsibility.
Bottom line, though: I am sorry to say that it appears as though Dimon's screwup was a combination of one quarter hubris and three quarters poor management. His credibility has taken a big hit (and he freely admits it and takes the blame).
For now, Jamie Dimon is no longer the Superman of banking; he is Clark Kent (without the ability to turn into a superhero in a phone booth).
For now, he is just another one of those guys in banking and on Wall Street that has overreached.
Jamie Dimon's reputation will be regained -- and I am certain he has learned an important lesson in 2012 -- but not until he does a lot of heavy lifting (in delivering better JPMorgan profits) in the years ahead.
I wouldn't count him out.
How do we, as investors, uncover a turning point in a market sector?