Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said JPMorgan Chase & Co.’s reputation is intact as far as he’s concerned, after the bank posted a trading loss on credit derivatives.
“I’ve had enough mistakes of my own that I’m very forgiving when something like that happens,” Buffett said today on Bloomberg Television’s “In the Loop With Betty Liu” program in an interview from the Allen & Co. media conference in Sun Valley, Idaho.
JPMorgan, the biggest U.S. bank, said today it’s closing the group that traded so-called synthetic credit at the chief investment office, after a $4.4 billion trading loss at the unit in the second quarter. The company also restated first-quarter results after finding a “material weakness” in its reporting and said in a regulatory filing that employees may have sought to hide losses.
Buffett, who has a personal stake of about 1 million JPMorgan shares, was asked by Liu if the blunder would hurt the reputation of the New York-based bank. “Not with me,” he said.
“If you do big things, you’re going to get big swings” in earnings, Buffett said.
The billionaire, whose company is the biggest investor in American Express Co., said JPMorgan’s loss is small compared to the damage from a fraud at the credit-card lender in the 1960s.
The problem at American Express “was far greater than this, relatively,” Buffett said, adding that he prospered from the rebound of the company.
Asked if he had advice for JPMorgan Chief Executive Officer Jamie Dimon, Buffett said “Keep your head down.”
“You’ve got a fantastic institution and you’re making money every day,” Buffett said. “You’re going to run into something like this, and you hope you don’t run into it too many times in your career.”
Buffett, who controls one of the largest stakes in Wal-Mart Stores Inc., has said that strong companies can recover from their mistakes, even if they divert the time of top managers.
“I don’t think the earning power of Wal-Mart five years from now will be materially affected by the outcome of this situation,” Buffett told Berkshire shareholders in May, weeks after the New York Times reported that executives at the retailer bribed Mexican officials to fast-forward expansion.
The billionaire also has praised the durability of Toyota Motor Corp. in 2010 after the automaker recalled more than 8 million vehicles following reports of unintended acceleration.
“If you look at any of the great companies, at one time or another they have had a setback,” Buffett said in 2010. “Toyota will be a major auto company far beyond my lifetime.”