JP Morgan: It May Take Two

 JP Morgan: It May Take Two

THE PR VERDICT: “D” (PR Problematic) for JP Morgan. (Pictured: JP Morgan CEO Jamie Dimon.)

Megabank JP Morgan hit the headlines over the weekend with news that it was mobilizing its senior management to defeat a shareholder vote on corporate governance. In advance of a vote at next month’s annual meeting, board members are planning to sit down with some of the bank’s biggest shareholders, encouraging them to block a motion to separate the role of CEO and Chairman.

Momentum for the proposal has gathered steam following the losses from the London Whale trading episode and JPM’s nearly $6 billion in losses. Fairly or unfairly, questions about the CEO have been raised, and whether or not it is possible to manage a firm of JP Morgan’s size. Following some recent ugly congressional hearings, the new catch cry is not only too big to fail abut also too big to manage. This recent suggestion, to split the current Chairman/CEO role into two is an attempt, so say its proponents, to get another set of eyes overseeing day-to-day management.

The Board of JP Morgan isn’t in favor of the change, while press reports have CEO Jamie Dimon being alternatively sanguine about the proposal or threatening to leave, if the motion is approved. To avoid ongoing external scrutiny and to appease fierce critics in Washington and elsewhere, this may be one battle not worth fighting.

THE PR VERDICT: “D” (PR Problematic) for JP Morgan and its decision to oppose suggested governance reforms.

THE PR TAKEAWAY: Give an inch to keep a mile. It’s not really clear what JP Morgan’s objections are to splitting the role of CEO and Chairman. It is, after all, a structure that is already in place in many companies around the world, and splitting the roles is generally perceived as a desirable safeguard. For a firm that has been dragged through acres of tough media coverage about its internal management controls, this might have been one relatively painless and not unreasonable concession to make. Another financial loss or management failure around the corner, and JP Morgan may rue the day it so vociferously opposed such a modest reform.

JP Morgan’s Whale of a Hangover

 JP Morgans Whale of a Hangover

THE PR VERDICT: “C” (Distinctly OK) for JP Morgan. (Pictured: JPM chief Jamie Dimon.)

Stiff drinks for the staff at JP Morgan? A martini or two might have helped ease the pain from Friday’s Congressional hearing in Washington, which examined the firm’s now infamous $6 billion loss known as the “London Whale.” The trade generated not only steep losses but a level of scrutiny from regulators and the media that has had JP Morgan’s management on the hoof for months.

Friday’s hearing was brutal for JPM’s top brass. The list of accusations by the Senate’s Permanent Sub Committee on Investigations was simple enough: a risky proprietary trading strategy, concealing losses, manipulating pricing models, and lying to investors and regulators. Anything else? Actually, yes; the fallout continues as Senate aides are now pondering referrals to regulators and the Justice Department. This was a bad day for JP Morgan, and a very good day for the Senate’s PR machine.

Despite a parade of embarrassing and contradictory testimony, the thrust of JP Morgan’s response remains unchanged: “Management always said what they believed to be true at the time, period. In hindsight we discovered some of the information they had was wrong.” Fair enough, but unlikely to break the momentum on a train wreck of an issue that continues to gain momentum.

THE PR VERDICT: “C” (Distinctly OK) for JP Morgan. A straightforward and expected defense, though it’s unlikely to make much of a difference.

THE PR TAKEAWAY: Life is not always fair. Despite its clout, JP Morgan was always going to be outgunned in a public hearing concerning its embarrassing  losses. The bad news for the firm is that there is little that can be said to disrupt the forward movement on this issue, apart from what they’ve already said. Admitting you got it wrong may not be enough in an environment that continues to be out of love with banks. It will take more critical and remedial changes in management and strategy before the heat is turned down. Until then, another round, please…

JP Morgan: We Told You So

told you so JP Morgan: We Told You So

The PR Verdict: “A” for CtW - "We told you so."

“We told you so “ seems to be the key message from the CtW Investment Group to JP Morgan.  CtW, a shareholder representing union funds, claims it was concerned over 12 months ago at what it saw as “lax and out dated” risk management controls at JP Morgan.  Those concerns were laid out to senior management. But then, oops, a year later, the storied financial institution announced a trading loss of over $2 billion and a market value drop of more than $25 billion.

CtW wins the PR prize. The Executive Director of the group told the NY Times that it had expressed its concerns to a JPM board member and the former Chief Risk Officer.  The main complaint?  That the three-person board responsible for monitoring overall risk lacked the necessary expertise to oversee the function.

CtW says that ultimately the problem reflected an overall unhealthy deference to CEO Jamie Dimon and his Chief Risk Officer.  With this sentiment resonating with pundits, it seems the party is well and truly over for banking’s favorite CEO.

The PR Verdict:  “A” (Gold Star!) for CtW, punching above its weight. By saying “we told you so” they look like the smartest ones in the room.

PR Takeaway:  Capitalize on every PR opportunity.  By coming out with these revelations now, CtW claims the upper hand and grabs the PR advantage.  Describing JP Morgan as having an “old fashioned model of governance”,  CtW legitimately puts itself at the forefront of the reforms JP Morgan will be announcing.  While it’s an uncomfortable place for JP Morgan, it’s a great place for CtW and its public profile.

To read more, click here.

 

 

Oops We Did It Again…Jamie Dimon and JP Morgan Chase

JAMieDIMON2 Oops We Did It Again...Jamie Dimon and JP Morgan Chase

The PR Verdict: “B” for JP Morgan Chase and Jamie Dimon.

How do you say sorry for losing $2 billion?  Jamie Dimon, CEO of JP Morgan Chase seems to have got it right.  With a remorseful mea culpa, he announced last week a blow-out trading loss from credit derivatives.  From one of the banks  least scathed by the 2008 financial crisis, JPM’s surprise market malfunction was announced with aplomb.

The previously revered Jamie Dimon and his firm blamed the losses on “errors, sloppiness and bad judgment” and ominously warned, “it could get worse”.   Was this the same issue that had been raised in April but Dimon then dismissed as “tempest in a teacup”?  In a TV interview he said he was “dead wrong” to have dismissed earlier concerns.

In PR terms, so far so good but now the tough part.  For the CEO who has been the industry spokesperson against regulation and in particular trading restrictions proposed by the Volcker Rule, future lobbying efforts will now be muzzled (or at least should be).  Having cavalierly dismissed the notion of “too big to fail” as “non factual” he has at least temporarily, lost the PR right to belittle proposed oversight rules and restrictions.

The PR Verdict: “B” for JP Morgan Chase and Jamie Dimon.  From an industry that has lost its halo, the PR strategy to explain an “oops we did it again” $2 billion loss was well handled.  The challenge is what to say next.

PR Takeaway: No one likes a smarty pants.  Sunday’s NYTimes quoted a recent dinner in Dallas where Dimon was talking to valued clients about the much-discussed Volcker rule and its restrictions.  Dimon, allegedly imperious and heavy-handed, dismissed the debate as “infantile”.  He now needs to take a more humble and conciliatory tone.  With an uncapped trading loss of $2 billion dollars, the assumption that he and the industry know best, has well and truly hit the skids.

To read more click here.

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