Dimon: 'We Were Wrong About Stuff'
Jamie Dimon gave a heck of a quote today.
Speaking about the London Whale episode at a conference sponsored by Morgan Stanley, the chairman and chief executive officer of JPMorgan Chase & Co. said: “There was no hiding, there was no lying, there was no bulls----ing, period. But we were wrong about stuff.” He added: “Nothing was done that was deliberate in any way, shape or form."
For those who may have forgotten, the London Whale trades resulted in more than $6.2 billion of losses last year at the bank’s chief investment office and triggered government investigations. What’s striking about Dimon's quote, aside from its broad, categorical sweep, is that it seems to be inconsistent with some of JPMorgan’s own past statements.
Consider what the bank said in a July 2012 filing with the Securities and Exchange Commission when it disclosed that it would restate its financial results for the first quarter of the year. As JPMorgan explained at the time, the restatement was necessary, in part, because the bank had found evidence that some traders may not have been truthful about the valuations they were using:
Recently discovered information raises questions about the integrity of the trader marks, and suggests that certain individuals may have been seeking to avoid showing the full amount of the losses being incurred in the portfolio during the first quarter. As a result, the Firm is no longer confident that the trader marks used to prepare the firm’s reported first quarter results (although within the established thresholds) reflect good faith estimates of fair value at quarter end.
JPMorgan reiterated those findings in greater detail in January, when it released its own internal report about the trading losses. Here's an excerpt:
Shortly after May 10, a Task Force was formed to investigate the causes of the losses. In the course of the Task Force’s ensuing work, it became aware of evidence -- primarily in the form of electronic communications and taped conversations -- that raised questions about the integrity of the marks in the Synthetic Credit Portfolio in March 2012. After consulting with PwC, the Firm concluded that it was no longer confident that the March 31 marks reflected good-faith estimates of the fair value of all the instruments in the Synthetic Credit Portfolio. Accordingly, on July 13, the Firm announced that it would be restating its first-quarter net income, to lower it by $459 million.
It would seem that a clarification is in order.
(Jonathan Weil is a columnist for Bloomberg View. Follow him on Twitter.)