A $100 billion bet that results in a $6 billion-or-so loss is significant, but not the heart-stopping event it’s been made out to be. JPMorgan Chase & Co. (NYSE:JPM) is the biggest bank in the country, with more than $2 trillion in assets. Relatively, then, the size of the London Whale’s bet and the resulting cost is not so alarming. Over the past year, the bank was never in danger of failing, and it even managed to remain profitable throughout.
In the meantime, Dimon battened down the bank’s risk-management hatches more tightly than ever, replacing most of top management with hand-picked people, some of whom who helped JPMorgan Chase & Co. (NYSE:JPM) successfully navigate the London Whale situation, all while setting up a CEO-succession order in the process.
Foolish bottom line
So now Dimon faces a non-binding shareholder proposal to separate the roles of CEO and COB. At Goldman Sachs Group, Inc (NYSE:GS), CEO and COB Lloyd Blankfein is fighting a similar fight.
There’s something in the air right now. Shareholders in many sectors are becoming more active and trying to make their voices heard. This is overall an excellent thing.
In 2012, a similar shareholder proposal at JPMorgan garnered a 40% “yes” vote. Chances are that this year, given how people are feeling about the London Whale, that percentage will be higher.
Even though it’s non-binding, a majority vote could push the board to make the move anyway. If this happens, Dimon may choose to up and leave. It would be a big change for how he and the bank operate, and for all the reasons stated above, I don’t think the bank can afford to lose him. The big banks aren’t out of the challenging economic woods yet; there’s still danger out there.
B of A has a separate CEO and COB. So does Citigroup Inc. (NYSE:C), and neither of those banks are performing at the level of JPMorgan. Separating the roles, then, doesn’t automatically guarantee a healthier bank or more profit.
JPMorgan Chase & Co. (NYSE:JPM) is performing beautifully for customers and for investors, and Dimon is still the best risk manager in banking. Investors need to put the London Whale into perspective and keep Dimon at the helm. Or in this case, both helms.
The article Why JPMorgan Needs Jamie Dimon in Both Roles originally appeared on Fool.com and is written by John Grgurich.
Fool contributor John Grgurich owns shares of Goldman Sachs, Citigroup, and JPMorgan Chase. Follow John’s dispatches from the bleeding heart of capitalism on Twitter @TMFGrgurich. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of Bank of America, Citigroup, and JPMorgan Chase.
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