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…